Earnings Call: H1 2025

Aug 28, 2025

Summary

Double-digit growth in throughput and profits was achieved in H1 2025, with revenue up 13.6% and net profit up 30.6% year-on-year. Overseas terminals drove strong profit growth, while cost control and smart port initiatives enhanced margins. Outlook remains positive despite global uncertainties.

Dear investors and friends of the media, good afternoon. Thank you for your attendance at our first half results presentation. We have a mixed mode today, and we have Ms. Wu Yu, our Managing Director; Deputy General Manager, Mr. Chen Yipeng; Mr. Zhao Fengnian, our Chief Accountant. We are going to take you through the performance highlights and also operational review. Later, we will take your questions. Madam Wu, please. Thank you very much. Dear investors, friends of the media, good afternoon. I am Wu Yu, Managing Director for the company. First of all, I would like to welcome all of you to our first half results presentation. On behalf of the company, I would like to extend our gratitude and welcome. Thank you very much for your long-term support and concern, and we would like to use this opportunity to make exchanges with you on-site. Concerning today's presentation, there are five parts. We have the key highlights, financial performance, operational review, strategy and outlook, and finally, we will have the Q&A session. First of all, let's go over the company's key highlights. In the first half of 2025, the global economy continued to grow at a slow pace, and there continued to be changes in trade policies and geopolitical risks. We leveraged the company's global network and synergy with other COSCO SHIPPING brands to seize the opportunity presented by the surge in trade demand during the phase, achieving double-digit growth in throughput and profits, demonstrating strong capabilities in handling risk and operational resilience. In the first half, we achieved total throughput to 74.3 million TEU, a rise of 6.4%. Revenue increased by 13.6% to $806 million, EBITDA up 10.5% to $445 million. Net finance costs decreased by 14%. Profit attributable to shareholders reached $182 million, up 30%. Against the backdrop of profound adjustments in the global economic and trade landscape and complex geopolitical developments, we have actively seized market opportunities, continuously strengthened our core hub layout, improved operational efficiency, and adhered to high-quality development to positively respond to external uncertainties. We leveraged our globally connected network and the synergies of our dual branding strategy, resulting in year-on-year growth in total container throughput revenue and profit attributable to equity holders. Mr. Zhao will now take us through the financial performance. Thank you. Dear friends from the media and investors, good afternoon. I will now take you to the second part of our presentation. In the first half of the year, we achieved new results in improving quality and efficiency with both revenue and profits recording solid growth. Revenue increased by 13.6% year-on-year, and gross profit increased by 10.3% year-on-year. The company continued to optimize the management and profitability of our equity method investees, promoting their coordinated development. In the first half, profits from joint ventures and associates increased by 13.1%. In terms of net financial cost, we strengthened financial expense control, further reducing financial expenses through measures such as optimizing debt structure. Net financial costs decreased by 14% year-on-year in the first half, demonstrating significant cost control effectiveness. Our net profit attributable to equity holders increased by 30.6%, primarily driven by profits from Guangzhou Nansha Terminal and Yantian International Container Terminals in the PRD region, which increased by 59.8% and 10.9%, respectively. Overseas, this was primarily driven by profits from Greece Piraeus Container Terminal and COSCO SHIPPING Ports (Spain) Terminals, whose profits increased by 93.8% and 68.6% year-on-year, respectively. Dividend payout ratio remained unchanged at 40%, with a dividend of 1.928 US cents per share, representing an increase of 23.6% year-on-year. Now let's look at our revenue and GPM. In the first half, revenue rose by 13.6% year-on-year while the GPM was 27.2%. For subsidiary terminals in China, revenue went up by 1.1% while GPM was 36.2%. GPM of Xiamen Ocean Gate and Guangzhou Nansha Terminal remained above 40%. In the future, we will continue to build differentiated and one-stop value-added services at Xiamen Ocean Gate Container Terminal to promote growth in value and strengthen its role as a regional hub. We will enhance the operating capacity of Tianjin Container Terminal, increase the volume from nearby cargo sources, making it a new hub port for CSP in northern China. At Guangzhou Nansha Terminal, we will continue to develop the bulk to container change of cargo type to strengthen logistics efficiency and network service capability in the PRD. We will improve Yangtze River and inland river feeder network, expanding cargo sources from railways in Wuhan Terminal, optimizing route capacity allocation, achieving a significant increase in