Known as the "King of Shipping" COSCO Shipping Holdings (601919.SH; 01919.HK)'s performance in the first half of this year continued to explode.
The performance forecast recently released by COSCO Shipping Holdings shows that the company will achieve a net profit attributable to the parent company of 64.716 billion yuan in the first half of 2022. Red Star Capital Bureau noticed that this number not only increased significantly by 74.45% year-on-year in the first half of last year, but even increased by 23.98% compared with the second half of last year when sea freight rates were at a high.
Shipping costs have dropped for half a year. Why can COSCO Shipping Holdings still achieve a significant month-on-month increase in net profit?
Red Star Capital Bureau research found that although sea freight rates have declined in the short term, the decline is far less than the increase in the second half of last year, and the average sea freight rates are still at a high level. Calculated on a half-year cycle, the monthly arithmetic average of the China Export Container Freight Comprehensive Index (CCFI) in the first half of this year was 3304.31 points, which was not only higher than the 2073.77 points in the first half of last year, but also higher than the 3130.07 points in the second half of last year.
Picture According to IC photo
"The King of Shipping" earns 360 million per day
Net profit increased significantly both year-on-year and month-on-month
html On the evening of July 6, COSCO Shipping Holdings released a performance forecast, expecting to achieve net profits attributable to shareholders of listed companies in the first half of 2022 About 64.716 billion yuan, a year-on-year increase of about 27.618 billion yuan, a year-on-year increase of about 74.45%; the non-net profit attributable to shareholders of listed companies is expected to be about 64.436 billion yuan, a year-on-year increase of about 27.416 billion yuan, a year-on-year increase of about 74.06%.Based on this calculation, in the first half of this year, COSCO Shipping Holdings earned approximately 360 million yuan.
COSCO Shipping Holdings stated that the main reason for the expected increase in performance for this period is that in the first half of 2022, the supply and demand relationship in international container transportation will be relatively tight, and export freight rates on main routes will remain high. During the reporting period, the average value of China's Comprehensive Export Container Freight Index (CCFI) was 3286.03 points, a year-on-year increase of 59%.
At the annual shareholders’ meeting held on May 27 this year, Chen Shuai, deputy general manager of COSCO Shipping Holdings, also said that the company’s signing targets for this year have been completed, and the signing price has also been significantly improved compared to previous years. In terms of
freight rates, Chen Shuai said that at present, the periodic impact of the epidemic has passed. Judging from the loading rates of major shipping companies around the world and market freight rates, they are still relatively stable. Based on the judgment of supply and demand fundamentals, the company's outlook for future freight rates remains optimistic throughout the year.
Red Star Capital Bureau noticed that not only the first half of this year, but also COSCO Shipping Holdings’ performance in 2021 is also impressive.
Throughout 2021, COSCO Shipping Holdings achieved a net profit attributable to the parent company of 89.296 billion yuan, a year-on-year increase of 799.52%, ranking ninth among all A-share listed companies, setting a record high. Among them, the net profit attributable to the parent company in the first half of 2021 was 37.098 billion yuan, and in the second half of 2021 it was 52.198 billion yuan.
In other words, COSCO Shipping Holdings' net profit attributable to the parent company of RMB 64.716 billion in the first half of this year not only increased significantly by 74.45% year-on-year in the first half of last year, but also increased by 23.98% compared with the second half of last year when sea freight rates were high.
html On July 7, Red Star Capital Bureau called the Securities Department of COSCO Shipping Holdings to inquire about the substantial increase in its net profit. A staff member said that the specific situation will not be known until the complete semi-annual report is disclosed.So, what exactly is happening to the maritime industry? Why is a shipping company so profitable?
Sea freight has fallen this year
but the average value in the first half of the year is still higher than that in the second half of last year.
Red Star Capital Bureau previously reported that from January to May this year, sea freight fell for more than 20 consecutive weeks. From January 28 to May 6, the China export container freight index dropped from 3565.33 to 3056.98, a decrease of 14.26%; the Shanghai export container freight index (SCFI) dropped from 5010.36 to 4163.74, a decrease of 16.90%.
