occurrences

Recently, China Southern Petroleum released its 2023 annual report. During the reporting period, it achieved total annual revenue of 6.2 billion yuan, a decrease of -1.1% compared to last year; net profit to mother was 1.56 billion yuan, an increase of +8.6% over the previous year; the company completed a total of 46.8 million tons of freight throughout the year, with a freight turnover of 91 billion tons/km. Since the company's undistributed profit at the end of 2023 was negative, the current profit distribution and capital reserve share transfer plan is: no profit distribution and no increase in share capital.

reviews

China Merchants CNPC is a specialized tanker transportation company under the China Merchants Group. The market position is a global liquid cargo transportation service provider for small and medium-sized vessels. By the end of the 23 reporting period, it had 68 ships with a total capacity of 2.52 million dwt. Ships are mainly engaged in offshore transportation of crude oil, refined oil products, chemicals and gas. The main operating area of oil routes is east of Suez, including routes to Southeast Asia, Northeast Asia, and Australia, and is involved in a small number of regions such as the US, Europe, and South Africa. The oil transportation industry is the company's core business, accounting for 98% of gross profit in 23 years. The characteristics are as follows:

Demand side. Domestically, due to increased travel, total domestic crude oil imports increased 11.5% year on year, total domestic crude oil processing increased 8.7% year on year, and domestic gasoline, diesel and coal production increased 16.1% year on year.

Overseas, according to shipping media, global crude oil loading increased by about 5.7% year-on-year in '23. The global trade volume of refined oil products increased by 3% in 23 years, and by about 11% in tons and nautical miles.

On the capacity side, the capacity of new tankers added in '23 is still at a historically low level. It coincides with the implementation of environmental regulations, compounded by geopolitical factors, making capacity even more tight, and the freight rate index fluctuated widely throughout the year.

It can be seen from this that the objective gap between supply and demand has led to an increase in the prosperity of the oil transportation sector. As a leader in the refined oil transportation market in the Far East and the largest MR domestic refined oil tanker owner, the company has a clear competitive advantage.

Investment ratings

Looking ahead to this year, it is expected that the refined oil transportation market will remain optimistic, the crude oil transportation market will remain stable, and the chemical transportation market will bottom out and recover. We are optimistic about the company's 24-year development and maintain an “gain” rating.

Risk warning

Weak economic growth has brought risks of declining oil consumption, rapid growth in capacity, and transformation of the fleet structure.