On March 28, 2024, COSCO Marine Control released its 2023 annual report. In 2023, the company achieved revenue of 175.44 billion yuan, a year-on-year decrease of 55.14%; realized net profit to mother of 23.86 billion yuan, a year-on-year decrease of 78.25%. Among them, Q4 achieved operating income of 40.89 billion yuan, a year-on-year decrease of 45.1%; realized net profit to mother of 1.79 billion yuan, a year-on-year decrease of 85.56%.
Management analysis
The relationship between supply and demand in the shipping market is tightening, and revenue declined year on year. The company's revenue fell 55% year on year in 2023, mainly due to shrinking demand and rising supply. The supply and demand relationship in the global container shipping market is tightening, and the market freight rate level fluctuates at a low level. The average CCFI index fell 66.4% year over year in 2023. With a high revenue base for the same period last year, the company's revenue in 2023 declined year-on-year. In terms of volume price, the company's consolidated cargo volume was 23.554 million TEU, a year-on-year decrease of 3.5%, of which the foreign trade route freight volume was 19.2.31 million TEU, a year-on-year decrease of 3.5%; the company's foreign trade route revenue is estimated to be 10,55.3 US dollars/TEU, down 60% year on year.
The gross margin decreased year over year, and the cost ratio decreased year over year. In 2023, the company achieved a gross profit margin of 16.4%, a year-on-year decrease of 27.91 pct, mainly due to the sharp drop in foreign trade freight rates, which affected the company's gross profit margin.
In terms of cost ratio, the company's expense ratio for the 2023 period was 1.47%, down 0.4 pct year on year, of which sales rate was 0.57%, up 0.55pct year on year; management expense ratio was 3.51%, up 0.86pct year on year; R&D expense ratio was 0.61%, up 0.26pct year on year; financial expense ratio was -3.22%, down 2.07 pct year on year. In 2023, the company achieved investment income of 4.75 billion yuan, an increase of 88.9% over the previous year. The year-on-year decline in gross margin compounded the year-on-year increase in the expense ratio. In 2023, the company's net interest rate to mother was 13.6%, a year-on-year decrease of 14.43pct.
The dividend ratio reached 50%, and share repurchases continued to advance. At the end of the 2023 period, the company plans to pay a dividend of 0.23 yuan per share, with a total year-end dividend of 3,670 billion yuan. In addition to the interim dividend of 8.196 billion yuan, the company will total 11.866 billion yuan in 2023, which is about 50% of the company's net profit to the mother in 2023. In order to protect the company's value and shareholders' rights and enhance investor confidence, the company announced a share repurchase plan. On August 31, 2023, the company began to repurchase A shares and H shares. By the end of February 2024, a total of about 215 million A shares and H shares had been repurchased, and all shares repurchased had been cancelled.
Profit Forecasts and Ratings
Considering more container ship deliveries in the future, adjust the 2024-2025 net profit forecast of 20.2 billion yuan and 18.2 billion yuan, and add 15.7 billion yuan of net profit to mother in 2026. Maintain a “buy” rating.
Risk warning
Demand growth is slowing, industry competition is intensifying, transportation capacity supply is increasing, cost pressure is rising, and trade patterns are changing.