Due to the reconstruction of global energy trade under the conflict between Russia and Ukraine, based on the gradual improvement of industry supply and demand, we are optimistic that the oil transport sector is booming. At present, progress has been made in Iran's nuclear negotiations, Iran's oil ban is expected to be lifted, and the spot freight rate of VLCC has exceeded US $40,000 per day. We continue to be optimistic about the strong performance flexibility of Cosco Haineng.
The reconstruction of the energy supply chain boosts the oil transportation demand, and the supply-side optimization supports the business cycle in the medium and long term. Demand side:
1) refined oil: as the European Union still adopts relatively stringent sanctions, the European region will be forced to find the United States and the Middle East as alternative exporters, the distance of finished oil tankers will be extended, and the freight price of refined oil is expected to remain high. 2) crude oil: the demand for domestic restocking is expected to gradually boost the transportation demand of crude oil under the background of OPEC production increase expectation, Iranian oil ban lifting expectation and acceleration of resuming work and production. Recently, there has been a significant marginal improvement in VLCC freight rates, with VLCCTD3C-TCE reaching US $40,000 per day. On the supply side: the share of hand-to-hand order capacity remains low, the potential dismantling of old ships and the limited capacity of shipyards will limit the supply of the oil industry for a long time, and the slow growth of tanker supply is likely to continue until at least 2025. We believe that the business cycle of the tanker plate is expected to exceed expectations.
Foreign trade oil transportation brings upward performance flexibility, domestic trade oil transportation and LNG business contribution performance safety cushion. The company's business is mainly composed of foreign trade oil transportation, domestic trade oil transportation and LNG. Among them, foreign trade oil transportation is the core of the company's profit (accounting for about 46% of revenue), with strong upward flexibility; domestic trade oil transportation maintains a steady source of income and gross profit margin (maintained at 26% in recent years), providing the company with a "safety cushion" for profit; and LNG business growth also remains relatively stable, with a high gross profit margin (more than 50% for a long time), becoming a new performance growth point of the company.
Calculation of the operating profits of the three major businesses: 1) Foreign Trade Oil Transportation: for VLCC, it is estimated that the number of effective fleets in 23-24 years is 58, the average market freight rate is 660,000 US dollars per day, and the gross profit contribution in 23-24 years is expected to be 37,000,000 yuan. For small and medium-sized oil tankers, it is expected to contribute 8.8 billion yuan in gross profit in 23-24 and 455.1 billion yuan in foreign trade oil transportation. 2) domestic trade and oil transportation: the domestic trade oil transportation business has maintained a stable profit for a long time, and is expected to contribute 1.53 billion yuan to gross profit in 22-24. 3) LNG business: according to the existing operating arrangements, the LNG fleet is expected to contribute 6.5 million yuan in gross profit in 22-24.
Investment suggestion: the domestic economic recovery and the lengthening of the global oil transportation trade distance make the crude oil tanker market demand more flexible, superimposed long-term supply restrictions, and the prosperity of the oil transportation industry may exceed expectations in the next three years. As the leader of domestic oil transportation, the company covers all kinds of tanker types and has great profit flexibility. It is expected that the company's profits will improve in an all-round way in the next two years. Based on the current VLCC freight rate rapid upward and Iranian oil ban lifting expectations, we raise our profit forecast, and expect the company to achieve a home net profit of 14.7 won 43.6 / 4.85 billion yuan in 22-24, maintaining a "highly recommended" rating.
Risk hint: crude oil exports from the United States and the Middle East are lower than expected, COVID-19 epidemic spread more than expected, performance measurement risk