Event log description
The company released its 2023 annual report. In 2023, the company achieved total operating income of 127.81 billion yuan, -9.7% year on year; net profit to mother of 421 million yuan, -86.9% year on year; net profit after deducting non-return to mother of 665 million yuan, -84.5% year on year. Based on this calculation, the 23Q4 company achieved total operating income of 32.685 billion yuan, +0.9% year-on-year; net profit attributable to mother - 74 million yuan; and net profit not attributable to mother - 540 million yuan.
Incident comments
Affected by cyclical fluctuations in the container industry, the company's performance is under pressure in the short term. In 2023, due to factors such as the weakening momentum of global economic and trade growth and the turbulent geographical situation, demand for traditional shipping containers weakened, and the company's container business declined year-on-year. Furthermore, the US dollar index continued to rise, the spread between China and the US continued to be inverted, the exchange rate of the RMB against the US dollar fluctuated greatly, and the cost of forward locked remittance fees increased significantly; there were many one-time impairment charges and fees in the fourth quarter, which dragged down the company's overall profit.
Containers have entered an upward cycle and are expected to bottom out and rebound in 2024. In 2023, the company's container manufacturing business achieved revenue of 30.213 billion yuan, a year-on-year decrease of 33.90%, and net profit of 1,794 billion yuan, a year-on-year decrease of 65.88%. Looking ahead to 2024, according to Clarkson's February 2024 forecast, the global container trade mileage growth rate will increase from 1.9% in 2023 to 8.3% in 2024. It is expected that the imbalance between supply and demand in the shipping market will ease significantly. Currently, customer willingness to reserve containers is increasing, compounded by stable old container replacement factors, and container demand is expected to enter a recovery path in 2024. As demand in the container industry picks up in 2024, the company is expected to fully benefit as a leading container manufacturer.
The offshore business improved markedly, and the industry continued to prosper. In 2023, the company's marine engineering business achieved revenue of 10.452 billion yuan, an increase of 81.12% over the previous year; net loss of 31 million yuan (net loss of 334 million yuan for the same period in 23 years); of these, Ocean Technology Group, the operator of the marine engineering business, has achieved profit. The company's offshore engineering business layout gradually expanded from traditional oil and gas to new energy sources. New orders of US$1.63 billion were signed in 2023. By the end of 2023, the cumulative value of orders in hand had increased 35% year-on-year to US$5.4 billion (of which confirmed revenue of US$1.8 billion), with oil and gas business, wind power installation vessels and role-loading vessels accounting for about 4:3:3. Drilling platforms have become a scarce link in the industrial chain. The company's offshore asset management business improved markedly. In 2023, the offshore asset operation and management business achieved lease contracts for 3 platforms during the year, and rental operation revenue increased by more than 80% over the same period last year. Currently, the company is actively participating in many domestic and foreign market tenders, such as China, Norway, the United Kingdom, Brazil and Africa. It is expected that the 24-year high-value semi-submersible platform lease will gradually be implemented along with the industry boom.
The strategic plan has clear goals and both cyclical and growth attributes. The company clarifies the strategic plan until 2027, focuses on strategic themes to promote high-quality development, and coordinates the rational growth of “quantity” and the effective improvement of “quality”. On the one hand, by consolidating and enhancing the leading position of existing core businesses, and focusing on expanding multiple strategic emerging businesses; on the other hand, adhering to the central position of innovation, comprehensively enhancing independent innovation capabilities, and enhancing control over core links and key areas of the industrial chain.
Maintain a “buy” rating. Currently, the company's container production schedule is full, and the offshore business is expected to benefit from the continued rise in industry demand, and continue to be optimistic about the upward cycle of the container and offshore industry. The company is expected to achieve net profit of 28.9 billion yuan and 4.39 billion yuan respectively in 2024-25, corresponding to PE of 17.8 and 11.8 times, respectively. Continued key recommendations.
Risk warning
1. Market competition increases risk;
2. Risk of price fluctuations of major raw materials.