As sea freight prices continue to decline, intercontinental shipping sounded the "clang" for the second pass to the Hong Kong Stock Exchange.
Specifically, on November 4, the official website of the Hong Kong Stock Exchange disclosed that InterContinental Shipping Group Holdings Co., Ltd. (hereinafter referred to as "InterContinental Shipping") officially submitted an application for listing to the main board of the Hong Kong Stock Exchange, and China-Thailand International is the exclusive sponsor. It is reported that the company had submitted a listing application to the Hong Kong Stock Exchange on April 13 this year, but it ended in "invalidity".
. It has to be said that at the moment when the shipping prices are constantly declining, intercontinental shipments are very "brave" at this time.
Zhitong Finance APP learned that due to the weakness of global economy and the continuous improvement of European and American port problems, coupled with the current container shipping market in the traditional off-season, sea freight prices have been on a downward trend since the beginning of the second half of the year. According to relevant data, as of November 4, the Shanghai Export Container Freight Index (SCFI) fell 118.44 points to 1579.21 points weekly, an increase from 4.56% in the previous week to 6.98%, and has fallen for 20 consecutive weeks since June this year.
So, it is curious that what is the growth of intercontinental shipping that has overcome the barriers in this context? What opportunities and challenges may be faced on the way to overcome the barriers?
revenue doubled, debt repayment ability increased sharply
According to the prospectus, intercontinental shipping was established in 2012 as a comprehensive shipping service provider headquartered in China, mainly providing customers with two major businesses: shipping services and ship management services. At the same time, with the services provided by the company, the company is mainly positioned in the middle and upper reaches of the value chain of the maritime industry. In terms of shipping services, the company has a fleet of controlled ships and chartered ships. By 2021, InterContinental Shipping has a total of 22 controlled ships and signed 200 chartered ship contracts. It is reported that the company's fleet is mainly dry bulk carrier with a load capacity of about 11,000 dwt (default tons) to 206,000 dwt, transporting dry bulk cargoes such as iron ore, coal, grain, logs, etc., and also transporting asphalt , petrochemical products and molten sulfur through tankers and chemical ships.
In terms of ship management services, the company's ship management business services mainly cover the main aspects of daily operations, including technical management, crew management, maintenance and maintenance and system management. By 2021, the company manages 203 ships, 179 of which are third-party owned ships.
It is worth mentioning that benefiting from the positive impact of the surge in sea freight prices in 2021, intercontinental shipping related businesses have also taken advantage of the situation in the past two years. In terms of revenue and net profit, from 2019 to 2021, the company achieved revenue of US$135.6 million, US$178.9 million and US$372.7 million, respectively. In the next two years, increased by 332% and 175% year-on-year; net profit was US$8.434 million, US$724,000 and US$40.005 million, respectively. In 2020, net profit fell by 91% year-on-year compared with , and net profit in 2021 surged by about 54 times. By the first five months of 2022, the company's performance continued to continue at 215% in 2021. High growth trend: Revenue was US$179 million, a year-on-year increase of 42%; net profit was US$32.89 million, a year-on-year increase of 215%. In terms of gross profit margin, benefiting from the soaring sea freight prices in 2021, the company's gross profit margin is also in a state of significant increase: According to the prospectus data, from 2019 to the first five months of 2022, the company's gross profit was US$16.054 million, US$12.727 million, US$57.65 million and US$31.915 million, respectively, with gross profit margins of 11.8%, 7.1%, 15.5%, and 17.8%, respectively.
(Picture source: InterContinental Shipping Prospectus)
As revenue and net profit continue to maintain high growth, InterContinental Shipping's scary high debt level in the past few years has also gradually declined.
According to the prospectus data, from 2019 to the first five months of 2022, the company's net current liabilities gradually decreased, reaching US$43.2 million, US$35 million, US$21.3 million and US$3.6 million, respectively. At the same time, the net debt-to- equity ratio also continued to decline, at 2638.7%, 1475.7%, 183.8% and 185.9% respectively.
