As we all know, due to the increasingly complex and severe international environment and the unexpected impact of sporadic outbreaks of the domestic epidemic, the downward pressure on the economy has increased since this year, and many companies are also facing serious survival challenges. Profits are falling and cash flow and tightness have frequently appeared.
Against this background, the performance of China COSCO Shipping is expected to make a net profit of 97.206 billion yuan in the first three quarters, which can also make investors even more illuminated.
htmlOn October 10, COSCO Shipping (01919) disclosed its performance forecast for the first three quarters of 2022, and is expected to record a net profit of approximately 97.206 billion yuan in the first three quarters, an increase of approximately 43.73% compared with the same period last year. It should be pointed out that the company's net profit for the whole year was 89.3 billion yuan, which means that the net profit of COSCO Shipping in the three quarters this year exceeded that of the whole year last year, and such a shocking ability to make money is shocking.However, compared with its amazing money-making ability, the company's performance in the secondary market is a bit contrary: since the beginning of this year, its stock price has fallen by more than 35%, while in the third quarter alone, its stock price has fallen by more than 15%. As of the close of October 12, its share price was HK$9.04, with a total market value of HK$145.488 billion.
(Source: Zhitong Finance APP)
So, based on the above, it is curious that why the stock price and performance of COSCO Shipping diverges? Can the subsequent company's money-making ability still be so amazing?
net profit of 97.206 billion yuan in the first three quarters, but the downward turning point is faintly visible
From the meaning revealed by the performance forecast, the breakthrough progress of COSCO Shipping's performance in the first three quarters is not unrelated to "maintaining a high-level freight rate".
Specifically, COSCO Shipping stated that in the first three quarters of 2022, the supply and demand relationship between international container transportation was relatively tense, and the export freight rates of main routes remained at high levels overall. During the reporting period, the average of China's comprehensive export container freight index (CCFI) was 3163.95 points, an increase of 31.9% from the same period last year.
If judging from the average CCFI performance, the freight rate has indeed maintained a high level as COSCO Shipping said. But in fact, based on the latest data, with the release of capacity and the decline in demand, the turning point of downward freight prices has gradually emerged.
According to Choice data, since July 15, 2022, the China Export Container Freight Index (CCFI) reached a high of 3276.85 points, the index has gradually declined. As of September 30, the China Export Container Freight Index has dropped to 2382.81 points, down 5.9% from the previous period. Affected by this, the third quarter of the traditional peak season also showed the characteristics of "the peak season is not prosperous".
At the same time, other important shipping data also directly point to the fact that freight rates are falling. As of September 30, the Shanghai Export Container Freight Index (SCFI) fell to 1922.95 points, a month-on-month decrease of 39% and a year-on-year decrease of 58.3%, while the freight rates of European and American routes fell below the three-character mark. Among them, the SCFI Shanghai-European route recorded $2950/TEU, a month-on-month decrease of 33.6% and a year-on-year decrease of 60.9%; the Shanghai-Western route recorded $2999/FEU, a month-on-month decrease of 40.9% and a year-on-year decrease of 59.7%.
Therefore, judging from the current development trend, the past surge in containers "hard to find a box" may no longer be the same.
It is worth mentioning that if you look into the decline in freight prices, it is not difficult to find that it is mainly due to the dual impact of the lack of demand and the release of capacity.
From the perspective of capacity demand, due to the negative impact of spillovers in the Russian-Ukrainian conflict and the acceleration of the European and American central banks in hikes , the downward pressure on the global economy has continued to intensify. Among them, the growth rate of demand in Europe and the United States slowed down sharply, and large American retailers canceled billions of orders. China is more significantly affected by the epidemic lockdown. Many foreign trade and port-type cities have experienced silent management, factories are shut down, and logistics are stagnant, resulting in the LPI of China's manufacturing PMI and China's logistics industry prosperity index from July to August both lower than the boom line . China's vehicle freight flow index is far below the same level in the same period last year. Foreign trade exports have continued to slow down marginally, and negative growth in August month-on-month.
At the same time, from the perspective of capacity supply, global container capacity increased by in the third quarter year-on-year, , which was at a moderate level in the past seven years. Due to weak demand, the capacity idle rate has reached its peak in the past five years.Although strikes occurred in many ports in Europe and the United States, as many countries lifted the complete control measures for the epidemic, the overall trend of port operation efficiency and ship turnover efficiency has increased, resulting in the actual capacity supply still increasing.