throughput. For overseas subsidiary terminals, revenue increased by 25.9%, with GPM growing by 3.3 percentage points. The Piraeus Container Terminal in Greece has handled the unfavorable effects of the Red Sea incident very well, strengthening cooperation with shipping companies to increase throughput and increasing marketing strategies, driving revenue to grow by 27.9% and GPM rising by 2 percentage points to reach 21.4%, increasing competitiveness. COSCO SHIPPING Ports (Spain) Terminals revenue rose by 13.1%. GPM increased by 1.6 percentage points. We'll continue to focus on consolidating its regional advantages to play a more important role in the land and sea corridor between China and Europe to improve operational performance. At CSP Abu Dhabi Terminal, we'll continue to strengthen marketing strategies to shipping lines within and outside of COSCO SHIPPING Group, increased the number of routes and improved operational efficiency, driving revenue to grow by 10.9% and GPM to increase by 3.5 points. We will also continue to increase the overall competitiveness of CSP Chancay Terminal in Peru. While improving operational efficiency, we will also increase marketing efforts. Now, let's look at the profit distribution by region. In the first half, terminal profits reached $242 million, an increase of 19%. Terminal profits in China reached $185 million, up 0.8%. We will continue to integrate into regional coordinated development and enhance the capacity of domestic terminals, while focusing on the coordinated development of the Beijing-Tianjin-Hebei region, the integration of the Yangtze River Delta, Guangzhou-Hong Kong-Macau Greater Bay Area and the New Western Land-Sea Channel. We will continue to strengthen cooperation between domestic and international trade routes. For overseas terminals, profits went up by 187.4%. Profits in the Mediterranean, Middle East region rose significantly by 149.9%, mainly benefiting from the Piraeus Container Terminal's improved operational efficiency and accelerated container transshipment, and throughput rising 4.9% year-on-year, net profit rising significantly by 93.8% year-on-year. The Europe region saw a significant increase of 297.1%, mainly due to COSCO SHIPPING Ports (Spain) Terminals, which increased its efforts to introduce new routes and enhanced ports reach, resulting in 6.2 increase in throughput and 68.6% increase in profits, driving the profitability of the entire European region. In the future, we will continue to focus on the Chinese market while taking advantage of the dual drivers of domestic and international markets, focus on global channel opportunities, expand overseas markets, improve stable revenue growth, and continuously optimize our portfolio's profitability. In terms of the balance sheet, by the end of June, the company's cash and bank deposits amounted to $1.28 billion, of which renminbi accounted for approximately 41%, EUR 19%, and USD 37%. Total debt amounted to about $3.25 billion, renminbi accounted for about 30%, EUR 17%, USD 51%. Capital expenditure in the first half, $160 million, about $26 million was spent on investments. About $134 million was spent on fixed assets, mainly on CSP Chancay and COSCO SHIPPING Ports (Spain) Terminals, amounting to about $98.9 million and $11.7 million respectively. The net debt-to-equity ratio was 26.7%, and it has been stable at a low level in recent years. In the future, we will continue to capitalize on the advantage of our low leverage and focus on emerging markets with high development potential. As for the average bank borrowing cost, it dropped to 4.7% during the first half. We strengthened capital planning and management strategies, took advantage of our scale, and reduced our financial costs as a whole, realizing a decrease of 14% in net financial cost. In the second half, we will closely monitor changes in monetary policy by major central banks, actively expand banking resources, leverage the company's bargaining power, optimize existing loans, negotiate reductions in existing loan interest rates, or replace them with loans at lower interest rates in advance. Further reduce financial costs and promote high-quality development of the company's overall profitability. Now, let us turn to Mr. Chen Yipeng. Thank you, Mr. Zhao Fengnian, for the detailed introduction about our performance. Dear investors and friends of the media, good afternoon. I will now take you through the operational details. In the first half, our total throughput reached 74.3 million TEU, up 6.4%, with an increase in China and also overseas. The total throughput of China terminals reached 56.39 million TEU, up 5.7% year-on-year, mainly driven by the strong growth of the Bohai Rim, Yangtze River Delta, and southwest coast regions. In the first half, we expanded the coverage of ports in China, increased the joint marketing efforts of subsidiaries led by the headquarters and improved operational capacity through market expansion, improved operations, and smart ports. Total terminals throughput in overseas regions amounted to 17.91 million TEU, up 8.4%. Based on our global route network, we are focusing on enhancing the hub operational capabilities of terminals such as Chancay in Peru, Piraeus