Event
COSCO Shipping Holdings (601919) released the 2021 annual report, achieving operating income of 333.694 billion yuan, an increase of 94.85% over the same period last year, and a net profit of 89.296 billion yuan, an increase of 799.52% over the same period last year. The basic earnings per share is 5.59 yuan, and the proposed cash dividend per share is 0.87 yuan (including tax). During the reporting period, profit before interest and tax (EBIT) was 131.5 billion yuan (equivalent to about US $20.38 billion).
The company issued a pre-increase announcement for the Q1 quarter in 2022, showing a net profit of 27.6 billion yuan for Q1, an increase of 78.6% over the same period last year.
Comment
1. During the reporting period of 2021, the average composite index (CCFI) of China's export container freight rate was 2615.54 points, an increase of 165.69% over the same period last year. This is the main reason for the big increase in profits. The average CCFI during the Q1 period in 2022 is about 3400, which is still higher than the 21-year average.
2. 22 years overseas has entered the post-epidemic era, port congestion and supply chain tension tend to ease, resulting in a drop in container prices. We predict that without the Black Swan event, the peak of Q1 in 22 would be the highest freight rate for the whole year. However, the freight rate and duration of the company's recent signing of the long Association order are expected to rise. At the same time, the long Association's transport capacity is expected to account for more than 50% of the company's total capacity this year. These measures can delay the decline in long-term profits brought about by the decline in freight rates.
3. The company's port business continues to grow by a small margin and provides assistance for collection and transportation; at the same time, the 21-year trading volume of the foreign trade e-commerce platform has increased by 187% compared with the same period last year, which also facilitates the subsequent delivery of goods.
Investment rating
Our measurement of the company's performance over the next three years is based on the assumption that CCFI will return to the 21-year Q1 average level in 2024. Dividends for the next two years are worth looking forward to, with a "buy" rating. It is estimated that in the next three years, the EPS is 6.02,4.71,2.79 respectively, and the corresponding PE is 2.58,3.30,5.57 respectively.
Risk hint
High oil prices have lasted for too long, and international shipping prices have fallen too fast.