Earnings Call: H2 2024

Mar 21, 2025

Summary

Steady growth in 2024 with throughput up 6.1% and revenue up 3.3% year-on-year, despite global uncertainties. Focus remains on emerging markets, digital and green transformation, and optimizing global terminal portfolio. CapEx for 2025 is set at $967 million.

Shareholders, investors, analysts, good afternoon. Thank you for joining COSCO SHIPPING Ports' 2024 full year results investor presentation. This presentation is taking place both online and offline. We have Mr. Zhu Tao, Chairman of the Board. Vice General Manager, Mr. Chen Yipeng. Chief Accountant, Mr. Zhao Fengnian. In this presentation, the management will first present the company's 2024 results and company's outlook, and then they will take your questions. Now, let me defer to the Chairman of the Board, Mr. Zhu Tao. Thank you. Investors, analysts, media friends, ladies and gentlemen, good afternoon. I am the Chairman of the Board, Zhu Tao. Thank you for joining our company's 2024 full year results investor presentation. On behalf of the company, I would like to express my sincere gratitude and my warm welcome. At the same time, thank you very much for your long-term support and interest for our company, and I hope that through this opportunity, we can have more communication and exchange. Today's presentation will cover five parts. One, key highlights. Two, financial performance. Three, operational review. Four, strategy and outlook. To conclude, there will be a Q&A session. First, let me go through the company's key highlights for 2024. In 2024, global economy continued to recover moderately and trade volume showed a gradual rebound, but subject to uncertainties such as tariffs and geopolitical turbulence, the global economy is expected to be on a medium to low growth track this year. Despite many difficulties and challenges, China's economy has remained stable in general, and its foreign trade, as well as global market share, has remained stable. According to the General Administration of Customs, total value of China's imports and exports of goods in 2024 amounted to RMB 43.85 trillion, a year-on-year increase of 5%. Among them, value of exports reached a new high of RMB 25.45 trillion, up 7.1% year-on-year. While the total value of imports amounted to RMB 18.39 trillion, up 2.3% year-on-year. In 2024, the company achieved steady growth amidst many challenges. Total throughput rose by 6.1% year-on-year to 144 million TEU. Revenue was up 3.3% year-on-year to $1.503 billion. EBITDA was $843 million, up 2.3% year-on-year. Finance costs decreased by 13.8% year-on-year. Profit from JVs and associates rose by 7.5% year-on-year. Overall, the global macroeconomy is expected to grow steadily this year, and the International Monetary Fund forecast in its latest World Economic Outlook report that the global economy growth rate will reach 3.3%. With the resilience of the supply chain, policy support and breakthroughs in emerging areas, the scale of China's imports and exports is expected to maintain steady growth. The trade structure is expected to be further optimized. Long-term development trend remains unchanged, and the economy will continue to grow in a positive direction. Now, let me invite Mr. Zhao Fengnian to present the second part, that is the company's financial performance in 2024. Thank you, Mr. Zhu. Ladies and gentlemen, investors, media friends, good afternoon. Now, let me present the second part, and that is the company's financial performance for the whole year. 2024, our operations are good, and we have revenue up 3.3% year-on-year. Although gross profit margin decreased slightly by 1.2%, EBITDA was up 2.3% year-on-year. Net finance cost. By replacing existing debts and optimizing debt structure for the whole year, our net finance cost decreased by 13.8%. Due to an improvement in the debt structure, profits from joint ventures and associates grew 7.5% year-on-year due to improved management and control over non-subsidiary terminals. Profit attributable to equity holders of the company declined by 8.9% year-on-year. Dividend payout ratio remains unchanged at 40%, with dividend of $0.034 per share for 2024. Next, let's take a closer look at the revenue and gross profit of subsidiary terminals. Revenue was up 3.3% year-on-year, and although GPM decreased slightly by 1.2%, overall performance was stable. For subsidiary terminals in China, revenue rose 1.8% year-on-year, and gross profit margin remains above 40% for the three major terminals. In the future, we will continue to build a new model of port and supply chain at Xiamen Ocean Gate Terminal to promote the growth of local and trans-shipment container volume and strengthen regional hub function, enhance the operating capacity of Tianjin Container Terminal, increase the volume from nearby cargo sources to Tianjin ports, fully grasping the new domestic demand, develop the bulk collection and change of cargo sources at Guangzhou Nansha Terminal, continuing to strengthen logistics efficiency and network service capability. Improving the Yangtze River and inland river feeder network, strengthening foreign export cargo sources, enhancing the brand influence of Nantong Tonghai Terminal, expanding cargo sources from railways in Wuhan Terminal, optimizing route capacity allocation, and achieving a significant increase in throughput volume. As for overseas subsidiary terminals, revenue increased 4.8% year-on-year. COSCO SHIPPING Ports (Spain) Terminals successfully attracted new routes from the COSCO SHIPPING dual brands and other shipping lines, and will continue to focus on increasing rail shipment volume and utilize its regional advantages to play a more important role in the land and sea corridor between China and Europe. At CSP Abu Dhabi Terminal, we continue to strengthen the trunk and feeder routes and steadily improve its role as a Middle East hub port, driving revenue and GPM growth. Gross profit margin was higher than the company's average level for the first time. It was 32%. Efficiency improvement has been enhanced. Piraeus Container Terminal in Greece was mainly affected in the short term by the