Baltic Sea Container Freight Index (FRX) also shows the same trend.
At the same time, the situation of "hard to find in a cabinet" has also improved last year. Xiao Wu, who is engaged in textile foreign trade, said that there is no need to grab the shipping space like last year. On the contrary, there is still plenty of space. "There have been a lot of freight forwarders coming to promote recently, and the containers are much easier to order than last year."
However, Red Star Capital Bureau noticed that , although sea freight rates have declined in the short term, the decline is far less than the increase in the second half of last year. The average sea freight rate Still at a high level.
data shows that the monthly average value of China's Comprehensive Export Container Freight Index (CCFI) has begun to rise continuously since June 2020, and it has climbed rapidly in 2021, reaching a high of 3291.25 points in October; after falling slightly for two months, it has again It rose to a new high in January 2022, at 3510.83 points; then it continued to decline, to the latest data in June of 3228.37 points.
In other words, although overall, the CCFI freight rate comprehensive index showed a downward trend in the first half of this year, if calculated on a half-year cycle, the monthly arithmetic average in the first half of this year was 3304.31 points, which was not only higher than that in the first half of last year 2073.77 points, also higher than the 3130.07 points in the second half of last year.
From this perspective, COSCO Shipping Holdings’ net profit growth trend in the first half of this year is consistent with the overall industry trend.
Regarding the recent drop in sea freight rates, on July 7, staff from the Securities Department of COSCO SHIPPING Holdings introduced to the Red Star Capital Bureau that COSCO SHIPPING Holdings’ freight revenue includes spot agreement freight rates and long-term agreement freight rates. However, The company will not disclose the specific proportion of the two agreements. Regarding long-term contract agreements, some customers sign for 2-3 years, but the vast majority of them sign for one year. In other words, most of COSCO Shipping Holdings' long-term agreement freight rates this year are locked in 2021.
When the Red Star Capital Bureau further asked whether the annual contract agreement was locked at a high freight rate, the staff member said, "Not necessarily, it depends on the specific negotiation time." He said that the European route is a rolling contract and does not It will be limited to a certain point in time; under normal circumstances, American lines start to implement new long-term agreement prices in May every year, and they can be negotiated before May.
The cumulative order volume is also rising.
There are obvious differences in the industry, and employees have mixed feelings.
It is worth noting that while the average freight price increased in the first half of the year, the cumulative order volume is also rising. In other words, the container shipping industry achieved both volume and price growth in the first half of this year.
Data from the Ministry of Transport shows that in May 2022, container throughput at my country's ports continued to perform well, with throughput at both coastal and inland ports increasing. According to statistics, the national ports completed container throughput of 25.43 million TEU (international standard unit units), an increase of 4.3% compared with the same period last year. Among them, coastal ports completed container throughput of 22.28 million TEU, a year-on-year increase of 3.8%; inland ports completed container throughput of 3.16 million TEU, a year-on-year increase of 8.2%.
Xiao Li, who is engaged in traditional Russian foreign trade business, told Red Star Capital Bureau, "Business this year has been so good that we have had a lot of orders! And now that the sea freight has dropped a bit, our costs have also dropped accordingly and we have made more money." But doing touch screen foreign trade Xiao Wang, a businessman, said that his business has been very bleak since May. "Orders have dropped significantly, and several friends are sitting at home with nothing to do." Why does
have such a different voice? Red Star Capital Bureau reviewed the main export commodity volume table released by and of the General Administration of Customs and found that from a macro perspective, different industries showed different rising and falling trends in cumulative export volume from January to May this year, with obvious differences.
The export volumes of industries such as agricultural products, textile raw materials, coal and lignite are all rising. The export volume of the alumina industry has increased by as much as 937.2%, and the export volume of electric passenger vehicles has increased by 108.6%; while urea and fur Subdivided industries such as clothing, shipbuilding industry, mechanical and electrical products, and high-tech products have experienced significant declines.
Overall, data from the General Administration of Customs show that in the first five months of this year, my country’s total import and export value was 16.04 trillion yuan, an increase of 8.3% over the same period last year. Among them, exports were 8.94 trillion yuan, a year-on-year increase of 11.4%. The United States is my country's third largest trading partner, with exports to the United States in the first five months reaching 1.51 trillion yuan, a year-on-year increase of 12.9%.
