Company announcement 2023 annual report: 1) Financial data: 2023 revenue of 25.88 billion yuan, -12.9% year on year; net profit attributable to mother of 4.84 billion yuan, -4.9% year on year; net profit after deducting non-return to mother of 4.64 billion yuan, -3.5% year on year. 2023Q4 revenue was 6.86 billion yuan, -15.6% year over year; net profit to mother was 1.08 billion yuan, -11.6% year over year; net profit without return to mother was 1.02 billion yuan, -11.9% year on year. 2) Revenue composition: In 2023, oil transportation, bulk transportation, consolidation, and role-loading vessels achieved revenue of 96.72, 71.08, 55.39, and 1,961 billion yuan respectively, +37.6%, -39.5%, -22.2%, and 5.7% year-on-year, with oil transportation and distribution accounting for 37.4% and 27.5%, respectively. 2023Q4 achieved revenue of 24.3, 19.6, 14.9, and 590 million yuan, year-on-year, -13.8%, -28.1%, -18.2%, and +5.8%, of which oil transportation and scattered operations accounted for 35.4% and 28.6% respectively. 3) Profit margin: Net profit margin 18.7% in 2023, +1.6 pts year on year; net interest rate without return to mother 17.9%, +1.7 pts year on year. The net interest rate for 2023Q4 was 15.7%, +0.7 pts year on year; net interest rate without return to mother was 14.9%, +0.6 pts year over year. 4) Increased dividend ratio: It is proposed to distribute a cash dividend of 2.38 yuan for every 10 shares, for a total cash dividend of 1,938 billion yuan. The dividend ratio is 40.07%, compared to 30.36% in 2022. 5) Income tax expenses: Annual income tax of 490 million, tax rate of 9.1%, Q4 income tax of 260 million, tax rate of 19%. It is expected to increase dividends, return overseas profits, and make up for tax differences.
Oil transportation: Market freight rates have risen significantly, and the boom is expected to continue. The revenue of the oil transportation business in '23 was 9.67 billion, +37.6% year on year; net profit was 3.08 billion yuan, up +249.2% year over year. Q4 revenue was 2.43 billion, -13.8% YoY; net profit was 740 million, -19.2% YoY. The average TCE value for TD3C routes in 2023 was 35,500 US dollars/day, up 111% year on year, VLCC daily TCE increased 64% year on year, and Aframax increased 50% year on year. Freight rates in the oil transportation market increased significantly. In 2023, VLCC tankers operating in the company's spot market had an immediate average daily TCE of nearly 50,000 US dollars, continuing to outperform the market. At the industry level, according to Clarksons's latest March data, VLCC's on-hand order capacity is only 4.3% of total capacity. It is expected that 1, 5, and 20 ships will be delivered respectively in 24-26. The supply of effective capacity is tight, and the boom in the industry is expected to continue.
Distribution: The overall decline in the industry, and the steady operation of the company outperformed the market. Distribution business revenue in '23 was $7.11 billion, or -39.5% YoY; net profit was $899 million, or -58.4% YoY. Q4 Revenue of $1.96 billion, -28.1% YoY; Net Profit of $330 million, +195.7% YoY. The bulk market was relatively sluggish throughout the year, and the average daily TCE dropped significantly. The average BDI in 2023 was 1,378 points, down 28% year on year. The dry bulk market showed a volatile recovery in December 2023. The average BDI in December was 2,538 points, an increase of 39% over the previous month. By closely tracking the market and dynamically adjusting business strategies, the company strives to seize opportunities in the midst of market fluctuations. In 2023, the company's dry bulk fleet achieved an average daily TCE of 17,000 US dollars, and all ship segments outperformed market theoretical assessments.
Transportation: Consolidation business revenue in '23 was 5.54 billion, -22.2% YoY; net profit was 870 million, or -58.2% YoY.
Q4 Revenue of 1.49 billion, -18.2% YoY; Net Profit of 240 million, -3.2% YoY. Overall freight rates in the container market fell year on year in 2023. The average CCFI value for the whole year was 942 points, down 66% year on year. According to Alphaliner's data, the company's container fleet ranks 33rd in the world. The company continues to develop an overseas agency network for the supply chain business. Over 23 years, the supply chain business has completed a total of 145,900 TEU and 40,000 cubic meters of consolidated containers.
Ro-Ro ships: Demand continues to be strong in the international market. The revenue of the Ro-Ro shipping business in '23 was 1.96 billion, +5.7% year over year; net profit was 270 million yuan, +206.4% year over year. Q4 Revenue of $590 million, +5.8% YoY; Net Profit of 50 million, +0.7% YoY. In 2023, the company completed the river-sea transportation volume of 8761,000 vehicles, and the overall fleet averaged a daily TCE of 14,500 US dollars/day, of which the marine fleet averaged 29,800 US dollars/day.
Investment advice: 1) Profit forecast: Based on current market demand and freight rate levels, we slightly adjusted our 24-25 profit forecast to achieve net profit of 7.77 billion or 9.21 billion yuan (the original forecast was 80.9 billion and 9.6 billion yuan), and also introduced a 26-year profit forecast to achieve an estimated net profit of 10.46 billion yuan, corresponding to EPS of 0.95, 1.13, and 1.28 yuan, corresponding to PE 8/7/6 times PE. 2) Maintain the previous valuation method, and give 10 times PE in 2024, corresponding to the target price of 9.5 yuan. It is expected to have 20% space compared to the current price, and maintain the “recommended” rating. 3) As an operating platform for all foreign trade vessels under the China Merchants Group, the increase in dividend rates highlights the company's focus on shareholder returns and continues to be optimistic that the company will achieve a sharp rise in cyclical value.
Risk warning: Exports from oil-producing countries such as the US Gulf and the Middle East declined more than expected, demand fell short of expectations, and costs increased dramatically.