Radar Finance Hongtu Produced by Hongtu Text | Li Yihui Edited by | Deep Sea
Although the profit of nearly 100 billion yuan in the first three quarters, A-share sea transportation leader China COSCO Shipping still cannot escape the constraints of the cycle, and the stock price and performance showed a significant deviation.
On the evening of October 10, COSCO Shipping released its first three quarters of 2022 performance announcement. It is expected that the company's net profit attributable to shareholders of listed companies in the first three quarters of 2022 will be approximately 97.206 billion yuan, an increase of approximately 43.73% compared with the same period last year.
If calculated on a daily basis, COSCO Shipping earned a daily net profit of approximately 357 million yuan in the first three quarters of this year, which is comparable to a money printing machine. However, while its performance exploded, its stock price changed inversely with its performance. As of October 11, COSCO Shipping closed at 3.76%, with a share price of 11.31 yuan per share, down 54.43% from the high of 24.82 yuan per share in July last year.
Some investors believe that the stock price drawdown is relatively large, which is related to the strong cyclical industry in which the company is located. Data from Shanghai Shipping Institute shows that as of September 30, the Shanghai export container freight index has fallen for 16 consecutive weeks. Container shipping market has gone from being difficult to being able to find one box to being difficult to find one piece of goods. This point can also be seen from the latest performance forecasts. China COSCO Shipping expects to achieve a net profit of 32.484 billion yuan in the third quarter, compared with the net profit of 37.105 billion yuan in the second quarter, fell by 12.45% month-on-month.
For the subsequent performance of the shipping market, institutions generally believe that sea freight prices may continue to weaken, and it is difficult for the profitability of major container routes to maintain the current level.
Performance is good and worrying
During the shipping economic cycle, COSCO Shipping earned more than 300 million yuan a day, continuing to show the true nature of the "king of cycles".
According to the announcement, the company achieved a net profit attributable to shareholders of listed companies in the first three quarters of approximately 97.206 billion yuan, an increase of approximately 43.73% compared with the same period last year; and achieved a net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses of , an increase of approximately 96.707 billion yuan, an increase of approximately 43.44% compared with the same period last year.
In the single quarter, COSCO Shipping achieved a net profit of 27.617 billion yuan in the first quarter of 2022; net profit of 37.105 billion yuan in the second quarter, setting a new historical net profit high in the single quarter; net profit of 32.484 billion yuan in the third quarter. Although it declined month-on-month, it made a daily profit of 360 million yuan, which still crushed 99% of A-share companies.
For such a profit-making speed, the company stated in the performance forecast 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 the 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 31.90% from the same period last year.
In addition, COSCO Shipping's performance is also closely related to its leading position. In terms of industry status, according to last year's annual report cited Alphaliner data, the company's container fleet capacity scale continues to rank first in the industry.
According to Alphaliner data, as of early July this year, there were a total of 6,399 container ships operating in the world, with a total capacity of 25.7883 million TEU, equivalent to approximately 309 million deadweight tons. Among them, COSCO Shipping is the fourth largest shipping owner in the world, and its capacity is behind Mediterranean Shipping, Maersk shipping, and Dafeisteel.
As the performance improves, the fundamentals of of COSCO Shipping's have also gradually improved. The semi-annual report shows that in the first half of the year, the company received 209.5 billion yuan in cash from selling goods and providing services, driving a net inflow of 112.5 billion yuan in operating cash flow.
Under this circumstance, as of June 30, 2022, the company's book funds had reached 247.9 billion yuan, and increased by 142.67% year-on-year.
Historically, COSCO Shipping is a famous "loss king" in A-shares. In 2013, due to the loss of net profit for two consecutive years, China COSCO Shipping's predecessor, China Ocean Shipping , was once on the verge of delisting. That year, the company obtained 8.4 billion yuan in profits by disposing of non-current assets, successfully turning losses into profits, and successfully "removed the hat" the following year.
