Zhitong Financial APP learned that Anxin International released a research report saying that it was first given a "buy" rating of China ship Leasing (03877). It is optimistic that it has a high degree of understanding of the industry, can accurately grasp the cycle of the shipping industry, make appropriate business decisions, implement counter-cyclical investment strategies, and increase investment in high-quality ships such as clean energy, and continue to optimize asset allocation with a target price of HK $1.80. It is true that the global economic recession next year will put a certain degree of pressure on China Shipping Leasing, but the risk can be dispersed through the distribution of fleet types. At the same time, the steady increase in the number of fleets can also hedge against the impact on the performance of some companies.

The main points of the report are as follows:

The only listed leasing platform under China Shipping Group.

China Shipping Leasing, founded in 2012, is a chartering company of China Shipbuilding Group and one of the leading ship leasing companies in the world. The company provides customized ship leasing solutions to meet the different needs of customers. The development of the company's fleet takes diversification and modernization as the main direction, with an average fleet age of 3.3 years. As of June 2022, the size of the company's ship portfolio has reached 157, of which 132 are in operation, 25 are under construction, the utilization rate of the ship portfolio is 100%, and the rental cash collection rate is 100%. The company has a variety of ships for leasing, among them, marine clean energy equipment, container ships, tankers, multi-structured ship asset allocation to improve the medium-and long-term stable operation and sustainable development ability of medium-and long-term ship leasing.

Develop self-operated fleets to increase income generation.

With the market position of China Shipping Group in the industry, the synergy and close business relationship between China Leasing and Shipyard, it can keep abreast of the latest information on supply and demand in the shipping market and customer demand, and grasp business opportunities in a timely manner. As a result, the company has expanded from stable long-term leasing services to self-operated, joint and joint fleet business to develop short-term leasing business. Mastering the ship operating cycle can bring additional income to the company and enhance the overall return on assets. By the end of June 2022, the company has a total of 26 self-operated fleets, which are divided into two ways: self-operation, joint venture and joint venture. Four proprietary ships will be delivered next year, with a total size of 30.

The impact of the interest rate increase cycle on lease income is limited.

The income of the company's leasing business is mainly affected by the interest rates and charter rates charged to customers. Among them, the interest charged by the financial leasing business to customers is generally based on the floating interest rate, and the interest rate raising cycle has a positive effect. In terms of cost, benefiting from the background of central enterprises, there is a comparative advantage in financing. As of June 2022, the total interest-bearing debt of the company is about 29 billion yuan. Of these, about 10 billion yuan are US dollar bonds, with an average interest rate of 2-3%, maturing in 2025-30 years, and interest rates are relatively stable. The rest of the interest-bearing debt is dominated by foreign banks, which can basically hedge against the interest income of customers collected by financial leases, and has a limited impact on lease income.

Risk Tips:The recession affects downstream shipping; cyclical risks in the leasing market; uncertainty of proprietary fleets and return on investment.