Container Terminal in Greece, and CSP Zeebrugge Terminal in Belgium, in line with the handling capacity and surface requirements of major shipping companies. In the future, we will continue to improve our network layout and strive to build overseas port hubs. Equities throughput rose 3.8% to 22.88 million TEU. Equities throughput of China terminal rose 1.8% year-on-year to 16.14 million TEU, with significant year-on-year increase in the Yangtze and Pearl River Delta regions, driven by CSP Wuhan Terminal. In line with the overall trend of inland waterway transportation development in China, multimodal transportation business is expected to see significant growth potential at Wuhan, which is why we have increased our equity stake to full ownership. We'll continue to deepen the development strategy of the Yangtze River economic belt, leverage the advantages of rail-water intermodal transportation. Equities throughput of overseas terminal, 6.74 million TEU, an increase of 8.7%. We will explore further growth opportunities from new routes and shipping alliances and the restructuring and upgrading of the industrial chain, particularly by capitalizing on opportunities such as Asian regional integration, South-South cooperation, and cross-border e-commerce. The container volume of subsidiary terminals was positive, up by 3.6%, with international routes up by 6.6%. Throughput of the company's nine major subsidiary terminals showed steady growth. Benefiting from dual branding strategy, COSCO SHIPPING Lines and OOCL contributed significantly higher volumes, up 10.5% and 11.6% respectively. We actively responded to market changes and route adjustments by innovating our marketing model, continuously introducing new routes, promoting interterminal cooperation, and striving to attract more routes to its controlled terminals. As a result, container volume from MSC and other shipping alliances increased by 13.2%, expanding our cooperation with major shipping companies. In terms of ASP calculated in euros, the company's European subsidiary terminal saw a year-on-year increase of 10.3%, mainly due to the continued strong performance of Piraeus Container Terminal in Greece and COSCO SHIPPING Ports (Spain) Terminals. In the second half, we'll actively respond to internal-external market changes, focusing on strengthening domestic and international trade channels, network construction, and extended business development while continuing to expand our business scale, optimize cargo structure, and increase revenue. We will establish a diversified global supply chain system through comprehensive products, marketing operations, and customer service. We'll strengthen the foundation of port operations through the integrated development of hubs, channels, and networks to optimize the structure of our global shipping routes. We are promoting the development of supply chain resources and advancing multimodal transport operations, creating a new global logistics supply chain ecosystem. The following are the results achieved by several key projects. For the Xiamen Haicang CFS project, we will strive to maintain a high usage rate, optimize warehouse space planning at the logistics park, enhance space utilization through centralized management, and expand Southeast Asian shipping routes. Second, at Xiamen Haicang CFS, we'll continue to increase our promotional efforts focused on connecting with leading local enterprises, deepening internal coordination with a group, and closely collaborating with COSCO SHIPPING Lines (Xiamen), logistics, and chemical companies to achieve good results. At CSP Abu Dhabi CFS, warehouse utilization rates approached saturation level. We're building a large-scale logistics project center in the Middle East, and the CFS project has obtained Abu Dhabi National Oil Company's full category logistics supplier qualification, becoming the only Chinese company to obtain this qualification. Relying on this, we can provide comprehensive services covering heavy cargo transportation warehousing, significantly enhancing our competitiveness. At CSP Zeebrugge Terminal CFS, we'll continue to explore market opportunities and focus on the construction of serial intermodal transport channels by integrating the resources of the terminal and railway stations and leveraging the abundant customer resources of COSCO SHIPPING Group in Europe. We will build an efficient and stable two-way logistics corridor, will strengthen the function of the port area as a gateway to Northwest Europe, and provide a fundamental channel for business expansion in the Northwest European market. The global port and shipping industry is shifting from single-point competition to ecosystem competition. We need to accelerate our leading role in smart port construction, continuously promote unmanned container truck operation, and achieve economies of scale, strive to achieve improvements in efficiency and scale. To accelerate the integration of cutting-edge technology with port operations, five terminals in Xiamen, Wuhan, Abu Dhabi, and Peru have fully transitioned to commercial scale operations and large-scale application of unmanned container trucks, achieving an average cost reduction of 10% per container. In the first