Incident: Nakatani Logistics announced its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 12.439 billion yuan, down 12.5% from the same period last year. Among them, revenue from water transport business was 10.11 billion yuan, down 17.9% from the same period last year, and revenue from land transportation was 2.33 billion yuan, an increase of 25.1% over the same period last year. Revenue of 2.79 billion yuan was achieved in the first quarter of 2024, a year-on-year decrease of 8.2%. For the full year of 2023, the company achieved net profit of 1.72 billion yuan, and the net profit margin to mother was 13.8%, down 5.5pp from '22. In the first quarter of 2024, the company achieved net profit of 390 million yuan, and the net profit margin to mother was 14%.
We attach great importance to cash dividends and have established a continuous, stable and scientific dividend return mechanism for investors. According to the resolution of the 19th meeting of the 3rd board of directors of the company, the company plans to distribute a cash dividend of RMB 7.2 (tax included) for every 10 shares to all shareholders, calculating the total proposed discovery dividend of RMB 1.51 billion (tax included), accounting for 88.05% of net profit due to mother in 2023.
The average freight rate level in the industry has returned to normal. In the 2021-2022 period, due to strong demand for foreign trade container transportation, there was a situation where domestic trade capacity was supplementing the foreign trade market. Industry freight rates continued to operate at a high level during this period. The average PDCI index values for 2021-2022 were 1,469 and 1661 points, respectively. As foreign trade container freight rates declined in 2023, domestic trade container freight rates also gradually returned to normal. The average value for the full year of 2023 was 1,252 points, down 25% from the same period of the previous year. As of April 26, 2024, the average PDCI was 1,141 points, which has returned to the long-term average level.
Delivery of new ships strengthens the capacity chassis and enhances asset quality. The company has signed orders with domestic shipyards for 18 4,600 TEU container ships, and a total of 11 ships will be launched in 2023. At the same time, in order to better adapt to the current market situation in the domestic trade container logistics industry, the company continues to optimize the ship tonnage structure and ship age structure, and eliminate old ships that are older and do not meet route requirements. During the reporting period, the company disposed of a total of 5 container ships, totaling 220,000 DWT. The average age of the disposal vessels was over 20 years. As of the end of 2023, the company's total capacity was 3.55 million DWT. According to Alphaliner's latest published data, Nakatani Logistics ranked 20th in the world in terms of capacity and ranked second among China's domestic trade container shipping companies.
Profit forecast and investment suggestions: We are optimistic that the company's domestic trade business volume will continue to increase due to the release of the company's new capacity. We expect net profit attributable to the parent company in 2024/25/26 to be 17.6 billion yuan, 18.3 billion yuan, and 1.99 billion yuan, respectively, and EPS of 0.84 yuan, 0.87 yuan, and 0.95 yuan respectively. Companies in the shipping logistics sector were selected for benchmarking, taking into account shipping and logistics attributes. Peers can compare the company's PE valuation 12 times in 2024, while Nakatani Logistics's current PE valuation is 11 times higher, which is still cost-effective. Covered for the first time, giving a “holding” rating.
Risk warning: risks such as macroeconomic fluctuations, a sharp drop in domestic container freight rates, and a slowdown in capacity delivery.