Maintain an increase in holdings. The company's profit grew steadily in 2023, which was basically in line with expectations. The company is committed to procyclical operations and is expected to exceed expectations in terms of profit sustainability. The dividend rate is beginning to rise. Orders may continue to be placed cautiously in the next few years, and the dividend rate is expected to gradually increase. Maintain the 2024-25 net profit forecast of HK$2,22.4 billion, and add the 2026 forecast of HK$2.6 billion. Maintain the target price of HK$2.06.

Results grew steadily in 2023, and long-term rental profits increased significantly. At the end of 2023, the company's fleet size was 151 ships (including orders), of which 128 were in operation, down 1 from the end of 2022. Net profit of HK$1.9 billion (+10%) was achieved in 2023, which is generally in line with expectations. Among them, there were 102 long-term leasing (leasing+long-term leasing) ships, a slight decrease of 1 compared to 2022. Thanks to the delivery of 2 new 24,000-container ships, the long-term rental asset scale increased and the share of US debt decreased and the debt structure optimized. The net long-term rental profit is estimated at HK$1.4 billion, an increase of 25%. We expect the gradual delivery of on-hand orders over the next two years to ensure continued steady growth in long-term rental profits.

Short-term rental profits declined slightly in 2023, and future earnings may continue to exceed expectations. In 2021-22, the company actively operated in a procyclical cycle, and short-term rental business (own+joint venture) profits continued to grow. In 2023, a total of 26 short-term own/joint ventures remained stable and recorded a net profit of HK$500 million, a reduction of 19%. 1) Refined tankers: Net profit of HK$340 million, an increase of 10%; 2) Net profit of the LPG fleet of HK$90 million, an increase of 143%; 3) Net profit of the bulk carrier fleet of HK$80 million. The decline in dry bulk market sentiment and the company's pursuit of a steady business model with high utilization rates reduced profits by more than 60%. Considering that the capacity utilization rate of the refined oil transportation market has exceeded the threshold, the future boom will rise and continue or exceed expectations. The company will fully benefit from the rise in refined oil transportation, and profit sustainability may exceed expectations.

The dividend rate is currently increasing in 2023, and high dividends can be expected in the future. Since the company went public, the dividend rate has declined year by year, and the capital expenditure cycle is behind it. The dividend rate increased to 39% for the first time in 2023.

In 2023, 18 new ship orders were signed, 2 fewer than in 2022. Orders may continue to be placed with caution in the future. At the end of 2023, the company had orders for 23 ships, a reduction of 6 ships compared to the end of 2022, and future capital expenditure will be reduced. The company has long attached importance to shareholder returns, and it is expected that the dividend rate will gradually increase.

The company's PE valuation is less than 4 times. If the dividend rate increases to 50%, the dividend rate will increase to 14%.

Risk warning. Default risk, economic fluctuation, interest rate and exchange rate risk, geographical situation, etc.