half, the cumulative operational volume of unmanned container trucks reached 530,000 TEUs, representing an increase of 69%. All China subsidiary terminals as well as CSP Abu Dhabi utilize the EAM system. Since implementation, terminals have deepened application of the system, effectively helping standardize processes and management with cost saving and efficiency enhancing results. We are also continuously developing AI technology application with the EAM system to further enhance intelligence, efficiency, and convenience. Transitioning from traditional operations to a new operational model requires the vigorous promotion of advanced information technologies such as 5G, AI, Internet of Things, and cloud computing. We will continue to focus on building replicable, smart, and efficient modern ports, moving forward towards large-scale application and comprehensively forging a new ecosystem. I will now hand over to Ms. Wu Yu. Thank you very much. Let's take a look at our strategic plan and outlook. As our global portfolio continues to grow, we'll continue to strengthen our network and optimize allocation of resources, accelerate the pace of innovation, and improve operational efficiency. First, centered on Belt and Road Initiative, achieve new breakthroughs in globalization. We'll focus on our core business and strengthen global hub network and the core roads. We will grasp development potential and opportunities in emerging markets and accelerate our investment in Southeast Asia, South America, Africa, and other regions. Second, we focus on lean operations and improve efficiency. We'll focus on these internal and external synergies to improve our operations. Through flexible commercial terms and differentiated services, we'll seize opportunities brought about by increased demand in transport, continue to introduce new routes, and strive to secure additional ship calls. We'll continue to explore new methods of cost control, leverage our scale competitive advantage, and explore opportunities for value enhancement. Thirdly, upgrading supply chains to create new momentum for integrated development. We actively participate in our shipping plus port plus logistics and hub plus channel plus network integration policies to respond to changes in our value chain and grasp opportunities from the supply chain. We'll continue to develop integrated supply chain logistics services that seamlessly connect shipping routes, ports, terminals, and land transportation. We're committed to strengthening innovation and upgrading green and smart ports. We are aligning with the latest development concepts to establish a digital system and completing the implementation plan for the short, medium, long-term development of AI. In terms of green and low carbon development, we're working together to build a global green transportation channel for ports and shipping, striving the industry toward accelerated evolution of zero carbon supply chain. In the first half, we continue to strive to achieve our commitment to carbon neutrality by 2050, and systematically promote the deep integration of ESG and production operation management around the five pillars of sustainable development, integrity and women cooperation, resilience for the future, agility and innovation, caring for nature, and dynamic progress and integration to achieve the three-in-one integration of the company and its value chain in the economy, society, and natural ecology. The company has received high recognition from leading domestic and international ESG rating and index companies, including Wind ESG rating of A, AA rating from Huazheng ESG rating, ranking first in the transportation infrastructure industry, and significant reduction in ESG risk exposure with the Morningstar ESG risk score decreasing to 14.8. We will continue to implement sustainable development principles, explore innovative solutions, and contribute long-term value to the construction of a digital, intelligent, and green low carbon port ecosystem. Looking forward, we will actively seize development opportunities, adhere to surveying market demand, focus on emerging markets and regional markets, especially major regions or markets where major shipping alliances have added new routes and capacity, and focus on investing in global resources. Although uncertainty of global economic recovery still exists, our economy has a stable foundation, strong resilience, and great potential. The supporting conditions and basic trends for long-term improvement have not changed, helping us to steadily realize high quality development. As emerging economies transition from being participants to growth engines, forming more balanced and diversified global economic system, this brings new growth momentum. We will take advantage of new trends of the global economy and trade, use our global portfolio as the core development strategy, and continue to improve the quality and efficiency of the terminal portfolio while the company's asset scale continues to expand. We will also promote the company's high quality and sustainable development, accelerate progress towards the goal of constructing a customer-centered global leading integrated port logistics service provider. This concludes