On January 24, 2024, the company held the first meeting of the 10th board of directors in 2024 to review and pass proposals such as the “Proposal on Adjusting the Company's Plan for Issuing Additional A Shares to Unspecified Targets”. According to the company's announcement, at this meeting, the board of directors agreed to reduce the total amount of capital raised by issuing additional A shares to unspecified targets in 2023. We believe that the current reduction in the total amount of capital raised by the company has reduced the dilution of ordinary shareholders' rights in this issuance. At the same time, the capital raised by the company is mainly to upgrade integrated construction and purchase ships. The investment direction is highly related to the main business, and the economic benefits of the project are good, which is expected to bring new opportunities for development to the company. We maintain the company's increased holdings rating.

Key points to support ratings

Capital raised in fixed increases has been drastically reduced, and the proportion used to supplement working capital has been reduced. On January 24, 2024, the company held a board meeting to review and pass proposals such as the “Proposal on Adjusting the Company's Plan to Issue Additional A-Shares to Unspecified Targets”. According to the company's announcement, at this meeting, the board of directors agreed to reduce the total amount of capital raised by issuing additional A shares to unspecified targets in 2023. After this adjustment, the total amount of capital raised was reduced from $3.70 billion to $2,173 billion, down 41.3% from the previous time, and the amount used to supplement working capital was reduced from $959 million to $306 million, down 68.0% from the previous time.

The investment direction of capital raised after the fixed increase and adjustment is highly related to the main business, and the overall economic benefits of the project are relatively good. According to the company's announcement, this adjustment takes into account factors such as the implementation progress of the company's investment projects, the actual construction situation, and the company's strategic development plan. After the adjustment, after deducting the issuance fee, the issuance will all be used for the following projects: the supply chain digital-intelligence integration upgrade project, the Singapore fuel-fueled ship purchase project, the dry bulk carrier purchase project, and supplementary working capital. Each project capital accounted for 36.5%, 27.8%, 21.6%, and 14.1% of the total investment, respectively. Among them, the internal rate of return of the Singapore fuel-fueled ship purchase project and the dry bulk carrier purchase project was 14.41% and 9.33%, respectively, which is relatively good for the economy.

The reduction in the fixed increase amount mitigated the dilution of ordinary shareholders' rights to a certain extent, which is conducive to stabilizing market expectations and safeguarding shareholders' rights and interests. Previously, the company's large increase had an impact on the company's stock price. The reduction in capital raised this time is conducive to stabilizing expectations in the secondary market. After the fixed increase was adjusted, the main use of capital raised by the company was to upgrade integrated construction and purchase ships. The investment direction is conducive to improving the company's operating efficiency, increasing the total capacity of the company's ships, and bringing new growth points to the company's development.

valuations

We maintained the company's 2023-2025 net profit of 2,627/32.03/3.649 billion yuan, -26.8%/+21.9%/+13.9% year-on-year, and EPS of 1.19/1.45/1.66 yuan/share, corresponding to PE 5.7/4.7/4.1 times, respectively, to maintain the company's holdings increase rating.

The main risks faced by ratings

The global economy fluctuates and the shipping market fluctuates.