Description of the event
The company released its 2023 performance forecast. The net profit for the full year of 2023 is expected to be 2.5-375 million yuan, down 92% to 88% from the same period last year, and the median estimate is 310 million yuan; corresponding to 23Q4 net profit from -250 million yuan to -120 million yuan, the median estimate is -180 million yuan, which is an improvement over the previous year and a month-on-month loss. Net profit after deducting non-return to mother in 2023 is estimated to be 48-72 million yuan, down 89% to 83% from the same period last year; corresponding 23Q4 deducted non-net profit -7.3 to -490 million yuan, with a median estimate of -610 million yuan.
Incident comments
Affected by cyclical fluctuations in the container industry, the company's performance is under pressure in the short term. In 2023, due to factors such as the weakening momentum of global economic and trade growth and the turbulent geographical situation, demand for traditional shipping containers weakened, and the company's container business declined year-on-year. Furthermore, the US dollar index continued to rise, the spread between China and the US continued to reverse, the exchange rate of the RMB against the US dollar fluctuated greatly, and the cost of forward-locked remittance payments increased significantly. According to preliminary statistics from the company's finance department, the cumulative loss of investment profit and loss, fair value change profit and loss, and exchange income from the foreign exchange hedging business in 2023 was about RMB 82 billion, of which the estimated cost of forward locking and remittance was about 610 million yuan. At the same time, there were many one-time impairment charges and expenses in the fourth quarter, which dragged down the company's overall profit.
In the container business, the recovery in foreign trade combined with the renewal and release of old containers is expected to bottom out and rebound in 2024. Container manufacturing experienced a supercycle in '21 due to port congestion and other factors. The cycle began to decline in '22, and global trade sluggish in '23, and container manufacturing fell back to its lowest level in nearly 10 years. Containers are expected to bottom out in 2024, mainly due to: 1) the recovery in global commodity trade is expected to drive a recovery in demand for shipping; 2) the release of huge demand for the replacement of used boxes, the last round of demand for used containers during the peak of 2008-2011 and the replacement of used containers that were delayed due to the imbalance between supply and demand in '21, are expected to be released. In the short term, the 23Q3 company's standard dry box picked up further month-on-month. The cumulative sales volume in 23Q3 was about 213,000 TEU. Compared with Q1 and Q2, they increased by 159% and 18% respectively, and 23Q4 standard dry box production and sales have achieved a significant year-on-year increase. In December '23, the container supply chain sentiment index was 111.43, reaching its highest value in 23 years, entering a boom transition range. As demand in the container industry picks up in 2024, the company, as a leading container manufacturer, is expected to fully benefit from the recovery in industry demand.
In the offshore industry sector, the relatively high oil price is compounded by the decline in offshore oil extraction costs, and the recovery in offshore oil and gas capital expenditure. Combined with a sharp supply side clearance after the previous round of decline in the offshore industry long-term cycle, it is expected that the upward trend in the offshore industry cycle will continue. In terms of special ships, demand for offshore wind power installation and operation and maintenance is relaying, and the continued growth of global new energy vehicles combined with environmental protection is expected to continue to be strong. The company's offshore business mainly involves two major aspects of offshore engineering and drilling platform leasing on the manufacturing side. Among them, marine engineering is mainly operated through CIMC Raffles, which mainly includes FPSO, wind power installation vessels, and Ro-Ro ship manufacturing. As of the end of 23Q3, the company's offshore engineering orders were 5.2 billion US dollars, an increase of 38% over the previous year, and subsequent confirmation of receipt is guaranteed. Drilling platforms have become a scarce link in the industrial chain, and the company's offshore asset management business has improved markedly. By the end of 23Q3, a total of 10 platforms had been leased. It is expected that the 24-year high-value semi-submersible platform lease will gradually be implemented along with the industry boom.
Continue to be optimistic about the upward cycle in the container and offshore industry. Currently, the company's container production schedule is full, and the offshore business is expected to benefit from a continued boom in industry demand. The company is expected to achieve net profit of 30.8 billion yuan and 4.56 billion yuan respectively in 2024-25, corresponding to PE 15 and 10 times, respectively. It maintains a “buy” rating and continues to focus on recommendations.
Risk warning
1. Market competition increases risk;
2. Risk of price fluctuations of major raw materials.