Main points of investment:
Event: Cosco Haineng released its half-yearly report in 2022, showing a net profit of 160 million yuan in the first half of the year, down 71% from the same period last year, and 130 million yuan in the second quarter, an increase of 43.5% over the previous quarter. Among them, the other income in the first half of 2022 was 130 million yuan, about 180 million yuan less than the same period last year, mainly due to the reduction in government subsidies, and the performance was in line with expectations.
Russia-Ukraine war affected low and high sulfur oil price gap widened, VLCC fleet did not install desulfurization tower, the first half of the profit was affected. The gross profit of the company's foreign trade tanker transport business in the first half of 2022 was-430 million yuan, a decrease of 100 million yuan compared with the same period last year. Under the influence of the conflict between Russia and Ukraine, the difference between low and high sulfur oil prices has widened, and the TCE gap between energy-saving ships with desulfurization towers and non-energy-saving ships without desulfurization towers has widened from less than US $10,000 / day to US $30,000 / day. The company's fleet did not install desulphurization towers, which affected VLCC profits in the first half of the year. The average TCE of VLCC representative route TD3C (Middle East-China) in the first half of 2022 is only-9334 US dollars per day (compared with-311 US dollars per day in the same period last year). The TD3C-TCE freight rate has risen to 24518 US dollars per day in August and is expected to continue to rise during the peak season.
After the delivery of the tanker, there are still eight orders for LNG ships. In the first half of 2022, the Group received two tankers with 360000 deadweight tons and disposed of one tanker with 159000 deadweight tons. The company's holding subsidiary owns 155tankers with a total of 22.06 million deadweight tons, 6 LNG ships with a total of 1.05 million cubic meters, and eight LNG vessels with a total of 1.39 million cubic meters under construction.
Flexible allocation of domestic and foreign trade to open flexible space in peak season. In the first half of 2022, the VLCC fleet seized the phased opportunity of the market, and the proportion of cargo operating days in the Atlantic region increased by 4.9% compared with the same period last year. At the same time, we made full use of ships engaged in both domestic and foreign trade to adjust the distribution of capacity, adjusted three ships from domestic trade to foreign trade, and adjusted one ship from refined oil transportation to black oil transportation, thus increasing the overall fleet income.
The profitability of small and medium-sized oil tankers and finished oil tankers has improved significantly to show profit flexibility, and Q3 is expected to start a quarterly improvement trend. With the reconstruction of the global supply chain in the conflict between Russia and Ukraine, small and medium-sized oil tankers were the first to rise. The Q2 TCE rates for SUEZMAX and AFRAMAX ships were $35793 and $35668 per day, respectively, and the month-on-month average TCE rates for SUEZMAX and AFRAMAX ships were $51119 and $52643, respectively. Q3 is expected to start a quarterly improvement trend.
The refined oil refining in Europe and the United States is tight, and inventories are also at a low level. More cross-regional trade has maintained a high prosperity in the international refined oil transportation market. The average BCTI TC7-TCE in the second quarter was 34475 US dollars / day, an increase of 230% month on month. The average August TCE freight rate was 38883 US dollars / day, which improved quarter by quarter.
Small and medium-sized tankers profit improvement overall performance in line with expectations, VLCC off-season is not off-season peak season can be expected, Q3 is expected to start a quarterly improvement trend, raise profit forecasts, maintain the "buy" rating. The peak shipping season for crude oil products is October-December. From June to July, refinery overhaul under high temperatures in the Northern Hemisphere affects the off-season. From a seasonal point of view, the original tanker freight rate has risen against the trend in the off-season, peak season effect, superimposed with the landing of the sixth round of EU sanctions, EEXI environmental protection new regulations, Q3 is expected to start a quarterly improvement trend. Raise the profit forecast, estimated 22-24 return net profit 14.3,45.4, 6 billion yuan (the original forecast for 22-24 is 14.3,20.4, 4.49 billion yuan), maintain the "buy" rating.
Risk hint: new shipbuilding orders rose sharply, global crude oil production recovered less than expected, and new projects for LNG ships fell short of expectations.