The Zhitong Finance App learned that CICC released a research report stating that it maintained Haifeng International's (01308) “outperforming the industry” rating, lowered 2024 net profit by 23% to US$505 million due to lower freight rates than expected, introduced net profit of US$443 million for the first time, and lowered the target price by 15.8% to HK$16. The company announced a dividend of $0.14 for the full year of 2023, corresponding to a dividend ratio of 70% in 2023. Assuming that the company maintains a 70% dividend rate, the corresponding dividend rate for 2024 is 8.3%, which is very attractive.

The report quoted the company's 2023 performance: revenue reached US$2,429 million, down 40.9% year on year; net profit to mother was US$531 million, corresponding to profit of 0.20 US dollars per share, down 72.7% year on year. The performance was lower than expected by the bank. The bank believes it is mainly due to declining market freight rates. In 2023, the company's annual cargo volume fell 1.1% year on year, and single box shipping revenue fell 41.0% year on year due to falling market freight rates. 4Q23's cargo volume increased month-on-month, and freight rates in Southeast Asia improved month-on-month. The company's gross margin declined due to falling freight rates, but in 2023, the company's sales costs fell 15% year on year, and 2H23 sales costs fell 4% month-on-month compared to 1H23. The bank believes this is mainly due to the decline in the company's boat rental costs and fuel costs.

The bank mentioned that there are few new freight rates for small supply-side boats. According to Clarkson's March data, on-hand orders for small boats under 3000 TEU account for 8.5% of capacity (while old boats aged 20 and over account for 24%), and ship dismantling has accelerated since 2023. 110,000 TEU of ships were scrapped in 2023, and 10,000 TEU of ships were scrapped since 2024. Furthermore, considering the limited production capacity of shipyards and the impact of new environmental regulations on effective capacity, the bank believes that the future growth rate of small ships may be further limited. Demand side cargo volume is expected to improve year on year. The bank believes that with the transfer of industries within the Asian region and the growth of Southeast Asian countries such as Vietnam, the company's cargo volume is expected to increase year over year. According to Clarksons forecast data, in 2024, 3000 TEU small ship capacity increased 2.1% year on year, while cargo volume demand in the Asian region increased 3.7% year on year.