COSCO Marine Holdings (601919) 2024 Quarterly Report Comments: The profits of the Red Sea incident are initially realized, and the price rise in the off-season may increase the dividend
event:
On April 30, 2024, COSCO Marine Holdings released the first quarter report of 2024: the company's operating income in the first quarter of 2024 was 48.269 billion yuan, up 1.9% year on year; Net profit attributable to the parent company was 6.755 billion yuan, a year-on-year decrease of 5.2%; Non net profit attributable to the parent company was 6.724 billion yuan, a year-on-year decrease of 5.2%; The freight volume of container shipping business was 6.027 million TEUs, up 10.5% year on year.
Key investment points:
The Red Sea incident boosted the freight rate, and the company's performance initially realized that the Red Sea bypass since the end of last year has significantly improved the fundamentals of the container transport market and significantly boosted the container transport freight rate. According to Clarkson's data, in 2024Q1, the average of China's export container freight composite index (CCFI) grew 51.2% month on month, and the average of Shanghai's export container freight composite index (SCFI) grew 84.6% month on month. The net profit attributable to the parent company increased by 277.6% month on month, and the performance was initially realized.
The situation in the Middle East continues to be tense, and the price rise in the off-season may increase the dividend distribution and the Red Sea detour may continue.
Recently, a series of events between Israel and Iran, as well as Iran's ship arrest, have put the situation in the Middle East under tension; Husai's armed attack on the Red Sea continues. At the same time, the industry has set off a "rising tide" in the off-season. According to CCTV Finance (2024/04/22), recently, leading shipping companies such as Maersk, Dafei and Hebrot have increased their prices, and some routes have increased by nearly 70%.
The range of price adjustment routes is mainly concentrated in the United States, South America, the Red Sea and other directions, and the company may benefit. If the Red Sea incident runs through 2024, the company's performance and dividends may further increase.
Profit forecast and investment rating COSCO Shipping Holdings is a world leading integrated container transport service provider. Based on the industry's latest situation in the Middle East and the trend of freight rates, we have adjusted the company's profit forecast. It is estimated that COSCO Shipping Holdings' operating revenue in 2024-2026 will be 221.664 billion yuan, 184.149 billion yuan and 204.09 billion yuan respectively, and the net profit attributable to the parent company will be 29932 million yuan, 17.062 billion yuan and 19.972 billion yuan respectively, corresponding to PE of 6, 11 and 9 times. Based on the continuous tension in the Middle East and the continuous impact of the Red Sea incident on the container shipping market, maintain the rating of "overweight".
Risk tip: The Red Sea detour will end quickly; The price war in the industry exceeded expectations; The company's operating performance/dividend did not meet expectations; Exchange rate fluctuation risk; Geopolitical risk; Safety accidents.
