China COSCO Shipping has just released its third-quarter performance forecast. It is expected to achieve a net profit of 97.2 billion yuan in the first three quarters, a year-on-year increase of 43.7%. This money-making ability is enviable, with a daily profit of 360 million yuan, and there is no suspense that this year's annual profit exceeds 100 billion yuan.
A company makes profits to a scale of 100 billion yuan, which is generally the patent of the bank. In 2021, only seven of the A-share have net profits exceeding 100 billion yuan. The four state-owned banks, as well as China Merchants Bank and Ping An , account for six places. The remaining 1 place belongs to China Mobile. It can be seen how difficult it is to achieve a scale of 10 billion yuan. China Petroleum still had this profitability nearly 10 years ago.
Zhongyuan Overseas Control has such strong profitability, but its recent stock price performance is also very average. The stock price has been falling since July last year, falling from a high of 25 yuan to 11 yuan today, a drop of up to 55%. September saw accelerating decline, with a drop of more than 22%.
Now the static price-to-earnings ratio of COSCO Shipping is only 2 times, the dynamic price-to-earnings ratio is 1.36 times, and the rolling price-to-earnings ratio is less than 1.5 times. This valuation level is lower than that of banks, and the price-to-book ratio is less than 1 times, which means that the current valuation is calculated based on the price of bankruptcy liquidation.
The company's cash in the account is as high as 250 billion yuan, which is still the data from the first half of this year. Since it made another 20 to 30 billion yuan in the third quarter, the cash in the account is probably more than 270 billion yuan. The valuation of
is a bit confusing. If it is another company, there is 250 billion cash on the account, and the market value is less than 180 billion. Such a listed company should be a good target. If you borrow 180 billion to buy the company and then use the cash on the account to pay back the account, is it an opportunity to make a fortune?
But if you think so, you are thinking too much. I think there are two reasons why China COSCO Shipping's valuation is low. The first is that the company belongs to a cyclical industry, that is, it will not open for three years. If you open for three years, you will have to eat for three years. China COSCO Shipping is a shipping company and an industry that depends on the weather. The last time you make a lot of money was in 2007, with a net profit of 19.1 billion and a net profit of 10.8 billion in 2008. However, in 2009, the net profit of deducting non-operating items in 2009 was a loss of 11.9 billion. Although it turned from losses to profit in 2010, the net profit of deducting non-operating items from 2011 to 2016 was a continuous loss. The cumulative loss in the past six years was 40.3 billion. It can be said that before this, China COSCO Shipping made not much money.
COSCO Shipping really made a lot of money since 2020. The new crown epidemic has led to China becoming a global production center, and China's products are continuously transported to the world, and shipping prices have also risen. The net profit in 2020 was 9.9 billion yuan, and the net profit in 2021 increased by 800% year-on-year to 89.3 billion yuan. The net profit in the first three quarters of this year increased by 43% year-on-year, and the annual net profit is expected to exceed 120 billion yuan. But this is a cyclical industry after all, and the turning point will come, but everyone doesn’t know when it will come. Once the turning point comes, it may be a state of huge losses.
The second reason should be the ownership system. COSCO Shipping is a state-owned enterprise and a state-owned enterprise controlled by the State-owned Assets Supervision and Administration Commission. It is precisely because of the attributes of state-owned enterprises that the market valuation is very low. According to the current situation, the company has 250 billion cash in its account and its market value is less than 180 billion, but can you really buy it with 180 billion? In fact, it can't be bought because this is a state-owned enterprise. The shares in the hands of the SASAC will not be sold to you, nor will they be sold to you for a price of 180 billion.
Modern financial valuation is also flawed. Companies like COSCO Shipping really give you 180 billion. Can you copy it? In fact, it cannot be copied. If you really want to copy it, the cost will be much more than 180 billion. Also facing the embarrassment of valuation are companies like China Petroleum. The valuation is only 0.75 times based on the price-to-book ratio, and the dynamic price-to-earnings ratio is only less than 6 times. However, companies like China Petroleum are the most important tools of the country. The real value is much higher than the current market value.
But the secondary market just cannot reflect it. This is probably because investors in the secondary market cannot enjoy their value. To put it bluntly, these nationally important enterprises do not serve shareholders in the secondary market, but serve this country. As for the capital market, it is to raise funds for them.Of course, there are exceptions here, that is, liquor companies, such as Kweichow Moutai , whose valuation is not low. This is probably because Kweichow Moutai has a very stable ability to make money and has a lot of dividends.
I thought about it briefly. The valuation of listed companies in private enterprises is more likely to be overvalued, because the interests of shareholders in the secondary market, institutional investors and major shareholders of the company are likely to be consistent. Because the stock price is high, everyone can reduce their holdings. This is a group that directly benefits. However, state-owned enterprises are different. The SASAC will basically not reduce its holdings, because what they want is controlling rights, not the short-term benefits obtained by reducing their holdings in stock prices.
My point of view may not be correct. Dear readers, let me talk about your point of view. What is the reason why China COSCO Shipping is very low?
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