Incident: COSCO Maritime Control announced the 2023 Annual Report and the 2024 First Quarter Report. In 2023, the average value of China's Export Container Freight Composite Index (CCFI) fell 66.4% year on year. The company achieved operating income of 175.45 billion yuan, a year-on-year decrease of 55.1%. In the first quarter of 2024, the company achieved revenue of 48.27 billion yuan, an increase of 1.9% year on year. For the full year of 2023, the company achieved net profit of 23.86 billion yuan, and the net profit margin to mother was 13.6%, down 14.4pp from '22. In the first quarter of 2024, the company achieved net profit of 6.76 billion yuan, and the net profit margin to mother was 14%, up 0.4 pp from 23.
Steady management and continuous returns to shareholders. Based on the good performance achieved during the reporting period, and in line with the Group's 2022 2024 shareholder dividend return plan and future sustainable development needs, the company's board of directors proposed to distribute a cash dividend of RMB 0.23 billion (tax included) to all shareholders at the end of 2023, and a cash dividend of approximately RMB 3.67 billion for the end of 2023. In addition to the cash dividend already distributed to all shareholders in mid-2023, the company distributed a total of about RMB 11.87 billion in 2023, which is approximately what the company achieved in 2023 It is 50% of the net profit attributable to shareholders of listed companies.
The company's overall capacity is leading the world. As of March 31, 2024, COSCO Maritime Control's self-operating capacity reached 510 ships/310.6 million TEU, up 2.1% from the beginning of the year, and the company's capacity remained at the first tier in the industry; the average age of a ship was 13.1 years, and the average capacity of a single ship was 6090 TEUs, up 0.5% from the beginning of the year.
The Red Sea detour has increased transportation distance, and environmental protection has become stricter and effective capacity can be controlled. The Red Sea incident since the beginning of 2024 has caused container ships to detour, increase overall transportation distance, and increase transportation demand. At the same time, against the backdrop of stricter environmental protection policies, the speed of old ships and non-environmentally friendly ships will be affected to a certain extent. The increase in effective capacity of container ships will be less than actual capacity investment, and the overall capacity is manageable.
Profit forecasting and investment advice. We are optimistic about the company's operational resilience as a leading shipping service provider in the industry. At the same time, we emphasize that the growth rate of effective capacity is less than that of the new ships actually launched, and that the market capacity is manageable. The company's net profit for 2024/25/26 is 24.57 billion yuan, 239.6 yuan, and 25.05 billion yuan, respectively. EPS is 1.54 yuan, 1.50 yuan, and 1.57 yuan respectively, and the corresponding PE is 8x, 8x, and 8x, respectively. Comparable to the company's PE in 24 years, we believe that as a leading shipping company, the company operates steadily. At the same time, as the global economy stabilizes and demand for shipping grows, freight rates have some room to rise. The corresponding target price is 15.4 yuan. For the first time, coverage is given, and a “buy” rating is given.
Risk warning: risk of macroeconomic fluctuations, risk of fuel price fluctuations, risk of freight price increases falling short of expectations, etc.