Red Sea incident. However, the company strengthened its infrastructure upgrading and marketing development so as to continue to consolidate Piraeus Container Terminal's hub position in the Mediterranean region. As the situation calms down, Piraeus Container Terminal will also recover. Now, let's take a look at the profit situation. Full-year terminal profit amounted to $424 million, down slightly by 1.7% year-on-year, and the overall situation improved with a significant year-on-year growth in terminal profit in Q4. In terms of terminal profit in China, it amounted to $361 million for the full year, up 1.9% year-on-year. In Q4, terminal profit rose 7.6% year-on-year. We'll continue to work hard in the Chinese market, focusing on areas including Beijing-Tianjin-Hebei, synergistic development, Yangtze River Delta integration, GBA area, Western China new land and sea corridor. We'll continue to optimize our asset layout and enhance asset quality. Profit from overseas terminals amounted to $63.95 million for the year. Compared with the year-on-year situation in the first nine months, Q4's year-on-year performance improved significantly. In 2025, we'll continue to strengthen our international hub ports, promote CSP Abu Dhabi Terminal's hub and spoke network, strengthen warehousing supply chain synergies and other initiatives to promote cargo flow and enhance the terminal's hub capacity in the Middle East. At Piraeus Container Terminal, we responded appropriately to the adverse impact of the Red Sea crisis throughout the year and will further strengthen our position as a Mediterranean hub port in collaboration with COSCO SHIPPING dual brands and other shipping alliances in the future. COSCO SHIPPING Ports (Spain) Terminals achieved a record high volume of containers since its acquisition and became one of the major ports of call for Ocean Alliance vessels for the Western Mediterranean. At CSP Zeebrugge Terminal, we'll promote the development of feeder routes, railroad, warehousing, and other ancillary services to build a new gateway hub port in Northwest Europe. In the future, we'll help to integrate domestic and international drivers of growth, focus on key regions such as Southeast Asia, South America, Europe, Middle East, and Africa, strengthen cooperation with the Ocean Alliance, continue to deepen synergy between ports and shipping lines, and promote linkage of hub-and-spoke network, domestic and foreign trade, ultimately resulting in a more efficient terminal portfolio. In terms of the balance sheet, as of the end of 2024, the company's cash and bank deposits amounted to $1.01 billion, of which RMB accounted for approximately 47%, EUR 22%, USD 24%. Total debt amounted to approximately $3.11 billion, of which RMB accounted for approximately 32%, EUR 16%, USD 49%. Capital expenditure amounted to approximately $630 million. Of this amount, approximately $95.8 million was spent on investments. About $540 million was spent on fixed assets, mainly on CSP Chancay and COSCO SHIPPING Ports (Spain) Terminals, amounting to approximately $420 million and $25.42 million respectively. Net debt to equity ratio was 29.6% and has been stable at a low level in recent years. In the future, we'll continue to capitalize on the advantage of our low leverage and focus on emerging markets with high development potential. As for average bank borrowing costs, it dropped to 5.21% last year. We enhanced overall efficiency of capital utility, appropriately controlled capital expenditures, and strictly controlled the level of debt. At the same time, we strengthened centralized management of capital and debt and internal financing, further expanded financing channels, optimized debt structure, and took advantage of the differences in the market and the domestic and overseas financing policies to replace the loans with high interest rates. Through these measures, we strengthened capital planning and management, took advantage of our scale, and reduced our financial costs as a whole, realizing a year-on-year decrease of 13.9% in net financial costs, and enhancing profitability of our terminals on all fronts. Now, let's invite Mr. Chen Yipeng to go through a business review of the company. Thank you, Mr. Zhao Fengnian, for the detailed explanation of our company's financial performance. Investors, media friends, good afternoon. Now, let me introduce the performance on the operational side. In first half of the year, company's total throughput reached 144 million TEU, up 6.1% year-on-year, with increase in all regions. Total throughputs of China terminals reached 110 million TEU, up 6.5% year-on-year, mainly driven by the strong growth of the Bohai Rim, Yangtze River Delta, and South West Coast regions. In the Yangtze River region, CSP Wuhan Terminal and Nantong Tonghai Terminal performed particularly well. In the future, CSP Wuhan Terminal will capitalize on its advantages in rail-water intermodal transport to become a hub port in the region. Total terminal throughput in overseas regions amounted to 34.22 million TEU, up 4.5% year-on-year. Last year, the company grasped the opportunity of inventory replenishment in Europe and the U.S. to respond to the restructuring of shipping alliances and the Red Sea crisis. This year, the company will continue to closely monitor the market conditions and will continue to improve its commercial terms based on the restructuring of shipping alliances, change of trade flow, the events in the Red Sea, and the increase of new vessels in the market. Equity throughput rose 4.5% year-on-year to 45.32 million TEUs, of which equity throughput of China terminals rose 5.2% year-on-year to 32.8 million TEU, with significant year-on-year increase in the Yangtze River Delta, mainly driven by CSP Wuhan Terminal's sea-rail intermodal transportation corridor. This year we will continue to strengthen its hub function in the middle and upper reaches of the Yangtze River. Equity throughput of overseas terminals was 13.04 million TEUs, an increase of 2.6% year-on-year. In the future, we will continue to strengthen our analysis and research on the pattern of the new shipping