COSCO SHIPPING Ports Limited (1199) Earnings Call Transcript & Summary

Shareholders, investors, analysts, good afternoon. Thank you for joining COSCO SHIPPING Shipping Port's 2024 Full Year Results Investor Presentation. This presentation is taking place both online and offline. We have Mr. Tao Zhu, Chairman of the Board. Vice General Manager, Mr. Yipeng Chen, Chief; Accountant, Mr. Fengnian Zhao. 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. Tao Zhu.

Investors, analysts, media friends, ladies and gentlemen, good afternoon. I am the Chairman of the Board, Tao Zhu. 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 5 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 USD 1.503 billion. EBITDA was USD 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 macro economy 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 present -- let me invite Mr. Zhao 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. So by replacing existing debt and optimizing debt structure for the whole year, our net finance cost decreased by 13.8%. So due to an improvement in the debt structure, profit 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 remained unchanged at 40% with dividend of USD 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 remained above 40% for the 3 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 transshipments, 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 a 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 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. CSP Spain successfully attracted new routes from the COSCO SHIPPING dual brands and other shipping lines and we'll 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 Abu Dhabi Terminal, we continue to strengthen the trunk and feeder routes and steadily improve its role as the 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%. So efficiency improvement has been enhanced. PCT 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 PCT's hub position in the Mediterranean region. As the situation comes down, PCT terminal will also recover. Now let's take a look at the profit situation. Full year terminal profit amounted to USD 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 USD 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, Hubei 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 USD 63.95 million for the year. Compared with the year-on-year situation in the first 9 months, Q4 year-on-year performance improved significantly. In 2025, we'll continue to strengthen our international hub ports, promote Abu Dhabi terminals hub and spoke network strengthen warehousing, supply chain synergies and other initiatives to promote cargo flow and enhance the terminals hub capacity in the Middle East. At PCT, 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. CSP's main terminal achieved a record high volume of containers since ITS acquisition and became one of the major ports of core for Ocean alliance vessels for the Western Mediterranean. At Zeebrugge Terminal, we will 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. Strengthened cooperation with the Ocean Alliance continued 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 USD 1.01 billion, of which RMB accounted for approximately 47%, euro 22%, USD 24%. Total debt amounted to approximately USD 3.11 billion, of which RMB accounted for approximately 32%, euro 16%, USD 49%. Capital expenditure amounted to approximately USD 630 million. Of this amount, approximately USD 95.8 million was spent on investments. About USD 540 million was spent on fixed assets, mainly on CSP Chancay and CSP Spain amounting to approximately USD 420 million and USD 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 cost, 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 cost 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 to go through a business review of the company.

Thank you, Mr. Zhao. For the detailed explanation of our company's financial performance. Investors, media friends, good afternoon. Now let me introduce the performance of the -- 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 throughput 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 Southwest Coast regions. In the Yangtze River region, CSP Wuhan and Nantong terminals performed particularly well. And 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 sea rail intermodal transportation corridor. This year, we'll continue to strengthen its hub function in the middle and upper regions 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'll 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 the 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 8 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 also saw different degrees of growth. Focusing on customer needs, the company accelerated its marketing development efforts, utilized advantages of its global terminal network and continue 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'll 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'll 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'll 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 CFSIS, 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'll 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 leap forward -- 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 2.2x 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're also focused on the 2 parts 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 rigorously promoting the construction of port digitalization. Therefore, we'll continue to focus on building a replicable and scalable intelligence and efficient type of modernized ports and move towards large-scale application, forging sustainable and high-quality development. Now I will invite Chairman Zhu 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. So these are our 2 wheels. The company's development strategy is centered around 4 areas. First, centered on Belt and Road Initiative, achieved new breakthroughs in globalization. We'll 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 Terminal in Egypt were completed successfully. We'll 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 noncore terminal assets and intensify our efforts asset to dispose off and revitalize nonstrategic inefficient and ineffective assets with low business synergy so as to enhance efficiency of resource utilization. Second, focus on lean operations and improve efficiency. We'll 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 development. The company has actively participated into the group's shipping plus Ports plus Logistics and Hub plus channel plus network integration policies. As value chain reconstruction accelerates and the reorganization of shipping alliance evolves, we'll 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 3-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 -- 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. So 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. So 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 remained aspirational both 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'll continue to improve energy efficiency, promote electrification and utilize more renewable energy. We are confident that it will maintain strong competitiveness on the journey of promoting green and low-carbon transformation of the port industry and contribute to realization of a greener and more sustainable future. So we have an 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 5 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 and Peru was 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'll 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'll 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'll optimize distribution of logistics resources, improve logistics infrastructure and build up the ability to provide full chain services. Third, enhance operational capacity. We'll expand value-added services such as bond warehousing and ports and develop full supply chain services for specialized products such as automobile, mineral ores and fruits. Fourth, we'll 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'll 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'll 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. So online/off-line participants are welcome to ask questions. Please state the company you represent before you ask questions. So questions, please.

I am from Goldman Sachs. I have 2 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. So what about SP output -- ASP output? Now you are negotiating about new contracts. Last year, volume performed quite well. This year, will that be expectation of price increase? Second question about green and smart ports. Right now, many containers use dual-fuel new vessels. So regarding LNG and methanol and other fuel at your ports, will there be other infrastructural related investments?

I will take the first question. And then -- well, you are mainly asking about cargo volume and the economy projections for this year. So we think that in 2025, about global industry, as said in the presentation, will maintain a mild recovery momentum. So the objective factors have been analyzed in our presentation already. Now we would cite from some authoritative organizations forecast. 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. So for Chinese ports for domestic and international -- for domestic policies, they will accelerate the growth. In 2025, domestic demand will be our major driving force for growth and Ministry of Transport and also other agency studies in 2025, China port container throughput will be 345 million TEU. Comparing with 2024, it will be up by 4%. So this is higher than the average 2.8% growth, as stated earlier. For overseas demand, there is tariff uncertainty. So 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% -- 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 would be 3.8%, higher than the average 2.8% of the global number. And Black Sea and also Africa, Middle East, Mediterranean Sea, growth will be 6.6%. For southwest -- northwestern part, 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. So 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 so 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 BRIC 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 play -- continue to play important role. Thank you. Mr. Chen 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 optimized our processes. So in terms of the terminal operations, we reduced our task so that our energy efficiency can increase. Besides, through some changes and moves, our ports energy consumption can come down further. Number 3, 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. And last year, in Xiamen Ocean Gate terminal, that was the first vessel with LNG injection. In Nantong terminal, we also replenished energy for some vessels. At other terminals, we will continue to make or arrange low-end carbon facilities building.

Here is a question from online analysts 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's the first question.

Yes, let's 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, well, it is expected that in March and April this year, there might be a 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 1 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.

Second question. Last year, the company's CapEx, how was it allocated? And 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 USD 633 million divided into 2 parts. First, terminal fixed asset investment. USD 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 USD 958 million. For 2025, our estimated CapEx would be USD 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 2 parts. First part, fixed asset investment USD 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. USD 313 million, that is our projected scale.

Right. Let's see whether there are investors on site who have questions.

I am from Japanese News Agency. My question is regarding Chang-ho and U.S. BlackRock transaction or settlement. 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 they -- after their announcement, there are so many reports in Chinese media, but then 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?

Right. I know that recently, Chang-ho, that is Whampoa Hutchison sold port or is going to sell or port assets. And 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 friends and participants to focus on COSCO SHIPPING Port's own business and development. Now as listed company concerning external uncertainty, well 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. That part is certain. So 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.

Here is a question from UOB 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?