Shipping prices have increased, and multi-purpose ship rents have risen
Since the end of 2023, international freight rates have risen sharply, which is expected to drive the delayed rise in multi-purpose ship rents. From December 2023 to early June 2024, Shanghai's overall export container freight index SCFI rose 215%, and the international shipping boom rose sharply. Multipurpose ships can load containers, and the average freight rate level of goods is expected to rise. Looking back at 2020-2022, multi-purpose ship rents lagged behind the rise in international freight rates and container ship rents, and the increase was also low. So we expect multi-purpose boat rents in 2024 will also lag behind the rise in freight rates.
37 multi-purpose ships, with high profit flexibility
By the end of 2023, COSCO Haite had 37 multi-purpose ships. If the average rent rises by 10,000 US dollars/day, the annual net profit is expected to increase by about 700 million yuan. The rental levels for mid-range Haiter multi-purpose vessels in the period from 2022 to 2023 are 2.5 million US dollars/day, respectively, and are expected to pick up in 2024 as shipping prices increase. If heavy gondolas and pulp ships also carry some container cargo, then they will also enjoy the profit flexibility brought about by rising freight rates.
Capacity may nearly double in three years, and profits are expected to rise
According to the ship delivery plan according to Clarkson statistics, in 2024-2026, Zhongyuan Haite will receive a large number of newly built pulp ships, car ships, and heavy gondolas, and the capacity of the new ships is expected to reach 4.31 million dwt. The total capacity of Zhongyuan Haite's seven types of ships in 2023 is 4.69 million DWT, and 500,000 DWT of old ships are scheduled to be decommissioned during the “14th Five-Year Plan” period (no decommissioning in 2021-2023), so the total capacity is expected to reach 8.5 million dwt in 2026, nearly double that of 2023. If all ship types maintain their prosperity in 2023, the increase in capacity is expected to drive up profits.
Maintain profit forecasts and maintain “buy” ratings
Since multi-purpose ship rents were relatively stable in the first half of 2024, the net profit from 2024-2025 was maintained at 1.35 billion yuan or 1.69 billion yuan, and the net profit from the 2026 forecast was 1.96 billion yuan; considering the profit elasticity brought about by the increase in shipping prices, the “buy” rating was maintained.
Risk warning: The return to normal traffic in the Red Sea has led to an increase in effective capacity, a decline in global economic growth, intensification of trade conflicts between countries, accelerated shipping, and mass delivery of new ships.