In 2016, COSCO Shipping once again fell into a loss situation, with a net profit attributable to the parent company's owners losing 9.906 billion yuan, and the undistributed profit on the books in the annual report was -19.253 billion yuan. At that time, COSCO Shipping once again organized self-rescue through major asset restructuring; and as of this year's semi-annual report, the company's undistributed book profit had surged to 136 billion yuan.
At the same time, the company was also subject to a high debt-to-asset ratio. According to iFinD data from Tonghuashun, in 2018, COSCO Shipping's debt-to-asset ratio was as high as 75.3% and 73.64% in 2019; as of the end of the first half of this year, COSCO Shipping's debt-to-asset ratio dropped to 51.48%, a decrease of 5.28 percentage points from the end of the previous year.
, with abundant funds at hand, China COSCO Shipping, has once again expanded its business territory. According to the announcement, on September 30, the company's wholly-owned subsidiary of , COSCO Shipping Consolidated Transportation signed an equity transfer agreement with COSCO Shipping Logistics Co., Ltd. . COSCO Shipping Logistics intends to transfer 13.46% of the equity of COSCO Shipping Supply Chain to COSCO Shipping Consolidated Transportation, with a transaction price of 1.217 billion yuan.
COSCO Shipping Supply Chain mainly engages in comprehensive freight forwarding, warehousing and distribution, product logistics, ship agency and other businesses. COSCO Shipping said that the acquisition will help the company improve the entire comprehensive logistics service network of end-to-end containers and enhance the comprehensive logistics transportation service capabilities throughout the process.
At the same time, the company also increased its fleet expansion. Recently, it has ordered 15 23,000-box container ships from COSCO Shipping Heavy Industry, with a total order price of about 20 billion yuan and is expected to be delivered in 2025.
stock price fluctuated and fell by 50%
stock price trends over the past year show that while COSCO Shipping's performance exploded, its stock price did not rise simultaneously.
As of the close of October 11, the A-share price of COSCO Shipping Holdings was 11.31 yuan per share, with a total market value of 182 billion yuan, and the price-earnings ratio of 1.41 times, second only to Jiuan Medical and 1.34 times that of Anxu Bio.
In the past six months, the company has been fluctuating and downward in the secondary market, and has fallen by 36% since the beginning of the year, and the decline in October alone has exceeded 20%. If we look at it in a long run, on July 7, 2021, COSCO Shipping's stock price reached a record high of 33.4 yuan, and has been pulled back from its high point by more than 50% since its previous resumption of rights.
However, before that, COSCO Shipping has achieved a 10-fold increase in in more than a year.
dayeye check shows that COSCO Ocean Control was formerly China Oceanwide. It was founded in 2005. It is one of the major global suppliers that provide comprehensive container shipping services to international and domestic customers.
In June 2007, COSCO Oceanwide was listed on the main board of the Shanghai Stock Exchange. Starting from 2016, China Ocean Shipping Group and China Marine Group completed the reorganization and established China Ocean Shipping Group . China Ocean Shipping was renamed China Ocean Shipping Control. In addition to divestment of dry bulk freight transportation business and focusing on the original container business, it also injected and operated all container ships and containers of China Ocean Shipping , with a significant increase in transportation capacity.
In August 2018, COSCO Shipping acquired "Oriental Overseas International", and its transportation capacity further increased by 52.5% compared with the end of 2017.
Since 2019, the global shipping market has gradually recovered and has begun to enter a prosperous cycle. The operating performance of COSCO Shipping has also gradually improved. The company's net profit increased by 4 times year-on-year to 6.76 billion yuan.
Entered 2020, and the impact of the epidemic caused shipping companies to reduce their ship capacity in the first half of the year; in the second half of the year, as global consumption gradually recovered, global demand for transportation shifted to China, which was the first to restore production capacity. This mismatch between maritime demand and maritime capacity has caused the performance of COSCO Shipping, which has the advantage of transportation capacity, to explode.
