Introduction to this report:
The company's 24Q1 non-net profit increased significantly year-on-year, in line with expectations. Continue to be optimistic about oil transportation super bull market options. It suggests that the 24Q2 high base effect is optimistic and can be expected in the second half of the year, maintaining the increase in holdings.
Summary:
Maintain an increase in holdings. The oil transportation industry's capacity utilization rate has already been assessed. 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. Maintain the 2024-26 net profit forecast of $72/869.4 billion. Maintain the target price of HK$1,187 and maintain the increase in holdings.
The 2024Q1 deduction for non-performance surged 40% year-on-year, in line with expectations. Net profit due to mother in 2024Q1 was 1.2 billion yuan (+13%), a sharp increase of 40% year-on-year (net revenue from 23Q1 ship sales exceeded 200 million yuan), in line with expectations. 1) Foreign trade oil transportation: The average value of VLCCTD3 CTCE corresponding to the 2023-24Q1 single quarter was 3.4/5.2/3.1/2.9/42,000 US dollars. The 24Q1 off-season was not weak. The gross profit was 1.22 billion yuan, which was the same as the previous year. Considering the elimination of old VLCC vessels, 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 the second half of the year can be expected to be optimistic. 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 a high 2302VLCCTCE, and the profit performance of oil carriers was impressive; in the second half of the year, high oil price cuts in the Middle East curtailed trade demand, leading to pressure on the freight center and poor peak season. The capacity utilization rate of the oil transportation market is already at a high value in 2024. 1) Demand: Traditional energy sources are resilient, and Asian strength is expected to exceed expectations. The restructuring of crude oil trade deepens and continues, and the Atlantic region will continue to increase production and extend the flight distance. 2) Supply: VLCC accounts for 5% of in-hand orders. The shadow fleet is becoming more stringent, which is expected to speed up the elimination of old ships. Furthermore, environmental policies will restrict effective capacity flexibility. Supply and demand will continue to improve in the next few years, and the rise and continuation of the boom will exceed expectations. It suggests the high base effect of 24Q2. At the same time, shipowners are optimistic about the central freight rate expectations for the peak season in the second half of the year, and the profit center will continue to rise.
The oil transportation industry will prosper in the next few years, and returns to the company's shareholders will continue to increase. In 2023, the company will implement equity incentives for executives, demonstrating confidence in the upward trend, and will help improve profit flexibility and 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.