alliances, seize opportunities such as the strengthen of Global South cooperation, and tap into the synergy of existing network and resources to create differentiated and integrated services. In 2024, container volume of subsidiary terminals as a whole was positive, up 6.2% year-on-year, with largest contribution coming from domestic routes, up 17.1% year-on-year, with foreign routes throughput up 5.8%. Throughput of the company's eight major subsidiary terminals showed steady growth. Benefiting from the dual brand strategy, COSCO SHIPPING Lines and OOCL contributed significantly higher volumes, up 4.5% and 6.9% respectively. In addition, we also took opportunity of route changes and adjustments to strive for more routes to call at the company's terminals. Among them, volume of containers from 2M plus THE Alliance grew the fastest year-on-year, up 14.3%, while the volume of containers from other shipping alliances all saw different degrees of growth. Focusing on customer needs, the company accelerated its marketing development efforts, utilized advantages of its global terminal network, and continued to build a diversified customer portfolio. Looking ahead, we will implement strategies based on market conditions. On the domestic front, we will prioritize the renewal of agreements based on the volume in accordance with the industry benchmarking and the development of the terminals. Overseas, we will continue to add CPI clauses to our agreement renewals and link our rates to local price changes to resist pressure of rising costs and continue to optimize the commercial terms of our agreements. We will also focus on synergy between ports and shipping lines, optimize business negotiations, strengthening cost control measures, and increase core competitiveness. We will take into account the needs of key industry customers, give full play to our own strengths, provide better services for upstream and downstream industries, and strive to achieve synergies and maximize value for all parties. In terms of integrated development, the company has accelerated construction of a globalized logistics supply chain ecosystem, enhancing competitive advantage with high-quality service levels and improved supply chain efficiency and resilience. In the future, we will continue to build a new generation of integrated logistics hub ports, and the following are a few of the existing key projects. One, Xiamen CFS project. Xiamen Ocean Gate Terminal has pushed forward with the construction of a railway line into the port area and has opened a direct cross-border e-commerce route to Taiwan. In November 2024, Xiamen Haicang Supply Chain project was put into use. Second, Abu Dhabi CFS IS, actively building a large-scale logistics center in the Middle East with the UAE National Railway Company, opening up the land channel for rapid distribution in the Gulf countries and providing customers with local rail liner services to the whole territory of the UAE. With formal launch of some new projects such as photovoltaic this year, the yard will be responsible for the whole operation of the destination port of the project, which is expected to bring considerable cargo volume. Third, Zeebrugge will be committed to the construction of a distribution hub for paper pulp, as well as overseas warehouses for new cargo types such as solar power panels and home appliances, and build a distribution center for automotive exports to Northwest Europe. We will continue to increase development of emerging markets, leading industry customers, provide customized full-chain solutions for customers, build a highly efficient, safe, and reliable supply chain logistics system, and promote globalization and scale development to achieve a new leap forward. We continue to deepen integration of AI and other innovative applications with real-life business scenarios, accelerating the company's leading pace in the construction of smart ports, continue to promote automated truck operations, and achieve economies of scale, while accelerating construction of a digital ecosystem that connects upstream and downstream industry players to improve both the efficiency and scale of automated operations. To increase pace of integration of new technologies and increase automated operations at subsidiary terminals, we have driven commercial implementation of driverless container vehicle projects at Xiamen, Wuhan, Quanzhou, Chancay, and Abu Dhabi terminals, with a total handling volume in 2024 increasing 2.2 times year-on-year to 675,000 TEU. The implementation of the MIS information management system continues to deepen management analysis output capacity to ensure timely and accurate data collection to provide support for the company's decision making. At the same time, the EAM system can assist in carrying out daily management of equipment and assets. With in-depth application of the EAM system in the terminals, the standardization of processes and standardization of management can be achieved, and the results of cost reduction and efficiency gains are remarkable. We are also focused on the two paths of digitalized intelligence and green and low carbon development, fostering new sources of growth at our ports, supported by the implementation of core systems such as TOS. In the future, we will continue to push forward with the implementation of TOS system at suitable terminals. Upgrading from the traditional operation model to the new digitalized operation model requires vigorously promoting the construction of port digitalization. Therefore, we will continue to focus on building a replicable and scalable, intelligent and efficient type of modernized port, and move towards larger scale application, forging sustainable and high-quality development. Now, I will invite Chairman Xu to go through our company's strategic plan and outlook. Thank you, Mr. Chen, for explaining our company's 2024 major operations. Now, I would walk you through our company's strategic plan and outlook. As our global portfolio continues to grow, we have continued to optimize allocation of resources and accelerate pace of innovation to improve operational efficiency. These are