At the same time, benefiting from the significant growth in performance, the company's cash flow has also been growing. According to the data from the prospectus, from 2019 to the first five months of 2022, the net cash from operating activities was RMB 9.559 million, RMB 24.473 million, RMB 88.147 million, and RMB 26.926 million. At the end of the period, cash and cash equivalents html were RMB 31.943 million, RMB 4.42 million, RMB 25.03 million, and RMB 19.68 million.
is based on the above, benefiting from the soaring sea freight prices since 2021. The fundamentals of have performed well in the intercontinental shipping business, which is becoming more and more profitable. It is reported that due to the influence of the supply chain, major ports around the world are blocked and cargo is backlogged. container ship was snatched. The freight rates for global shipping routes soared about 10 times in 2021. Against this background, intercontinental shipping-related businesses naturally seize the opportunity to make the " bonus cake".
Marine price declines, and the continued growth may need to be questioned
It has to be said that the skyrocketing shipping prices have made major shipping companies in the world make a lot of money.
As mentioned above, the Shanghai Export Container Freight Index (SCFI) has fallen for 20 consecutive weeks since June this year, not only domestic shipping prices, but the global shipping market is "cold", and freight rates on major sea routes have fallen sharply - for example, last week (October 30), the freight rates for the US Western Front fell 221 US dollars to 1,681 US dollars, a drop of 11.68%; the freight rates for the European Line per TEU fell 339 US dollars to 1,763 US dollars, a drop of 16.1%; the freight rates for the Mediterranean Line per TEU fell 122 US dollars to 2,222 US dollars, a drop of 5.2%.
and corresponding to the prospectus book of Intercontinental Shipping, we can also see the status of the leopard shipping market.
According to the data from the prospectus, in recent years, the total capacity of the global maritime service industry has achieved significant growth in all sectors, mainly due to the increase in maritime trade volume and corresponding demand for maritime transportation: the total market size increased from 1,811.3 million dwt in 2016 to 2134.6 million dwt in 2021, with a compound annual growth rate of 3.3%. As global maritime trade activities recover from the COVID-19 epidemic and continue to grow, the global maritime service industry market size is expected to grow to 2,479.9 million dwt in 2026, with a compound annual growth rate of 3.0% from 2022 to 2026.
However, the marine operation industry, especially the dry bulk carrier operation industry, is cyclical and volatile in terms of charter rates. Therefore, even if the scale of the shipping market remains expanding, the continuous decline in shipping prices will still have certain adverse effects on intercontinental shipping.
According to the prospectus data, during the trailer record period, the Baltic dry bulk cargo freight index fluctuated between 393 points and 5,650 points, with an average of about 1,365 points, 1,068 points, 2,943 points and 2,258 points respectively. As of the last feasible date, the Baltic dry bulk freight index is 1,463 points, which is in a state of continuous decline. Based on this, InterContinental Shipping said that any significant drop in the Baltic dry bulk freight index will also have an adverse impact on the company's lease fees received from customers, thereby affecting profitability and cash flow .
At the same time, the competitive landscape of the shipping market is also very fierce, and intercontinental shipping may also face competitive pressure that cannot be underestimated.
It is understood that China's maritime service market is relatively concentrated in a few leading companies with high market awareness and brand awareness. Based on the international route capacity in 2021, the five major participants account for about 51.4% of the market share. The remaining market competition is fierce. In 2021, more than 20,000 market participants around the world will transport goods to China through international routes.
Under this background, the shipping level of intercontinental shipping is ranked "middle and upper" in China: in 2021, according to the capacity of international routes involving international shipping routes for shipping goods to and from China, the company is the fifth largest shipping company headquartered in China, with a capacity of about 1.26 million dwt, accounting for 0.4% of the total market share. In 2021, the company is also the fifth largest dry bulk shipping company headquartered in China based on the capacity of international routes involving transporting dry bulk cargo to and from China.
In addition, rising marine fuel prices will further weaken the profitability of intercontinental shipping and have an adverse impact on the company's business operations.
According to regular period lease and voyage lease, marine fuel expenses are generally borne by the company's customers, while such costs are generally borne by the company according to voyage lease and transportation contract.As InterContinental Shipping provides shipping services to customers under voyage leasing and contracts during the track record period, the company faces market fluctuations in marine fuel prices - from 2019 to May 31, 2022, recording fuel expenses of approximately US$16.2 million, US$28.7 million, US$36.5 million and US$24.0 million, respectively, accounting for approximately 13.5%, 17.3%, 11.6% and 16.3% of the total sales costs in the same period.
To sum up, as sea freight prices continue to decline, the second move of intercontinental shipment is obviously "prepared", with some growth highlights on them, but we still need to be vigilant about the sustainability of profits.
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