Introduction to this report:
The company's 24Q1 deducted non-net profit surged year-on-year, in line with expectations. Continue to be optimistic about oil transportation super bull market options. It suggests the 24Q2 high cardinality effect. The second half of the year can be expected to be optimistic. Reverse investing will enhance the investment experience and maintain wealth growth.
Key points of investment:
Maintain an increase in holdings. The oil transportation industry's capacity utilization rate has reached a threshold. Supply and demand will continue to improve in the next few years. The rise and continuation of the economy will exceed expectations, and there is room for performance valuation. It is recommended to reduce short-term fluctuations and focus on central trends. Reverse investment will enhance the investment experience. Maintain the 2024-26 net profit forecast of $72/86/9.4 billion. Maintain the target price of 23.54 yuan and maintain the increase in holdings.
2024Q1 deduction of non-performance surged 40% year over year, in line with expectations. Net profit from 2024Q1 was 1.2 billion yuan (+13%), a sharp increase of 40% year-on-year after deduction (net revenue from selling ships exceeded 200 million yuan in 23Q1), in line with expectations. 1) Foreign trade oil transportation: 2023-24Q1's single-quarter results correspond to VLCC's TD3C average TCE of 3.4/5.2/3.1/2.9/42,000. The 24Q1 off-season was not poor, with gross profit of 1.22 billion yuan, which was the same as the previous year. Considering the elimination of old VLCC ships, it was in line with expectations. 2) Domestic oil transportation: 24Q1 gross profit of 370 million yuan, a year-on-year increase of 30%. 3) LNG: 24Q1 net profit of nearly 200 million yuan, continues to be stable. 4) Financial expenses: Active optimization of the debt structure, with a year-on-year reduction of 150 million yuan in 24Q1.
The profit center has risen, and optimism can be expected in the second half of the year. Oil freight rates and profit centers have risen in the past two years, but the pace of trade still affects quarterly fluctuations in the short term. After the Spring Festival in 2023, the pace of crude oil trade was positive, driving the 23Q2 VLCC TCE high, and the profit performance of oil carriers was impressive; while lower production and high oil prices in the Middle East suppressed trade demand in the second half of the year, leading to pressure on the freight center and poor peak season. Capacity utilization in the oil transportation market has reached a threshold in 2024. Supply and demand continue to improve, while the impact of production cuts and oil prices weakened marginally, and the pace of trade returned to normal. It suggests the high base effect of 24Q2. At the same time, shipowners are optimistic about the tariff center during the peak season in the second half of the year, and the profit center will continue to rise.
The oil transportation industry is booming in the next few years, and returns to the company's shareholders will continue to rise. In 2023, the company implemented equity incentives for executives, demonstrating confidence in the upward trend, which will help show profit flexibility and improve market value management. The company's dividend rate increased to 50% in 2023. Considering the impact of 2023 and the upward trend in the industry over the next two years, it is expected that the company's shareholder returns will continue to improve in the future.
Risk warning. Economic downturn, poor implementation of environmental protection policies, geographical situation, safety incidents, etc.