our two wheels. The company's development strategy is centered around four areas. First, centered on Belt and Road Initiative. Achieve new breakthroughs in globalization. We will continue to grasp the opportunities of globalization, strengthen core business, focus on development potential and opportunities in emerging markets, and optimize layout of our global portfolio. In 2024, Chancay Terminal in Peru was opened smoothly, and the acquisition of equity in the Port of Laem Chabang in Thailand and Sokhna Port in Egypt were completed successfully. We will continue to accelerate our investment in terminals in Southeast Asia, South America, Africa, and other regions through outward mergers and acquisitions and entrustment of management. At the same time, we will strategically dispose of non-core terminal assets and intensify our effort to dispose of and revitalize non-strategic, inefficient, and ineffective assets with no business synergy, so as to enhance efficiency of resource utilization. Second, focus on lean operations and improve efficiency. We will seize the new development trends in the industry, strengthen cooperation between ports and shipping lines, foster internal and external synergy, and make sustained efforts to achieve progressive increase in business volume. Meanwhile, through flexible and commercial terms and differentiated services, we will seize the opportunities brought by the release of capacity and guide overall improvement of container volume, revenue, and efficiency. For cost control, we will rely on initiatives such as COE on-site research and specialized cost control measures by leveraging our competitive advantages in scale. Third, cater to customer demand and growth based on integrated developments. The company has actively participated into the group's shipping plus port plus logistics, and hub plus channel plus network integration policies. As value chain reconstruction accelerates and the reorganization of shipping alliance evolves, we will remain in touch with the upgrading of the industry structure and transformation of customer demand, continue to build an integrated supply chain logistics service that seamlessly connects routes, terminals, yards, and land transportation, and strive to optimize allocation of resources to increase the pace of development in emerging markets and for major customers in the industry. Fourth, we are committed to technological innovation to form new engines for growth. We have gradually established the company's digital supply chain system, completed the company's short, medium, and long-term three-phase development and implementation plan in AI, and improved AI knowledge level of the entire staff through training and other initiatives. We have also promoted the group's AI project in intelligent port demonstration to create a multidimensional digitalized management model, which will support our green and low carbon development. While expanding its global business, the company has effectively promoted digital intelligence, green and low carbon transformation with remarkable results, enabling the company to achieve its original medium-term energy saving and carbon reduction targets ahead of schedule. In 2024, carbon emission intensity was 35.3% lower than the base year, and energy consumption intensity was 29.5% lower. These achievements are attributed to the company's accelerated green and low-carbon transformation by taking into account the latest scientific and technological innovations. The new targets include striving to achieve carbon neutrality by 2050, 10 years earlier than originally planned, as well as aiming for 55% reduction in carbon emission intensity and 45% reduction in energy consumption intensity by 2035 compared to 2020. Our achievements are attributed to the company's accelerated green and low-carbon transformation by taking into account the latest scientific and technological innovations. In view of the fact that port terminals as basic logistics facilities are one of the key supports to help shipping companies accelerate low-carbon transformation, we remain aspirational, bold and committed on our path to consolidate and enhance our position as the world's leading port logistics service provider. Our new goals fit in with the global and industry low-carbon transition timetable, fully reflecting our company's development philosophy of customer centeredness, pursuit of high quality, and sustainability. Looking ahead, we will continue to improve energy efficiency, promote electrification, and utilize more renewable energy. We are confident that it will maintain strong competitiveness on a journey of promoting green and low-carbon transformation of the port industry and contribute to realization of a greener and more sustainable future. We have impact-driven approach to sustainability. In 2024, we achieved a number of accomplishments, including increased total installed capacity of distributed PV projects to 12 MW. Completed analysis of climate scenarios, providing a scientific basis for addressing challenges of climate change. Launched the world's first port digital integrated energy control platform, which utilizes innovative technology to achieve efficient and intelligent energy management. Four, completed construction of CSP Chancay Terminal, the first green and smart port in South America, which not only reflects our deep understanding and practice of green and smart port construction, but we also actively fulfilled our social responsibility during the construction process by protecting biodiversity of the adjacent wetlands and bird habitats, rescuing animals in the vicinity, and realizing a win-win situation in terms of both economic benefits and ecological benefits. In the future, we will continue to uphold concept of sustainable development, continue to explore and implement new measures, and contribute to building a greener, smarter and more harmonious port industry. We have been deepening our ESG strategy by focusing on the five major areas: governance, resilience, agility, nature, and dynamic. In November last year, witnessed by the heads of state of China and Peru, the ports of