our presentation about the market conditions and operating performance in the first half. Once again, our dear guests, we would like to express our sincere gratitude to all of you for your continued support. Moving forward, we will closely monitor changes in the port and shipping industry landscape and contribute to the stability of the global logistics supply chain. Through our efforts to enhance operational performance, we aim to maximize value for our shareholders. We will now proceed to Q&A session. We welcome any questions from you. Thank you very much for the presentation. We will start the Q&A. We welcome questions from on-site and also online participants. Please tell us who you are and who you represent. I am from RTHK. We are quite concerned about CK Hutchison's sales of the two terminals, or the two ports in Panama. Did you participate in the transaction? What is the progress of that transaction at the moment? Is it possible that, concerning the transaction, you will only consider overseas ports other than those in Panama? What about the U.S. Sino trade disputes? Things seem to be calming down, so does that mean you are looking at more positive signs? What is the outlook for the second half? Well, thank you very much for your question. There is no comment for the first part of your question, but I can talk about the second part. We have seen some policy fluctuations causing certain impact on stability. In May, concerning the trade negotiations between U.S. and China, they have been progressing well, but the market is also warming up and prices continued to climb until the middle of June. Concerning the tariff initiatives from the U.S., we are going to restructure our global supply chain. The composition of our supply chain will continue to be more diversified. Against this backdrop in Asia, the freight cost may be stabilized. Facing tariff changes or policy changes on the tariff front from the U.S., we will stay very close to such changes. We will be prudent and stay agile towards demands of our consumers. We will adopt the right initiatives to respond to market changes and make plans well ahead of time. We will also strive to enhance our operational efficiency, increase the stickiness from our customers to confront the uncertainties in the market and ensure our stable development. Do we have any questions from on-site investors? All right. Perhaps we can take questions from online, from Goldman Sachs. The question is about throughput situation at the ports and looking forward in the second half, some insights from the management. Concerning second half outlook, I want to tell you that at the moment, what we think about the second half, the overall economy and also shipping business, they will be restructuring at a deep level because of certain uncertainties in the market. IMF in July, in their economic outlook, they believe that the global growth would be about 4.3%, which is a slight downward adjustment considering the external uncertainties faced by China. With the support of various policies, we believe that domestically things will be rather stable, and IMF has readjusted its outlook to 4.8% for global growth. China being one of the major drivers behind that. External trade is still agile with its normal level of tenacity, and we see 2.9% improvement for external trade to EU, Korea, and Japan. Import and export also showed rising trends. Concerning the global ports throughput level, according to the latest Q2 report, the increase is expected to be at 4.4% in the North America, 10.5% growth in Central Middle East and Southeast Asia will also be single-digit growth, exceeding our expectation. At the same time, major port throughput in China, the momentum of growth is strong. According to local authority projections, the throughput level, 170 million TEUs. In the second half, we are approaching the end of a peak period, so we are looking at some rather obvious decline. For the whole year, global throughput growth will be 1.7%. For Asia and Latin America, between 1%-2%. Middle East, South Asia, will be closer to the mid-range single-digit growth. Up to 2029, 4.3% growth for South Asia, and then 2.6% for Africa, and 2.5% for Central Asia. We are talking about the Greater China region with 29 million TEU increase. Thank you very much for the management's answer. Do we have any on-site questions? How concerned are you about pressure from the U.S. on trade restrictions and COSCO's port assets globally? There has been talk recently from U.S. lawmakers that are concerned about COSCO's port holdings in the U.S. Could you respond to that, please? Well, we are very concerned about continuous developments in these overseas ports, and we will try to place our focus on these overseas port assets. We will continue to adhere to our prudent principles and strive to create and maximize return for our shareholders. All along, we have been serving global trade. That is our major responsibility. Around the world, we continue to have our operations in a legal manner, and we have good collaboration with global ports, and we will continue to identify potential investment opportunities so that we can continue to optimize our global port network. Thank you very much for