This report is read as follows:
Vaccines and RCEP are expected to accelerate the short-term recovery in traffic, and profits are expected to be gradually repaired from the low of 2020.
Main points of investment:
Vaccines and RCEP are expected to accelerate the rebound in transport volume, raising the target price to 11.06 yuan (the original target price is 8.75 yuan) and maintaining a "cautious overweight" rating. The epidemic has a great impact on transport volume in 2020, but with the introduction of the vaccine and the implementation of the RCEP agreement, transport volume is expected to pick up faster from 2021.
The forecast EPS for 2020-21 will be lowered to 0.26,0.70 yuan (the original forecast is 0.46 yuan and 0.73 yuan), and the forecast EPS for 2022 will be increased by 0.85 yuan. According to the DCF valuation method and the comparable company's 2021 PE, the target price will be raised to 11.06 yuan.
The domestic epidemic situation has been well controlled and the transport volume has gradually recovered. China has quickly and effectively controlled the epidemic, enterprises have resumed production and work, the volume of bullet train transport has basically recovered, domestic travel restrictions on residents have been lifted, and passenger flow has gradually recovered. However, sporadic cases of infection in China have a psychological impact on residents, and it will take some time for passenger volume to fully recover. The launch of the vaccine is expected to speed up the recovery of passenger traffic.
Signed by RCEP, the volume of ferry and cruise ships between China and South Korea is expected to increase. On November 15, 15 countries formally signed the Regional Comprehensive Economic Partnership (RCEP), which will lead to closer trade and personnel exchanges between China, Japan and South Korea. In the medium and long term, the volume of passengers and containers of the Sino-Korean ferry operated by the Blue Whale is expected to increase, and the passenger volume of the cruise ship "Mount Tai" is also expected to increase.
Profits are expected to be repaired gradually. In 2020, the new passenger ro-ro ships "China Renaissance" and "China Fuqiang" will be put into operation, and two newly built cargo ro-ro ships are also expected to be delivered and put into operation. A substantial increase in short-term capacity will bring pressure on loading rates and ticket prices. As transport demand rises, profits are expected to recover gradually from the low of 2020.
Risk analysis. The domestic epidemic situation was repeated, the epidemic situation in Japan and South Korea broke out again, the launch of the vaccine was delayed, fuel subsidies were lower than expected, and construction of the Bohai Bay tunnel and bridge began.