Company announcement for the third quarter of 2023:1) Performance performance: Revenue for the first three quarters of 2023 was 134.56 billion yuan, -57.5%; net profit of 22.07 billion yuan, -77.3%; net profit after deduction of 21.98 billion yuan, -77.3% year-on-year; net profit after deduction of 21.98 billion yuan, -77.3% year-on-year. 2023Q3 had revenue of 42.71 billion dollars, -59.6% yoy, -4.0%; net profit of 5.51 billion dollars, -83.1% yoy, -41.6%; net profit after deducting non-return net profit of 5.46 billion yuan, -83.1% yoy, -42.0% month-on-month.
2) Cost side: Operating costs for the first three quarters of 2023 were 108.97 billion, or -36.5% year-on-year. The operating cost for Q3 was 37.9%, +8.1% over the previous year; the Q3 fee ratio was 2.3%, -4.8% year-on-year, of which financial expenses were net income. 3) Cash flow: Net operating cash flow for the first three quarters of 2023 was 20.53 billion yuan, -87.7% year-on-year. Q3 Net operating cash flow was 7.26 billion yuan, -86.5% yoy and +2.2% yoy. 4) Profit margin:
The gross profit margin for the first three quarters of 2023 was 19.0%, y-26.7 pts; net profit margin of 16.4%, y-14.4 pts; net profit margin after deduction of 16.3%, y-14.3 pts. Q3 gross profit margin was 12.2%, y-30.7 pts, -9.8 pts; net profit margin was 12.9%, y-17.8 pts; month-on-month net profit margin was 12.9%, y-17.8 pts; month-on-month net profit margin was 12.8%, -17.7 pts, month-on-month -8.4 pts. 5) Debt ratio: At the end of September '23, the balance ratio was 47.6%, -2.5% yoy, -1.0% month-on-month.
The company's performance in the third quarter was under pressure, and the cost of a single box improved year over year. 1) Since 2023, the container shipping industry has faced a weakening of transportation demand, a gradual increase in capacity supply, and a significant drop in market freight rates compared to last year. The 2023 Q3SCFI and CCFI averages declined -69.9% and -70.3% year-on-year respectively. With a high performance base for the same period last year, the revenue and performance of the shipping business declined in 2023 Q3. 2) Revenue side: 2023Q3's consolidated business revenue was 40.95 billion, -60.6% year-on-year, of which consolidated route revenue was 37.47 billion, -62.3% year-on-year, trans-Pacific, Asia, other international, and mainland China were 102.7, 79.0, 104.2, 60.4, and 29.02 billion yuan respectively, -68.2%, -69.1%, -57.2%, -57.8%, and -5.8%. 3) Cargo volume:
The 2023Q3 container volume was 6.06 million TEU, -0.1% year-on-year and +2.0% month-on-month, including 107.3, 111.2, 209.5, 66.3, and 1,118,000 TEU across the Pacific, Asia, other countries, and mainland China, respectively, -1.1%, -0.3%, +2.2%, -4.4%, -0.1%, -4.4%, -3.0%, +8.2%, -0.2%, -0.2%, and +4.2%. 4) Single box revenue: 2023Q3 comprehensive single box revenue is 864 US dollars/TEU, -63.8% year over year, -7.7% month on month; single box revenue for international routes is 979 US dollars/TEU, -65.5% year-on-year, -7.2% month on month. Among them, trans-Pacific, Asia, other countries, and mainland China were 1339, 991, 694, 1276, and 353 US dollars/TEU, -69.0%, -70.2%, -59.8%, -9.1%, -8.4%, +6.4%, -8.4% month-on-month, - 13.5%, -8.9%, -9.9%; single box revenue for domestic trade routes was 2,565 yuan/TEU, -5.6% year-on-year and -8.3% month-on-month. 5) Single box cost: The cost of a single box in the 2023Q3 consolidation business is about 832 US dollars/TEU, -5.4%; the corresponding single box gross profit is about 32 US dollars/TEU, -97.9% year-on-year. 6) Consolidation profit: The 2023Q3 consolidation business EBIT margin was 15.8%, -28.5% year-on-year and -11.2% month-on-month.
Investment suggestions: 1) Profit forecast: Considering current freight rates, we adjusted our profit forecast for the year 23 to an estimated profit of 27.1 billion (the original forecast was 28.3 billion), and maintained the 24-25 profit forecast to achieve net profit of 20 billion and 21 billion dollars, respectively. The corresponding EPS for 23-25 is 1.68/1.24/1.30 yuan, and the corresponding PE is 6/8/7 times. 2) We believe that the market pays too much attention to pessimistic expectations of the downturn in the industry and underestimates the company's internal value. As the world's leading central enterprise gathering and transportation leader, the company's steady ability to withstand pressure continues to increase. We are optimistic about the long-term increase in the cyclical value of central enterprises after the verification of the company's profit center and the “ship-to-chain” end-to-end transformation. In the first three quarters, the company's supply chain revenue other than shipping was 21.84 billion yuan, accounting for 16.9% of container shipping business revenue, an increase of 8.7 percentage points over the previous year. At the same time, the company promoted share repurchases, effectively boosting investor confidence. 3) We maintain the valuation method and maintain the target market value of 240 billion yuan, corresponding to the stock price of 14.9 yuan. We expect a 54% margin compared to the current price, “push” the rating.
Risk warning: European and American import demand has declined sharply, spot freight rates are lower than long-term agreement prices, large-scale expansion of capacity, etc.