Chancay, Peru, were successfully opened, marking the first important gateway port that the company has invested in South America, which is of milestone significance for developing our global port network. We will accelerate the development of Chancay Port to become a first-class hub port on the west coast of South America, and build it into a benchmark project for the new Asia-Latin America land and sea corridor. First, we will focus on developing trunk and feeder lines, strengthening synergy with COSCO SHIPPING dual brands and other shipping companies, and make joint efforts to build an efficient route network from the coast to the inland areas and from Peru to various Latin American countries. Second, we will optimize distribution of logistics resources, improve logistics infrastructure, and build up the ability to provide full chain services. Third, enhance operational capacity. We will expand value-added services such as bonded warehousing in ports and develop full supply chain services for specialized products such as automobile, mineral ores, and fruits. Fourth, we will promote development of digitalization projects, build the first overseas port to use 5G network to transmit production and control-related data as well as voice communication, help to improve automation level of the port, and build the first smart port in South America. Looking ahead to 2025, we will actively seize development opportunities, remain responsive to market demand, focus on emerging markets and regional markets, especially the major regions and markets where major shipping alliances have added new routes and capacity, and focus on investing in global resources upstream and downstream of the industry chain. Although the uncertainty of global economic recovery still exists, China's economy has a stable foundation, many advantages, strong resilience, and great potential, and the supporting conditions and basic trend for long-term improvement have not changed, helping us to steadily realize high-quality development. Factors such as the expansion of BRICS countries, the broadening prospects of South-South cooperation and Middle East cooperation, and the new industries and new modes of business, global trade have brought new growth momentum. COSCO SHIPPING Ports will take advantage of the new trends of the global economy and trade, use our global portfolio as the core development strategy, and continue to improve 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, and accelerate progress toward the goal of constructing a customer-centered, global leading integrated port logistics service provider. This is all I have to say about the market and the company's key operating performance in 2024. Once again, we would like to thank our investors and journalists for their support for COSCO SHIPPING Ports, and we very much understand your great expectations for the company. In the future, we will keep up with the changes in the global market, make our own contribution to the stability of the global logistics supply chain, and maximize the value for our shareholders through our efforts to improve the company's operating performance. Now, let's move on to Q&A. You are most welcome to ask questions. Thank you. Thank you, management, for your presentation. We will start Q&A session now. Online, offline participants are welcome to ask questions. Please state the company you represent before you ask questions. Questions please. Management, greetings. I am from Goldman Sachs. I have two questions for the management. First, about this year's outlook. Just now, I saw that cargo volume outlook is more or less the same as that of the industry. What about ASP output? Now you are negotiating about new contracts. Last year, volume performed quite well. This year, will there be expectation of price increase? Second question, about green and smart ports. Right now, many containers use dual fuel new vessels. Regarding LNG and methanol and other fuel at your port, will there be other infrastructural-related investments? Thank you. I will take the first question. You are mainly asking about cargo volume and the economy projections for this year. We think that in 2025, about global industry, as said in the presentation, we will maintain a mild recovery momentum. The objective factors have been analyzed in our presentation already. Now, we would cite from some authoritative organizations' forecasts. Now in 2025, according to the forecast, global container throughput growth will be 2.2%, and the market will be at a low to medium growth rate corridor. For our company, we have Chinese ports and overseas ports. For Chinese ports, for domestic policies, they will accelerate the growth. In 2025, domestic demand will be our major driving force for growth. The Ministry of Transport and also other agencies' studies, in 2025, China port container throughput will be 345 million TEU. Comparing with 2024, it will be up by 4%. This is higher than the average 2.8% growth, as stated earlier. For overseas demand, there is tariff uncertainty. For international routes, the growth will be around 3.0 according to Ministry of the Transport. For internal trade throughput, it will be in the same pace of economic growth, with growth rates of 5.0%. This year, GDP growth target for China is 5.0. For overseas, when external demand improves, well, right now in Europe, there is trade recovery. In 2025, European ports turnover or throughput can maintain steady growth. According to external reports, in 2025, container throughput growth will be 3.8%, higher than the average 2.8 of the global number. Black Sea and also Africa, Middle East, Mediterranean Sea growth will be 6.6%. For northwestern parts, the growth will be 2.5% and 2.9%, roughly the same as average. For major European ports, Rotterdam, Hamburg, they will continue some digitalization and green and low-carbon transformation, which will enhance operating efficiency. For northwestern Europe, their hub status will be enhanced. Europe, Africa, Asia, especially Southeast Asia, emerging markets will deepen trade cooperation. This will drive growth for European ports. For emerging economy, there