In addition, the Shanghai Shipping Exchange reported that last week, the average space utilization rate of ships on the routes from Shanghai Port to the West and East US routes was basically close to the full load level.
The stock price has fallen by more than 15% this year.
Institutions believe that sea freight rates will continue to decline in the future.
Although sea freight rates are still at a high level and the loading capacity of shipping companies is also relatively satisfactory, COSCO Shipping Holdings achieved staggering net profits in the first half of the year. However, in the secondary market, COSCO Shipping Holdings’ share price has been falling.
On July 7, 2021, the share price of COSCO Shipping Holdings A shares rose from 13.43 yuan/share at the beginning of that year to 33.40 yuan/share, a record high. But it continued to fall since then, falling to 13.12 yuan per share on April 27 this year, a record low. As of the close of trading on July 8, COSCO Shipping Holdings reported a price of 14.72 yuan per share, a cumulative decline of more than 15% this year.
It is worth mentioning that just a few days ago, Guotai Junan had just lowered the rating of COSCO Shipping Holdings Hong Kong stocks .
html On June 30, Guotai Junan (Hong Kong) issued a research report saying that it adjusted the rating of COSCO Shipping Holdings (01919.HK) from "Accumulate" to "Neutral" and lowered the target price to HK$14.2. The bank believes that continuous higher-than-expected demand and the resulting congestion problems are the main reasons for the rise in freight rates and their continued high levels. The bank expects that the growth rate of external demand will gradually weaken and may put pressure on freight rates; from the supply side, the supply chain congestion problem is expected to gradually ease, thereby releasing the supply of effective transportation capacity. Although freight rates are still in the high range, market sentiment may It fell on expectations of weaker demand.Although the rating of COSCO Shipping Holdings' Hong Kong shares was downgraded this time, it may also affect the stock price of COSCO Shipping Holdings' A shares in the short term due to the linkage between A and H shares.
Regarding the subsequent shipping market, Clarkson said in a study on June 13 this year: "Global container shipping trade is currently facing downward pressure. In the short term, port congestion and logistics disruption will continue to provide support for the spot freight rate and rental market. . But in the medium and long term, with the easing of port congestion, the sharp increase in shipping capacity in the next two years and the downward pressure on global container shipping trade, the process of returning to normalization of the container ship market may accelerate. ”
Clarkson said in the report. The study lowered its forecast for global sea container trade growth. "We have currently lowered the forecast for global shipping container trade volume growth to 1.3% (in TEU), and the forecast for box-mile trade to 0.5%. The risks and uncertainties faced by global container trade continue to increase, and the current forecast remains. Possibility of downward adjustment.”
html On the afternoon of July 7, the Ministry of Commerce held a press conference to announce the recent key work in the commercial field.Ministry of Commerce spokesperson Shu Jueting said at the meeting that my country's foreign trade development will face increasing uncertainties and unstable factors in the second half of the year, and the situation remains complex and severe. From the perspective of external demand, affected by geopolitical conflicts and the accelerated tightening of monetary policies in some developed economies, global economic growth is likely to slow down, and the prospects for trade growth are not optimistic; from a domestic perspective, the foreign trade base has increased significantly in the second half of the year, and the comprehensive costs of enterprises have Still at a high level, it is still difficult to receive orders and expand the market.
In the next step, the Ministry of Commerce will work with various localities and relevant departments to implement policies and measures to stabilize foreign trade, including promoting smooth flow of foreign trade, increasing fiscal and taxation financial support, helping companies grab orders to expand markets, and stabilizing the foreign trade industrial chain and supply chain. We will continue to make efforts to support enterprises in making full use of relevant policies and measures to help foreign trade enterprises develop stably and healthily. Specifically, it is necessary to help enterprises reduce comprehensive costs, make good use of export credit insurance tools, and improve their ability to receive orders and fulfill contracts.
Red Star News Reporter Yu Yao Xie Yutong
Editor-in-Chief Ren Zhijiang
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