In 2021, the global epidemic repeated and demand grew resumably, but the supply and demand relationship between container transportation continued to be tense, and COSCO Shipping continued to enjoy the prosperity dividend . That year, the company achieved revenue of 333.694 billion yuan, a year-on-year increase of 94.85%. Nearly half of the revenue is related to the trade in goods between China and the United States and China-Europe, and about 40% of the traffic comes from cross- Pacific routes and Asia-Europe routes.
As the operating performance grows significantly, the company's stock price continues to soar.K line chart shows that on May 22, 2020, the share price of COSCO Shipping once fell to 3.14 yuan per share; by July 7, 2021, the share price reached a maximum of 33.40 yuan per share, with the maximum increase of 10 times.
However, since then, the stock price has run against the performance. The market generally believes that the reason behind this is still related to the cycle.
In essence, shipping business is to transport goods from place A to place B through sea channels, which is a homogeneous competition between each other. Moreover, the industry is characterized by high debt, high cost, heavy assets, and high depreciation. The growth of profits is greatly affected by the supply and demand relationship. With the low threshold for expansion, it is difficult for most companies to maintain a long-term prosperity.
Some private equity investors pointed out that once the product price peaks, it is easy to lead to double profits and valuation kills, aggravating stock price fluctuations. After
predicted the third-quarter performance, some institutions followed up with the target price of COSCO Shipping. On October 11, Morgan Stanley released a research report, giving COSCO Shipping Hong Kong stock a rating of "reduced holdings" with a target price of HK$7.8.
report said that it has a slight positive view of China COSCO Ocean Control's quarterly results, and the third quarter net profit contracted slightly less than expected. However, the bank believes that the continued decline in spot freight costs may bring downside space to market sentiment.
cannot escape the cyclical
How will the shipping market be interpreted in the future? Whether COSCO Shipping can earn 30 billion yuan every quarter has become the key to determining investors' valuation.
First of all, there are clear signs that the trend of the shipping market is reversing. During the investigation on September 20, Xiao Junguang, secretary of the board of directors of COSCO Shipping, said that the congestion in ports in major navigation areas has been alleviated recently, transportation capacity has been gradually released, and supply has increased; on the demand side, under the influence of factors such as increasing inflation pressure and high energy prices, market demand has declined to a certain extent.
According to Cailianshe, the Baltic Sea Freight Index (FBX) fell by more than 61% from its historical high in September last year. The Shanghai Export Container Freight Index has fallen for 16 consecutive weeks as of September 30.
Oversupply of transportation capacity is the main reason for the decline in freight rates. Institutional data shows that in the third quarter of this year, global container capacity increased by 3.9% year-on-year, and the capacity idle rate hit a peak in the past five years.
Affected by this, the peak season that should have been in the third quarter, COSCO Shipping's net profit showed a downward trend month-on-month.
Secondly, for the forward, some institutions believe that container freight rates will be difficult to return to normal by at least 2023. HSBC Global Research Department predicts that container spot freight rates may fall to pre-epidemic levels, although shipping companies' contract rates should be higher than before the epidemic.
However, the bank believes that the end result will be the profitability of container routes from 2023 to 2024, which will drop by 80% from this year's record level.
fluctuations in shipping prices will undoubtedly have a great impact on the profitability of relevant shipping companies and the development of sales business.
On September 2, CICC stated in its research report that due to the marginal easing of port congestion and the acceleration of capacity turnover, the concerns and panic of difficulty in shipment caused by the imbalance in supply and demand have eased, freight rates have recently entered a downward channel. The bank said that considering the recent decline in freight rates, it lowered its Hong Kong stock target price to lower its profit forecast for this year and next year, with the recent decline in freight rates, and its target price for Hong Kong stocks fell by 17% to HK$16.22.
As of October 11, COSCO Shipping Hong Kong stocks closed at HK$9.1 per share, with a total market value of HK$146.5 billion.
Note: This article is original by radar Finance (ID: leizhuba). Reproduction is prohibited without authorization.