will be new capital investment. Looking at region and countries, trade growth will be very differentiated. In Asia, it will lead global export growth. For Middle East and South America trade growth, it will be relatively strong. When BRICS countries expanded their cooperation with Middle East, and also China's relationship with major trading partners, it is stable. So in global trade, it will continue to play important role. Thank you. Mr. Chen Yipeng can take your second question. Okay. For your second question, let me briefly answer it. In our presentation, we said already that in relation to green and low-carbon port building in 2024, we basically focused on a few points. First, for digital empowerment, we optimize our processes. So in terms of the terminal operations, we reduce task so that our energy efficiency can increase. Besides, through some changes and moves, our ports energy consumption can come down further. Number three, as said earlier, within port areas where PVs can be built, we have already started some building of PV facilities. In 2024, we have completed around 12 gigawatt PV investment. So with this, for low carbon green development, we have achieved some progress. In 2024, for green low-carbon energy efficiency, it is lower by 35.3% than the benchmark. For future plan, by 2050, we will achieve carbon neutrality 10 years earlier than original plan. So concerning green and low-carbon development of our ports, we focus on ecosystem. For shipping companies, as said earlier, concerning LNG injection in our ports, we are working on LNG injection practice. Last year in Xiamen Ocean Gate Terminal, that was the first vessel with LNG injection. In Nantong Tonghai Terminal, we also replenished energy for some vessels. At other terminals, we will continue to make or arrange low and carbon facilities building. Here is a question from online analyst from HSBC. Two questions. First, for Red Sea incident, it has deepened or upgraded. What will be the impact on your capital portfolio or asset portfolio? What measures will you adopt to respond to the situation? That is the first question. Yes, let us answer the questions one by one. For the Red Sea crisis, actually last year, when we announced results in our 2024 production and operations, a lot of challenges were brought. Last year during results announcement, in terms of our shipping resources layout, we have put in place some proactive measures. After the past year, we have very well responded to the Red Sea crisis and the related impacts to our ports. Early this year, it is expected that in March and April this year, there might be resolution of the problem, but recently there were some ups and downs. No matter what volatility we see, our company and our group, in relation to how to respond to the Red Sea crisis and also the impact on Suez Canal, and also impacts on the shipping industry, we have got mature response measures and reliable practice already. So no matter how the external environment changes, we still have confidence to maintain stable, responsive measures in order to maintain stability and growth of our throughput. In the past one year, when we faced up to the Red Sea crisis, we have accumulated rich experience. So regarding transcending of the Red Sea crisis, we have confidence that we can put in place appropriate responsive measures. Thank you. Second question. Last year, the company's CapEx, how was it allocated? This year, what is the CapEx allocation layout, please, or plan? So this is a question about CapEx. Yes, let me take this question. In 2024, if you look at actual CapEx, last year, actual CapEx was $633 million, divided into two parts. First, terminal fixed asset investment, $537 million, mainly used in Peru Terminal, Spain Terminal, Wuhan Terminal, Guangzhou Nantong Terminal, fixed asset investment. Second, equity investment by the headquarters, that is around $958 billion. For 2025, our estimated CapEx would be $967 million. So this is an annual investment plan, upper range. We will look at the actual progress of various projects to make investment. Now for this budget, it is divided into two parts. First part, fixed asset investment, $654 million, mainly used in our subsidiary terminals like Peru Terminal, Guangzhou Nansha, Spain, Wuhan Terminal, and so on. These are fixed asset investments. Next, head office equity investment, $313 million. That is our projected scale. Thank you. Right. Let us see whether there are investors on site who have questions. Thank you. I am from Japanese News Agency. My question is regarding Changhe and U.S. BlackRock transaction or settlements. Well, there are many ports transaction options. So if you look at your company for this transaction, how do you assess and comment on this transaction? Now, after their announcement, there are so many reports in Chinese media. But the reports or comments were relatively negative. So in face of such comments, what do you say? If that transaction or deal will change, then is your company interested to buy some of their assets? Have you considered that? Thank you. I know that recently, CK Hutchison, that is Hutchison Port Holdings, sold ports or is going to sell port assets. Our society is very concerned about it. Regarding other companies' transactions or deals, please understand that we are a listed company, and it is not convenient for us to comment. Today, in this presentation session, our goal is to enable our friends and participants to focus on COSCO SHIPPING Ports' own business and development. As a listed company concerning external uncertainty, our habit is that no matter how uncertain the external environment is, we will still make use of the dual wheel driving engine to face up to the uncertainty. This part is certain. On our operations and our business, we'll do our best to do a good job. This is our way to face up to uncertainty. Thank you. Thank you. Here is a question from United Overseas Bank of Singapore. The question is: Can you reveal the 2024 throughput, and in the coming few quarters, what is the outlook in relation to throughput? Let's ask Mr. Dipeng to answer the question. Okay, let me