Main points of investment:
The situation of coastal bulk transport was low before and high after last year. Last year, the situation in the coastal bulk transport industry was grim. Zhejiang coastal bulk shipping enterprises experienced a round of reshuffle. Zhejiang Cosco, Taizhou and Wenzhou were either bankrupt or restructured; most of the private shipping enterprises in Ningbo were closed down, shipping enterprises were everywhere, and the market competition was fierce. From the domestic industry index, international BDI can see the cold and warm of the industry, BDI reached an all-time low of 290 points in the first half of last year, in the second half of last year, China's coal and steel production capacity increased trend, greatly alleviating the imbalance between supply and demand, Ningbo Shipping also issued a performance pre-increase announcement.
The company is mainly for the actual controller Zhejiang Energy Group to transport thermal coal, in the form of north-south coal transport, three-year COA contract locked freight rate, less affected by index fluctuations. The company's main customers are stable, the business is basically COA contract locked freight rate, COA contract freight volume of 13 million tons, and the company's annual transport capacity of about 17 million tons, so the performance is relatively stable.
The company is financially sound and has a low debt ratio, which ensures that it can survive the shipping trough. The mid-2016 report shows that the company has total assets of 6.2 billion and net assets of 2.6 billion, of which 3 billion are long-term liabilities for expressways and few liabilities for shipping business. The recent three ships were all built with their own funds, with a net cash flow of close to 400 million. Ningbo Shipping is steady and not aggressive.
After nearly 10 years of cultivation, the highway has broken even, and traffic flow is expected to grow by about 10% a year, which is still far from saturated. The company began its highway business in 2005, using both land and water to hedge against the periodic fluctuations of the shipping industry. It invested 4.3 billion yuan in the west section of the Ningbo highway around the city, with a total investment of 4.3 billion yuan (cost 100 million / km), connecting the cross-sea bridge, Hangzhou-Ningbo highway, Taiwen highway, etc., to create a golden ring. After nearly 10 years of cultivation, the 16-year performance forecast shows that highway assets have made a profit, and traffic flow has increased by more than 10% a year. According to the current trend, the future profit is considerable.
Profit forecast. The company's main coastal waterway transport industry has been too low in 2017, the relationship between supply and demand in the industry is expected to improve, and road transport still maintains a high natural growth rate. It is estimated that the company's EPS in 2018 will be 0.10 yuan and 0.14 yuan respectively, and BPS will be 2.74 yuan and 2.87 yuan respectively. Considering the average valuation level of the industry, it will give the company 2.5x PB in 2017, with a target price of 6.85 yuan, covering for the first time and giving "increased holdings" rating.
Risk hint. Shipping continues to be in the doldrums and the highway toll policy is uncertain.