Core views:
Incident: The company released its 2024 quarterly report. In the first quarter of 2024, it achieved revenue of 6.254 billion yuan, +6.30% year over year; net profit to mother of 1,375 billion yuan, +22.62% year over year; net profit after deducting non-return to mother was 1,359 million yuan, +23.31% year over year. It was basically in line with expectations. At the same time, the company issued an interim dividend arrangement announcement, and the total amount of cash dividends distributed shall not exceed 50% of the net profit attributable to listed shareholders realized in the current period (consolidated statement caliber).
The main 1Q2024 oil dispersion business continues to outperform the market. Tanker fleet: Achieved net profit of 870 million yuan in the first quarter, up 13.87% year on year and 18.28% month on month. VLCC achieved an average daily TCE of 50,000 US dollars/day, continuing to outperform the market average. At the same time, the capital protection point of the company's VLCC fleet was reduced due to a reduction in interest-bearing liabilities, and the flexibility of forward performance was further enhanced. Dry bulk fleet: Achieved net profit of 357 million yuan in the first quarter, up 275.79% year on year and 7.29% month on month. All ship types achieved a year-on-year increase in TCE and outperformed the market index.
Oil dispersion supply constraints solidify the foundation for future profits. According to Clarkson data, as of April 2024, VLCC/bulk carriers accounted for 5.11% and 8.77% of orders, respectively, at historic lows. The set of short-term irreversible conflicts between low on-hand orders and the continuing rise in average ship age forms the basis for supply constraints, while continuously consolidating the long-term profits of the company's oil bulk transportation business.
An interim dividend arrangement announcement was issued, and shareholder returns may exceed expectations. The company announced the 2024 mid-term dividend arrangement, and distributed a dividend of no more than 50% of the current net profit to mother. The plan not only increased the number of dividends, but also increased the dividend ratio compared to 2023. It further demonstrated the company's sincerity in giving back to shareholders.
Profit forecasting and investment advice. The company is expected to achieve net profit of 64, 84, and 9.1 billion yuan in 24-26. Considering China Merchants Shipping's strong operating strength and excellent corporate governance, it maintains the judgment that the company has a reasonable value of 9.42 yuan/share, corresponding to 12 times PE in 2024, giving it an “increase in holdings” rating.
Risk warning. The global financial crisis, the release of orders exceeding expectations, IMO regulations falling short of expectations, OPEC production cuts exceeding expectations, and the risk of sanctions.