The Zhitong Finance App learned that Zheshang Securities released a research report saying that China's completed, new, and handheld orders in 2023 increased 12%/56%/32% year on year, respectively, to 59%/71%/60% during the peak period, respectively. There is plenty of room for growth in many indicators. The bank believes that the shipbuilding cycle is booming, supply difficulties may drive ship prices to continue to rise, and it is expected that oil tankers and dry spreaders will continue to place large orders in the later stages. The growth rate of new ship orders may slow down in the future; however, due to contraction in supply and difficulties in expanding production, tight supply and demand may drive ship prices to continue to reach new highs. The cycle is expected to fluctuate upward for a long period of time. The high level of prosperity will continue, and the performance of leading companies will be very flexible.

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The views of Zheshang Securities are as follows:

The cyclical boom is upward: supply difficulties may drive ship prices to continue to rise, and oil tankers and dry spans are expected to continue to place large orders in the later stages

1) Cycle position judgment: it has rebounded from the bottom, the multi-ship relay continues to rise, and the profitability of shipyards continues to improve;

2) Demand: Volume - China's completed, new, and handheld orders in 2023 increased 12%/56%/32% year-on-year respectively, respectively, 59%/71%/60% during the peak period, and there is plenty of room for growth in many indicators;

3) Demand: Price - As of March 2024, the Clarkson New Ship Cost Index closed at 181 points, up 10% year on year, with a cumulative increase of 43% since the beginning of 2021, at the historical peak of 95%; box ships led the way, the new container cost index had a cumulative increase of 47% since the beginning of 2021. Tight shipping positions and general inflationary pressure, including labor costs, pushed ship prices to continue to reach new highs;

4) Downstream capacity - container ships have sufficient capacity in 2024-2025, but there is still a shortage of oil tankers. Subsequent tankers and dry scatters have large demand and room for orders;

5) Supply: Shipyard traffic is almost saturated, but the number and delivery volume of active shipyards have declined significantly, and supply and demand are tight or driving ship prices to continue to rise;

Trend judgment: The bank determined that the growth rate of new ship orders may slow down in the future; however, due to contraction in supply and difficulties in expanding production, supply and demand are tight or driving ship prices to continue to reach new highs. The cycle is expected to fluctuate upward over the long term, the boom will continue, and the performance of leading companies will be highly flexible.

Industry trends: developing in the direction of high-end, large-scale, and dual-fuel, leading companies are expected to benefit first

1) New ship orders are developing in the direction of large-scale, high-end, and dual-fuel. Leading companies are leading the world in large-scale ship construction technology, and future high-quality and high-price orders are highly competitive; 2) Environmental protection policies drive the replacement cycle earlier, dual-fuel ship types increase the value of single ships, and peak cycle peaks or acceleration due to environmental demand; 3) The industry continues to be concentrated in China, and China continues to concentrate on leading companies. The “Matthew effect” is obvious. Shipyards with high production capacity and high technology are expected to benefit priority.

The State Assets Administration Commission included the market value management of listed companies in the assessment, and is optimistic about the revaluation of military central enterprises;

Xie Xiaobing, head of the Property Administration Bureau of the State Assets Administration Commission, said that further research will include market value management in the performance assessment of central enterprise leaders, and is optimistic that the market value management capabilities of military central enterprises will continue to improve; the bank believes that listed companies under China Shipbuilding Group are expected to achieve breakthrough improvements and development in various areas such as state-owned enterprise reform, asset integration, and market value management.

Risk warning: risk that demand for new shipbuilding falls short of expectations, risk of fluctuating raw material prices