your concern. Thank you for the answer. There is an online question from HSBC. There are three questions in total. We will answer them one by one. First of all, in the first half, domestic and overseas per container revenue level. Thank you. Well, let me take that question. In the first half, concerning overseas revenue in the European region grew by 10.3%. Mainly, that is because in European region we have relied on CPI elements. We continuously optimize our business with shipping lines. Also because in the European region, we have seen some changes to our business structure, driving up the revenue significantly. So adding those together, the growth reached 10.3% in Europe. For domestic revenue, there is a decline of 1.9%, mainly because in some of our terminals, we have been affected by the tariff changes. For example, Nantong Tonghai Terminal, some of their business has been affected. So the per container revenue also dropped, leading to the overall domestic figure dropping slightly. We will continue to optimize our business and hopefully bring that up again. The second question is about first half CapEx and what is the guidance for this year. Well, I will take that question. First of all, in the first half, the actual CapEx. It was $110 million. $134 went into fixed assets concerning terminals such as the ones in Spain and the one in Peru, 90-odd million, and they are the major ones. Then about equity investment, $20-odd million. Concerning the whole year, we have made adjustments in mid-year about the projection, which is $790 million. That is again, divided into two parts. Investment in fixed assets, $600-odd million, mainly on major terminals, for example, the ones in Xiamen, Peru, Spain, Abu Dhabi, et cetera. The other part is about equity investment, $179 million. Thank you. The final question is about the freight volume. Has that been assort already? Well, allow me to take that question. Actually, we can see in May there was this wave which was rather prominent. Now demand is cooling off gradually, so the freight cost is slowly coming down. If you look at our port situation and operations in July, actually, we are talking about an increase of 3.9% compared to May and June. This is also a declining trend. If we look at the overall external situation, our projection is Q3 global container business will drop by 0.8%. For Q4, the year-on-year decrease will be about 1.7%. The parent company, based on the operation in July and August, it is actually in line with the overall projection. Any other on-site questions? Hello, I am Charles. I have two questions. First of all, looking ahead, do we have any plan to acquire any ports? In what region? What about AI and automation facilities at our ports? What is the application situation? What are your future plans? Yes, I will take the first question. At the moment, we are propelling forward a talent project. Towards the end of September, the transaction will be completed, it will be delivered, and we will look at the overall global situation and in terms of our global network planning, we will focus on Southeast Asia, South America, and also Middle East. Your second question is about AI projects. Overall speaking, the company at the moment is focusing on unmanned trucks in Xiamen Ocean Gate Container Terminal, CSP Wuhan Terminal, Xiamen, Quanzhou, CSP Abu Dhabi Terminal, and CSP Chancay Terminal. We have already launched such automated initiatives. In the second half, concerning unmanned trucks, we are talking about a growth of 69% overall up to 530,000 TEUs. We will continue to participate in the construction of smart ports. At the moment, Tianjin Container Terminal, through the association, we are receiving a four-star level smart port status. In fact, AI is showing some clear trends. Other than unmanned trucks, on other AI technologies and applications and automation, we have achieved good results as well. Under our large model construction, we continuously optimize and develop the AI application. So hopefully, in terms of servicing our customers and risk prevention, we can make a real difference. At the moment, we are also looking into AI projects such as maintenance and repair on a smart basis for our facilities and equipment so that we can improve our inspections. As for security and prevention of risk, we also have certain smart projects. We also focus on better utilization of our assets so that we can achieve greater synergy through the use of AI prediction. At the moment, these projects are underway. We also have other data-related projects. We hope to have better monitoring in terms of low carbon and greening initiatives. Another question from our on-site investors. My name is Juchen. I have two questions. First, is about advance delivery. Normally, towards the end of every year before Chinese New Year, for sea freight, there will be some risk because everyone is rushing to complete everything before Chinese New Year. In the first half, we see a rather substantial amount of advance delivery. So towards the second half, do you think that peak will emerge again? Second question is about overseas acquisition plans. Right now, the U.S. is launching equivalent tariffs. In Southeast Asia, the tariff is also