Haifeng International recently released its 2020 performance announcement. In 2020, the company achieved operating income of approximately US$1.685 billion, a year-on-year increase of approximately 8.5%; and achieved net profit of approximately US$352 million, a year-on-year increase of approximately 59.7%.
In 2020, the company's gross profit margin was 26.41%, an increase of 7.22 percentage points year-on-year. Among them, the gross profit margin of the container shipping logistics business was 26.52%, an increase of 7.58 percentage points year-on-year, mainly due to the decline in marine fuel costs; the gross profit margin of dry bulk and other businesses was 17.93%, a decrease of 15.83 percentage points year-on-year, mainly due to the increase in the company's operating costs of dry bulk ships.
According to data from the National Bureau of Statistics, my country's PPI rose by 1.7% year-on-year in February 2021, up 1.4 percentage points from the previous month. Among them, the prices of ferrous metal mining and dressing industry rose by 5.9%, the prices of non-ferrous metal smelting and rolling processing industry rose by 1.5%, and the prices of ferrous metal smelting and rolling processing industry rose by 2.3%. As raw material prices continue to rise, ship prices will also rise. In 2020, the company signed 19 new ship orders of 42,000 TEUs in batches (including 27 options that have not yet taken effect, reaching 60,000 TEUs), which is equivalent to 45%-63% of the company's own capacity by the end of 2020. With the cost of locking shipbuilding at low levels and the continuous rise in freight rates, the company's profit margin is expected to further expand.
Price and volume increased, with strong performance
Haifeng International is an Asian shipping and logistics group company that provides comprehensive transportation and logistics solutions. The company's business can be divided into two major business segments: container shipping logistics segment, dry bulk shipping and other segments. The container shipping logistics branch mainly covers the provision of comprehensive logistics services such as container transportation, freight forwarding, ship agent, yard and warehousing. Dry bulk shipping and other branches mainly cover the provision of dry bulk shipping, land leasing and air freight agency services.
As of December 31, 2020, the company operated a fleet of 90 ships, with a total capacity of 129,652 TEUs, a year-on-year increase of 10.27%.
Figure 1: 2016-2020 Haifeng International operating fleet and total transportation capacity
In 2020, the company achieved operating income of approximately US$1.685 billion, a year-on-year increase of approximately 8.5%; and achieved net profit of approximately US$352 million, a year-on-year increase of approximately 59.7%. The average freight costs and container freight volumes were mainly attributed to container shipping and extended logistics businesses.
Figure 2: Haifeng International revenue and net profit
points business from 2016 to 2020: (1) The container shipping logistics business achieved revenue of US$1.663 billion, an increase of 8.9% year-on-year. This is mainly due to the increase of container shipping and extended logistics services from 2483,278 TEUs in 2019 to 2614,203 TEUs and average freight (excluding swap position fee income) from 2020 to about 1.6% from 536.6/TEUs in 2019 to the combined impact of US$545.1/TEUs in 2020; (2) Dry bulk and other businesses achieved revenue of US$22 million, a year-on-year decrease of 15.5%, mainly because the company's average daily rent for dry bulk carriers has decreased.
Figure 3: 2016-2020 Haifeng International container shipping volume and average single-box freight rate
marine fuel costs declined, gross profit margin increased
2020, the company's gross profit margin was 26.41%, a year-on-year increase of 7.22 percentage points. By business: (1) The gross profit margin of the container shipping logistics business was 26.52%, an increase of 7.58 percentage points year-on-year, mainly due to the decline in marine fuel costs. During the reporting period, the company consumed marine fuel costs of US$170 million, a year-on-year decrease of 18.46%. (2) The gross profit margin of dry bulk cargo and other businesses was 17.93%, a year-on-year decrease of 15.83 percentage points, mainly because the company's operating costs of dry bulk cargo ships increased.
Figure 4: 2017-2020 Haifeng International Gross profit margin of each business
In 2020, the company's administrative expenses were 97 million yuan, a year-on-year increase of 20.84%; the net profit margin was 20.9%, a year-on-year increase of 6.7 percentage points.
Figure 5: 2016-2020 Haifeng International Net profit margin
Low-level shipbuilding locking costs combined with continuous increase in freight rates profit margins increased
From the demand side: In the second half of 2020, with the full recovery of China's production, the market for shipping trade and container ship freight rates also steadily rebounded.The Shanghai Export Container Freight Index (SCFI) began to rebound since its bottoming in late April, soaring 178% in the second half of 2020 and saw a general increase in freight rates across all routes worldwide in the fourth quarter. Since 2021, although freight prices have fallen slightly, market demand has maintained a positive trend after the Spring Festival, and the overall freight prices have remained at a high level. Benefiting from the positive demand for commodities, dry freight prices have shown a significant upward trend, and the BDI index has risen by 44.1% from the beginning of the year (January 4 to March 10).
Figure 6: Shanghai Export Container Freight Index (SCFI)
Chartering Market began to gradually recover and achieved significant growth in mid-June 2020. The chartering rate index increased by 128% from the end of June; the second-hand container ship price index also showed a trend of first decline and then rise. In December, the second-hand container ship price index increased by 14% from the end of the first half of the year.
From the supply side, the lack of new orders and delivery volume of small ships in recent years, as well as the global shipping industry's environmental protection goal of zero carbon emissions in 2050 and a set of core rules implemented by the International Maritime Organization (IMO) have accelerated the scrapping of old ships, and also curbed the growth of container capacity, and supply and demand are expected to reach a balance.
According to data from the National Bureau of Statistics, my country's PPI rose by 1.7% year-on-year in February 2021, up 1.4 percentage points from the previous month. The price of ferrous metal mining and dressing industry rose by 5.9%, the price of non-ferrous metal smelting and rolling processing industry rose by 1.5%, and the price of ferrous metal smelting and rolling processing industry rose by 2.3%. As raw material prices continue to rise, ship prices will also rise. According to CICC data, in 2020, the company signed 19 new ship orders of 42,000 TEUs in batches (including 27 options that have not yet taken effect, reaching 60,000 TEUs), which is equivalent to 45%-63% of the company's own capacity by the end of 2020. In February 2021, the Japan Freight Index and Southeast Asia Container Freight Index increased by 18% and 97% year-on-year. With the cost of locking shipbuilding at low levels and the continuous rise in freight rates, the company's profit margin is expected to further expand.
This article is from Bread Finance
