Cosco Haineng issued a semi-annual performance announcement, which basically fell on the track of the performance forecast. In the first half of 2022, the company achieved revenue of 7.51 billion yuan, an increase of 22.9% over the same period last year, and a net profit of 159 million yuan, down 70.8% from the same period last year. Of this total, Q2 achieved a revenue of 4.04 billion yuan, an increase of 32.8% over the same period last year, and a net profit of 134 million yuan, down 33.4% from the same period last year.
Foreign trade oil transportation: 1) small and medium-sized oil tankers are booming first, contributing considerable performance in the first half of the year. The conflict between Russia and Ukraine has led to a change in the pattern of global energy trade. Europe has shifted to importing oil from every America, the Mediterranean and other places, while Russia's crude oil supply has shifted to Asia, and the overall transportation distance has led to the uptrend of the Avra and Suez tanker market. At the same time, due to the decline in refining and chemical production capacity in Europe and the low inventory of oil products, the refined oil market also performed better. 2) in the first half of the year, supply exceeds demand in the VLCC market, and the overall performance of freight rates is weak.
Due to excess capacity and high fuel prices, the average daily revenue of the TD3C route in the first half of the year was only-9334 US dollars per day. 22 H1 foreign trade tanker fleet realized income of 3.945 billion yuan, + 45.0% compared with the same period last year; transportation gross profit was-431 million yuan; gross profit margin was-10.9%. Among them, foreign trade oil products achieved a gross profit of 90 million yuan, with a gross profit margin of 11%.
The overall performance of domestic trade, oil transportation and LNG business is relatively stable. The transportation of offshore oil, pipeline oil and transit oil is relatively stable throughout the year. 22H1's domestic trade oil transportation revenue reached 2.954 billion yuan, an increase of 6.6% over the same period last year; transportation gross profit was 720 million yuan, with a gross profit margin of 24.2%. In terms of LNG business, the surge in demand for LNG in Europe has supported overall trade growth, with 2022H1 signing more than 25 LNG supply and purchase agreements (SPA) worldwide. In the first half of the year, the number of LNG vessels invested by the company has reached 49, and the LNG transport sector contributed 380 million yuan in net profit, an increase of 41 million yuan over the same period last year.
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, and VLCCTD3C-TCE has reached nearly 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.
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 lifting expectations, we expect the company to achieve a return net profit of 14.7 billion yuan in 22-24, maintaining a "highly recommended" rating.
Risk tips: 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.