reply. In 2024, global economy growth rate had recovered, and also for the manufacturing industry, it has also gradually recovered. In Europe and U.S., there is stock replenishment. Global trade is more positive. Looking into 2025, we believe that global economic growth, according to some authoritative organizations' projection, will be slightly higher than 2024. It will be at around 3.3%. For ports throughput growth, it will be around 2.8%. Given this trend, given this external environment, we will actively seize global development opportunities and cultivate more deeply into the Chinese market. We will focus more on Yangtze River unified development and the Western China Land-Sea Corridor. For Haicang Terminal, we will deepen synergy. Also some feeder and trunk routes network will be strengthened, so that we are able to enhance profitability of our business. At Wuhan Terminal, we will release the water rail intermodal transport advantage in order to capitalize on the advantage. Then we'll use our brand strength to greatly develop or boost growth of inland rail and ports throughputs. In overseas, we'll continue to make investment plan globally to deepen the cooperation relationship, and develop new business model. For CSP Chancay, when the project commences operation, we have already got 3 feeder and trunk network or deployment, so we can shorten from Chancay and Far East delivery timetable or timing. Then we can cover South America, ASEAN, and so on. As a result, we have completed a hub port layout for medium to long term, as shown in the external report. For emerging markets in 2025 to 2028, overall growth rate will be about 4.8%, of which Southeast Asia and Africa growth rate will be 3.5% and 3.3%, respectively. We have confidence that with our cooperation relationship and also new business model development, we can enhance efficiency of the port and our incremental business and scale can increase. Thank you. Here's a question from Sinolink Securities. When port driverless vehicle development is more and more rapid, do you think that you have some room to further control costs? In terms of rent revenue, what benefits will be brought to the company? Thank you. Well, let me respond to this question. Mr. Chen Yipeng, in his presentation, pointed out that in 2024, for our driverless container truck, comparing with 2023, is enhanced by 2.2 times. For driverless container vehicle in our subsidiary terminals, it is in full commercial operation and scale operation. If you look at the results, in 2024, at the end of 2024, we have already completed automated driverless container truck operation by 700,000 vehicles. So we are able to save cost by around 10%-15%. For Xiamen Ocean Gate Terminal, we have used pure EV driverless container truck, and then energy saving reaches a certain level at RBW. So 12 driverless container vehicles and 60 odd driver trucks. On one hand, we can maintain efficiency of terminals, we can lower energy consumption and lower operating costs. Tianjin Container Terminal, so it is fully digitalized in terms of container trucks. In Tianjin Container Terminal, because its operation volume is quite big, so driverless container truck efficiency is very leading. For CSP Wuhan Terminal, it is the most recently built terminal. At the early stage of construction, including the feeder, railroads, and bridge, we have put in place a fully automated solution. So while operation volume increases, when scale reaches a certain level, efficiency and cost saving, and also customer service capabilities will improve. According to preliminary estimates, comparing with old terminals, efficiency will improve 80% or 20%. So overall speaking, we will continue to move towards green, low carbon and energy saving model. We will deepen the use of automated driverless container trucks, and then we will make sure that our scale development can mean efficiency gain and cost savings, and improvement in customer service quality. Thank you. Management, I am from Reuters. Just now, you said that you hope to optimize the global network, and perhaps acquire some core assets. So do you have some initial targets of M&A? If you dispose of some non-core assets, then how big will the scale be? In the U.S., very soon, they will start to implement import tariffs. Have you done some analysis on impacts to your own business and to your customers? Sorry, I did not hear you clearly for your second question. U.S. tariff. Very soon, it will be comprehensively implemented. What kind of impact will be caused to your business and to your customer's business? Let me take your first question first. Because our strategy is to have a dual wheel and striving force, so we will make global resource deployment, and also we will strengthen operation of our own terminals. Our strategy is to become an investment plus building plus operation port operator. So this is different from other companies. In terms of global layout, we have said in our presentation already we will continue to develop and optimize according to international cargo flow and international trade, and also customers' transport capacity investment. We will follow market and users' needs to do our work. Our initial judgment is that the trade structure will see some change. There will be some shifts. So we will continue to have acquisition plan of global resources and ports or terminals, but we are a listed company, we cannot disclose the details. But please rest assured, we will continue to optimize and expand our layout. This is our important strategic support. In the future, for South America, Africa, and Southeast Asia, we will increase our investment and deployment. The second question is, at present, there are some tariff initiatives. Well, if the tariffs are indeed implemented, then I believe definitely there will be some impact. For example, the cargo flow structure will change because the tariff will affect which logistic pathway the trade uses in order to minimize cost. Secondly, in terms of taxation revenue, apart from such trade corridors, then inevitably, there will be cost increase to end consumers. Looking from our part, we believe