The impact of the decline in freight rates is actually transmitted to the financial report data of COSCO Shipping. In the first three quarters of 2022, COSCO Shipping recorded a net profit of approximately RMB 97.206 billion. In a single quarter, the company expects to achieve a net profit of 32.484 billion yuan, about 12.45% lower than 37.105 billion yuan in the second quarter of this year, which means that China COSCO Shipping's net profit declined month-on-month. According to historical data, since the third quarter is a traditional peak season, the performance in the third quarter is logically better than the second quarter. Based on
, it is not difficult to understand why the stock price of COSCO Shipping "fights" with performance.
20 billion shipbuilding VS downward trend, can the money-making ability continue?
The past is not recommended, and those who know the future can still pursue it. Since the turning point of the downward freight rate has already appeared, what should be the future market for COSCO Shipping?
According to Founder Medium Futures , on the demand side, major central banks have accelerated the pace of currency tightening, and the global economy is shifting from " stagflation " to recession. The demand in the United States is relatively good and shows a certain degree of resilience. However, the current inventory sales are constantly increasing compared with and the unemployment rate rebounds in the later period will restrict the importers' purchase efforts. Europe will suffer from high energy prices in the fourth quarter, which will seriously suppress the ability of Europeans to spend on fast-moving consumer goods and durable goods, but demand for China's heating equipment will increase significantly. China's economy is expected to rebound in the fourth quarter, but the substitution effect of India and ASEAN is obvious, and China's exports to Europe and the United States will still decline month-on-month in some months. On the supply side of
, liner companies continued to expand their efforts to suspend flights in October, which will significantly alleviate the capacity supply. The impact of the new crown epidemic will be further weakened. In the fourth quarter, more countries will announce the lifting of all epidemic-related entry measures, and the efficiency of supply chain system will continue to recover. The new ship will be launched in concentrated water in the next two years, and the supply of transportation capacity will be greatly released.
Overall, the situation of low peak season this year has been determined, but the situation will improve slightly in the fourth quarter. Thanks to the approaching Christmas holiday, transportation demand from October to November will be slightly better than in the early stages, and liner companies' sharp withdrawal and suspension of flights have also alleviated the pressure on capacity supply. Therefore, the decline in October will gradually narrow, the freight rate level in the same period of 2020 will be a strong support level, and December will enter the contract signing season for the 2023 annual contract. Linear companies will raise freight rates in various ways, with the goal of signing a relatively high long-term contract price. However, the launch pressure of new ships is relatively high in the next two years, and the market will risk further decline and a long-term downturn.
It is worth mentioning that as freight rates further declined, COSCO Shipping has plunged into the "ship building craze".
Since 2022, the world has set off a shipbuilding craze. For example, Mediterranean Shipping , headquartered in , Switzerland, has successively placed orders to order new ships, with orders of up to 48 ships within a few months and a capacity of 446,400 TEUs. Or, the French company Dafeisteel, which originally had the third largest capacity in the world, is also continuing to expand its capacity. During the period, it ordered 10 7900 TEU container ships at two Korean shipyards, and 6 15000 TEU container ships in Dalian Shipbuilding Heavy Industry .
, and COSCO Shipping has not fallen behind this wave of shipbuilding fever. In mid-September, COSCO Shipping plans to order about 15 23,000-box container ships under the same group's control, with a cost of about US$170,000-230 million per ship, with a total order price of about US$2.91 billion (about RMB 20 billion), and is expected to be delivered one after another in 2025. Earlier, in July 2021, COSCO Shipping also ordered 10 new Panamax container ships; in September of the same year, its holding subsidiary Oriental Overseas ordered 10 16,000-box container ships.
As of the first half of 2022, COSCO Shipping has a total of 32 new shipbuilding orders (excluding the latest 20 billion orders), with a total capacity of 585,000 TEUs; it operates more than 460 container ships with a total capacity of 2.92 million TEUs, ranking fourth in the world in terms of capacity scale.
As shipping companies build ships one after another, capacity will be greatly released in the next few years: According to shipping brokerage Clarkson, as new ships ordered by shipping companies will be launched one after another, the capacity scale of container fleets this year will increase by 3.7% year-on-year and will increase by another 8.1% in 2023.
. As freight rates continue to decline and demand in Europe and the United States continues to decline, coupled with the impact of the huge release of transportation capacity, it is obviously not a wise move to approach the "shipping fever" at this time.
In summary, whether from the perspective of the industry's development trend or from the shipbuilding layout of COSCO Shipping, the company's money-making effect may no longer be the same as before - after all, the huge benefits brought by the era of super high freight in the past two years have gradually returned to a normal growth state with the continuous decline of freight prices.
