Performance

On August 14, 2023, Sheng Hang released its half-yearly report for 2023. 2023H1 achieved revenue of 580 million yuan, an increase of 47.5% over the same period last year; net profit of 90 million yuan, down 2.6% from the same period last year; revenue of 290 million yuan, up 35.3% from the same period last year; and net profit of 40 million yuan, down 16.8% from the same period last year.

Analysis.

Underford also reported an increase in stacking volume and a year-on-year increase in revenue. The increase in operating income in the first half of 2023 and Q2 compared with the same period last year is mainly due to the expansion of business scope and scale: 1. The company acquired Jiangsu Underford energy supply chain in 2022 and merged with 2022Q3, so 2023Q2 brings additional increments to the company's revenue. 2. With the merger and acquisition of ships and the commissioning of ships, the company 2023 H1 realized 2.4883 million tons of domestic trade liquid chemicals by waterway, an increase of 4.48% over the same period last year, and 335300 tons of domestic trade oil products, an increase of 18.69% over the same period last year.

The profitability declined compared with the same period last year, and the expense rate increased compared with the same period last year. The price of 2023Q2 chemical products fell, and CCPI fell 24.6% compared with the same period last year. Due to the domestic and foreign economic environment, upstream and downstream refining and chemical enterprises maintenance and other factors, the company's profitability declined. 2023Q2's gross margin fell 11.6pct to 29.3%. In terms of expense rate, the expense rate of 2023Q2 increased by 3pct during the period, of which the sales expense rate was 0.4%, down 0.1 pct from the same period last year; the management expense rate was 6.9%, an increase of 1.3pct over the same period last year, mainly due to the increase in employee salaries, office building depreciation and share payment fees caused by restricted stock incentives; the R & D expense rate was 2.2%, which decreased 0.9pct from the same period last year. The financial expense rate was 5.6%, an increase of 2.7pct over the same period last year, mainly due to the expansion of financing scale. 2023Q2's net interest rate was 14.8%, down 9.3pct from the same period last year.

The scale of transport capacity can be expanded, and the structure of transport capacity will be continuously optimized. As of now, the number of domestic and foreign trade ships controlled by 2023H1 has reached 37 (including those that have been purchased but not put into operation), with a total capacity of 279200 deadweight tons, an increase of 39 percent over the beginning of the year. In August 2023, the company announced that it would replace the existing ship capacity by "retreating one into one". The new ship capacity will increase by 50% of the total tonnage compared with the ship capacity out of the market, which will help to further enhance the scale of the company's fleet. In addition, the company has three ships under construction with a total capacity of 15000 deadweight tons, including 3720 deadweight tons of oil and chemical tankers (capacity replacement), 5050 cubic meters of liquefied petroleum gas carriers (non-ethylene vessels) and 7450 deadweight tons of chemicals. after the above ships are completed and put into production, the ship age and capacity structure will be further optimized.

Earnings forecast, valuation and rating

Considering the decline of the chemical logistics industry, the company's 2023-2025 net profit is forecast to 220 million yuan, 310 million yuan, 400 million yuan (the original 240 million yuan, 330 million yuan, 420 million yuan). Maintain a "buy" rating.

Risk hint

Chemical industry fluctuation risk, safety operation risk, policy regulatory risk, M & A lower-than-expected risk, shareholder and director high reduction risk.