that tariff adjustment, if it is really implemented, then global supply chain will be further adjusted. Some manufacturing industries will accelerate the shift towards low tariff places. In the medium to long term, well, in the past few years, if you look at emerging Asian markets, there will be some points of growth. Then for that, we will seize this possibility and the potential shifts. In the future, the emerging market will see more regional economic unification. So we will seize the opportunities from supply chain change and also logistics pathway change. Then for our own terminal facilities and operations, we will build more flexible supply chain system. Now, what we need to do is that our products and services, our supply chain option must be more resilient and reliable. In the coming few years, when we face tariff and trade uncertainties, we are in this logistic industry, in this macro environment, so we need to focus on our flexible and resilient adjustments. Thank you. Thank you, management. Because of time, there are many, many online questions. So we will ask an online question from Huatai Securities. So to 2M Alliance and also shipping alliance for global trade and port industry, what kind of impacts will be caused and what will be some impacts on your company? What do you think? From January 1 this year, you can see that shipping companies alliance, since announced last year, has been implemented this year. Maersk and also other companies have started an alliance. So they will use feeder lines to cover small to medium-sized ports. Then for trunk routes, those will be the hubs. MSC will work with THE Alliance. Their model is to make use of a lot of direct routes to cover more ports to satisfy customers' need for stability and time. So if you look at these alliances, looking at their concepts and unique characteristics, you can see that nowadays customers' trade needs are diversified, and they have personalized needs for supply chain as well. So basically, these are two different models of the two alliances, but for the two different models, I think they can satisfy customers with needs. Now for customers' needs, they are very diversified. As a result, there will be different operation models for different alliances because they serve different customers. Looking at the impacts on ports, well then, there will be major adjustments of ports along the route. For global competitive landscape, there would be quite big change. On one hand, for core ports and core hub ports status, they would be more significant. International transshipment volume will be increased because they choose 10 to 11 major hub ports in the world. That means transshipment cargo volume will go up. On the other hand, for non-hub ports, they will face risk of marginalization. So they have to rely on trade within the region to sustain business. Then for the differentiation and diversion of these shipping alliances, port service has to be upgraded. Different alliances' needs will have to be met. For hub, they have to deliver high-quality transshipment service and optimize vessel turnover efficiency to meet shipping companies' needs. For the other ports, then they will deliver ship direct route service and other unique services to achieve differentiation and customization needs of customers. For COSCO SHIPPING Ports, shipping alliances adjustment on one hand brings challenges and also opportunities. So MSC shipping companies cooperation will see some new opportunities. In the past, they were in the alliance, but now no longer the case. This is an opportunity for us. Then after the 2M arrangement, OA, our market share will be 35%, becoming the biggest shipping alliance globally. So we will get customers' trust. For COSCO SHIPPING Ports, our parent company is the major constituent of the Ocean Alliance, so we have confidence that with these shipping alliances' new developments, we can make adjustment in a targeted way to our service and products. At the same time, we will actively maintain the existing volume and strive for new opportunities. At the same time, relying on the OA alliance, we will strengthen the backup strength in order to achieve new business breakthroughs. Thank you. Thank you, management. Because of time, we will take the last question. So the chance is given to participants on site. Management, greetings. I am Chi Cheng. Now, I have a follow-up question on the Hutchison Port acquisition. I am not asking you to comment on another company's deal, but as you said earlier, for overseas expansion, for Southeast Asia and Africa, there are good opportunities. So in that case, Southeast Asia and Africa also have many good ports. So my question is, when it comes to their asset package, is there any chance of acquisition in the future? As a listed company, I can say that whatever is in line with our strategic need, whatever is in line with our company's development, whatever can enhance our customer service and experience, we will be interested. Thank you. Thank you, management. This is the end of today's presentation. Oh, sorry. Let's take the last question because I have seen that she has raised her hands a number of times. Yes, my name is Wang Xiaoqing. My question is about overseas layout. Just now you talked about overseas M&A. In the past, you used minority share investment model. Then in South America, Africa, are you going to do overall M&A? For this year's CapEx of 300 odd million investment, this doesn't include future overseas M&A, right? Can I clarify with you this point? As investment, there will be diversified models. As I answered an earlier question, whatever is in line with our strategic direction, overseas layout is important to us. We will be interested. So I think no matter whether it is M&A or direct investment or building, do we invest in greenfield or brownfield terminal, minority shareholding or controlling shareholding? For different targets, I think there should be different options and solutions. Thank you. Thank you, management. This is the end of today's results announcement. Thank you for your interest and support all along for our company. Thank you.