increasing. So I think that is, in general, affecting the trade situation. So when it comes to tariff measures and geopolitical uncertainties, are they going to obviously affect your acquisition momentum overseas? I will take the first question. Concerning the second half, especially Q4, as Ms. Wu Yu has explained earlier, we are being affected by the equivalent tariff measures. In May to June this year, we saw this peak. Everybody wanted to leverage on the opportunity for export. Due to policy changes and also because of inventory clearance needs, we believe the entire market will see a higher level in the first half, and it will come down gradually in the second half. I believe things will begin to decline towards the second half. I will respond to your second question. When it comes to tariff, it keeps changing and even up to today, no one really knows what will happen at the end. We can see perhaps in the second half. Perhaps, in terms of volume, it is hard to predict a very obvious peak or the traditional peak. While many things are happening, we understand China's export to U.S. is dropping, but to other emerging markets, Southeast Asia and also Central and Southern America and Africa, they are on the rise. Because of that, we believe that when it comes to trade and the entire supply chain, they are rationalized and diversified. We can still grasp the development opportunities there and our overall overseas investment plan, just like what you have asked, we will focus on Southeast Asia, South America, Middle East, and other emerging markets. We think we still have plenty of opportunities and potential for development. Thank you, management. Another question from Haitong International analyst. What do you think about the Red Sea incident? How does that affect the company? Thank you. Concerning the Red Sea crisis, we see that since the emergence of the conflict, things have been changing continuously and things continue to evolve so that can we return to the Red Sea waters? How do we make the changes under so many uncertainties? So far, we can observe there is no larger shipping lines returning to the Red Sea routes, but we do see some rewarming for some routes. We will continue to coordinate with other shipping companies to support route adjustment. Concerning Red Sea incident or crisis and other conflicts, we will continue to come up with relevant initiatives and plans. Do we have further on-site questions? Perhaps we will take another question from online participant from UOB. The question is about coastal ports. In Q2, Abu Dhabi and Spanish ports, the reasons behind the performance, Xiamen, Abu Dhabi, and the one in Spain would be his focus. Thank you. I will take that question. In the first half of the year, Xiamen coastal ports, we have seen a slight increase of performance by 0.9%. Inside there is one factor. At Xiamen port, the routes from U.S. is still taking a bigger proportion. But of course, Sino-U.S. conflicts are causing certain pressure on Xiamen. It started off with a suppressed level. Later on, there was cooling off of the conflict and temperament, so Xiamen saw a quick rise in their business level. While it was affected at the beginning, we ultimately see a small increase. The second one was which one again? Abu Dhabi? Yes. Concerning Abu Dhabi. Similarly, there are two factors. First of all, as we all know, Dahab invested in Abu Dhabi Port. They have started operations. So gradually business got transferred to their self-operated port, affecting us to a certain extent. But our company has adopted dual branding strategy, and we have our own support and effort, and at the same time, we expanded other shipping alliances, including our Twin Star Premier. So for these businesses supplementing our operations, if you remove the factor coming from the transfer for Abu Dhabi Port, in fact, the year-on-year increase is actually 17.7%. So that is excluding that one factor. You can see that we are doing very well. For our port in Spain, in the first half, our growth was 6.2%, mainly because of certain attached routes supporting its overall development. Thank you very much. Do we have other on-site questions? Perhaps we will take another one from online. From Sinolink Securities. The question is the supply chain while we are looking at balanced development, what do you think about global shipping business, and do you have any special measures to tackle it? I will respond to that question. As we can see, because of external environment is changing and affecting us, major shipping companies, they have adjusted their routes with major changes. I think you all know MSC and the Twin Star Alliance, they have used this model to serve small to medium-sized ports. MSC and Premier collaboration to satisfy the owner of the cargo, which focus mainly on stability and continuity. So transportation mode is now becoming more diversified. So we can see diversified aspirations and personalization needs. These are the new trends. So concerning port operations, after adjustments are made to the routes, our ports have gone through some important restructuring as well. I expect there will be continuous impact. First of all, concerning the status of hub ports, they may be