Key points of investment

Shenghang Co., Ltd. announced that it plans to purchase chemical tankers and other related transactions from Fenghai Shipping. It plans to use 500 million yuan to purchase domestic chemical tankers and 3 foreign trade chemical tankers from Fenghai Shipping. It is estimated that the domestic trade chemical fleet will add 21,000 tons of capacity, and the foreign trade chemical fleet will add 43,400 tons of capacity. The purchased ship is scheduled to be delivered by the end of June or July. If it is successfully put into operation, it is estimated that it will contribute about 31 million yuan of net profit to the mother in 2023 and about 65 million yuan to the net profit of the mother in 2024.

Incident: The company announced plans to purchase chemical tankers and other related transactions from Fenghai Shipping. It plans to purchase 3 domestic chemical tankers and 3 foreign trade chemical tankers from Fenghai Shipping, with a total negotiated price of 504 million yuan.

Domestic and foreign trade expanded both ways, laying the foundation for the release of performance

The company's core business is chemical shipping. In the context of domestic substitution promoting steady growth in industry demand in recent years, the commissioning of additional capacity continues to drive business scale expansion. Benefiting from the continued tight balance between supply and demand in the industry, the company, as a leading enterprise in the industry, is leading the pace of capacity expansion, compounded by the gradual improvement in customer recognition, and is expected to continue to strengthen its competitiveness.

Status of ships to be purchased in this plan:

Fenghai 23: domestic trade chemical tanker, reference cargo capacity of 0.81 million tons, delivered before June 30; Fenghai 26: domestic trade chemical tanker, reference cargo capacity of 0.65 million tons, delivered before July 31; Fenghai 27: domestic trade chemical tanker, reference cargo volume of 0.65 million tons, delivered before July 31; Fenghai 13: foreign trade chemical tanker, reference cargo capacity of 0.81 million tons, delivered before July 31; Fenghai 15: foreign trade chemical tanker, reference cargo capacity of 0.81 million tons, delivered before June 30; Fenghai chemical tanker with reference cargo capacity of 0.33 million tons, delivered before June 30 Product The ship, with a reference cargo capacity of 27,200 tons, was delivered by June 30.

According to the company's 2022 annual report, as of the end of 2022, the company's domestic chemical fleets totaled 24, with a capacity of 155,500 tons; the total foreign trade chemical fleet was 2, with a capacity of 13,400 tons. After the planned ship purchase lands, the domestic chemical fleet capacity is expected to increase by 21,000 tons, an increase of 14% over the end of 2022; the capacity of the foreign trade chemical fleet will increase by 43,000 tons, an increase of 324% over the end of 2022.

Profit estimation: Assuming that all of the above ships are delivered on the planned date and successfully put into operation, based on the company's historical ship performance contribution capability estimates, the total contribution to the mother's net profit in 2023 is estimated to be about 31 million yuan, accounting for about 18% of the total net profit of the full year of 2022; it is estimated that the total net profit contributed by 2024 is about 65 million yuan, accounting for about 38% of the full year of the return to the mother's net profit in 2022.

Profit forecasting and valuation

Benefiting from outstanding customer resources and approval capabilities, combined with continuous improvement in operations, strong profit growth in the context of a tight balance between supply and demand in the industry. Considering that the acquisition has not been completed and the impact of this acquisition is not taken into account for the time being, it is estimated that the net profit of the company will reach 241, 311, and 380 million yuan respectively in 2023-2025, corresponding to the current stock price of PE 15.2, 11.8, and 9.7 times, respectively. Maintain an “increase in holdings” rating.

Risk warning

Shipping demand for hazardous chemicals fell short of expectations; capacity growth fell short of expectations; operation optimization fell short of expectations.