affected. So concerning our port operation, it is about maximization and how to turn things around more quickly because the aspirations are increasing. We do face certain risk, and we have to rely on regional trade to support our port operations. So at different ports, because of different status, we have to focus on differentiated competitiveness. From the company's perspective, restructuring will bring forth new opportunities, and we will continue to share with you. Together with MSC and other shipping companies, we have collaboration. We have identified new opportunities, and the port throughput increase has been supported by such collaboration as well. We also have our parent company and also the alliance support. We are well-backed by the biggest alliance in the world, so earning a lot of trust from our customers. We will enhance the level of synergy so that we can completely enhance our capability of our port operations. Thank you. Because of time constraints, let us take the final two questions. Do we have further questions on-site? I am from Reuters. I would like to understand your financial capability. You talked about overseas acquisitions. You will have this global plan. So how much are we talking about being put aside for acquisition? Will you rely on support from your parent company? Secondly, can you talk about overseas acquisition compared to 6 to 12 months ago? It is more difficult now. So what are the difficulties? I will take the first question. Concerning our strength, our capability, this is what we think. If you look at our cash reserve and also our scale, they are well aligned. At the moment, our cash reserve and bank loan level are both sufficient. Our total debt, HKD 3.2 billion. So net debt level is only HKD 90.5 billion. Compared to the overall scale of the company, that is very healthy level. If you look at other financial indicators of the company, net debt takes up a very small proportion of our total equity. It is only 26.7%. Our equity debt ratio is only 42%. Again, very healthy, and we are well supported for any potential acquisitions or expansions. I think I am able to answer the first part. The second part, well, I can give you one example. Concerning the second question, if you look at our global strategy, we are planning to improve our foothold around the globe. We will continue to identify potential port opportunities. But in fact, at the moment, in terms of overseas investment, we are facing a lot of restrictions due to domestic or local policies. They do not just target Chinese enterprises, but for any type of investment, we are subject to the local rules and legal restrictions. For example, investigation concerning anti-monopoly. Other than the policy front, for mature ports compared to emerging ports, in recent years, as you may already know, for the port and shipping industry, there are many terminal operators. Concerning external expansion, they have been rather aggressive. In the tendering process, they would submit very high bids, so that put certain pressure on the company. We have to reasonably assess the viability of our investment to ensure such investments in terms of their return and other indicators will create long-term return to the company. Sorry, the person speaking is not using a mic. There is no answer. No comment. Or I should say that it is outside the scope of today's presentation. We have many online questions. The next one is from an analyst. In the first half, your profit is very good. What measures have driven it up? What about the second half outlook? This is the situation, if you look at the performance of the first half. Our productivity indicator and financial indicator, they both performed rather well. So while we faced many challenges for the port and shipping industry, in general, things have been complicated and ever changing, and the global economy presented so many uncertainties. Still, in recent 2 years, while we have been affected, for example, trade protectionism and regional conflicts, all of these factors have created peer pressure. In order to control and prevent such risks and alleviate such adverse impact on us, we have deepened our operations and management. We continuously optimize our allocation of resources and optimized our processes to enhance the overall tenacity of our operations. So we can look at this on 2 things. In terms of operations, our total throughput increased by 6.4%. Because productivity has been greatly enhanced, our revenue also rose by 13.6%. Gross margin also improved. If you look at our financial performance through a number of measures and cost control to suppress financing cost, what we have done has shown rather prominent results. In the first half, net financing cost dropped by 14%. If you look at our measures on both fronts concerning optimization in the first half, our financial results, especially for attributable profit, increased by 30.6%. Among this, in PRD region, Guangzhou Nansha, Yantian ports, their profits increased by 56.8% and 4.9%. For Spain, our profit went up by 68.6%, a very good performance. This is the end of today's presentation. Thank you for your long-term support and concern. If you have further inquiries, please contact our PR team.