Huangpu Wenchong delivered the boxes 237 days ahead of schedule; the company's profitability is expected to be released at an accelerated pace. According to the International Shipping Network, on June 19, 2024, CSIC Huangpu Wenchong Shipping Co., Ltd., a subsidiary of China Shipbuilding Group, successfully delivered the 2300TEU feeder “ITAL WIT” (H2448) and the 1600TEU feeder ship “CAGUANGZHOU” (H2484). 1) The “ITAL WIT” wheels were delivered at the Longxue factory area, 134 days ahead of the contract period. The ship has a total length of 172.0 meters, a width of 32.20 meters, a depth of 17.0 meters, a draft of 9.0 meters, a full load of 10.2 meters of draft water, a load capacity of 27,900 tons, a design speed of 19.5 knots, a battery life of 11,000 nautical miles, and is classified ABS. 2) The signing and delivery ceremony for the 1600TEU feeder ship “CA GUANGZHOU” was held at the Wenchong factory area, 103 days earlier than the contract period. The skipper is 166.95 meters long, 27.50 meters wide, 14.50 meters deep, designed to have a draft of 8.5 meters, a design speed of 16.95 knots, can carry 1640 TEU, 14 ton heavy containers of up to 1250 TEU, and a full load capacity of 23,700 tons. It meets the EEDI2. It is an energy-saving and environmentally friendly regional container ship with a large load capacity, which meets the operating requirements of the Southeast Asian route.
The shipbuilding industry's ship exchange cycle, environmental protection policies, and tight production capacity have all contributed to an upward cyclical boom in the industry cycle, an increase in demand for orders for multiple ship types, and an improvement in shipyard profitability. 1) Demand: ① Volume: China's completed, new, and handheld orders in 2023 increased 12%, 56%, and 32%, respectively, with 59%, 71%, and 60% during the peak period, with plenty of room for growth; ② Price: As of June 2024, the Clarkson New Ship Cost Index closed at 187.01, up 9.42% year on year, and is at 98% of the historical peak. Tight shipping capacity and inflationary pressure have pushed ship prices to continue to reach new highs; 2) downstream capacity: capacity for tankers will still be scarce until 2025, and subsequent tankers and dry scatters are likely to place orders; 3) Supply: Shipyard shipments are almost saturated, but the number and delivery volume of active shipyards have declined significantly, and supply and demand are tight or driving ship prices to continue to rise. Due to shrinking supply and difficulties in expanding production, combined with ship exchange cycles and environmental protection policies, tight supply and demand are expected to drive ship prices to continue to reach new highs, and the ship cycle is expected to fluctuate upward.
With the consolidation of the Group's assets, the competitive landscape is expected to continue to improve. China Shipbuilding Group promised to resolve industry competition issues by June 30, 2026. The company is the only “A+H” platform under China Shipbuilding Group, which is expected to benefit the Group in resolving competition in the industry.
The holding company Huangpu Wenchong and the participating company Guangzhou Shipbuilding International are the core shipbuilding companies and are full of orders 1) Huangpu Wenchong: The holding subsidiary of the company, with a holding ratio of 54.54%. It is an important construction and support base for military ships, official ships, feeder container-like ships, dredging engineering vessels, and offshore engineering vessels in China. In 2023, Huangpu Wenchong's revenue was 16.1 billion yuan, up 26% year on year; net profit was 55.31 million yuan, up 13% year on year. As of 2023-12-31, Huangpu Wenchong had a handheld order of 55.76 billion yuan, and the number of on-hand orders was full. 2) Guangzhou Shipbuilding International: The company participated in a subsidiary with a share ratio of 41.02%. Mainly engaged in luxury passenger carriers, liquid cargo ships, oil tankers, ore ships, semi-submersible ships, etc., the company has long been at the top position in the global luxury passenger and semi-submersible ship construction field. In 2023, Guangzhou Shipbuilding International's main business revenue was 17.6 billion yuan, up 34% year on year; main business profit was 1.6 billion yuan, up 27% year on year.
As of 2023-12-31, Guangzhou Shipbuilding International held orders of 5.7 billion US dollars, and the number of on-hand orders was full.
Profit forecasting and valuation
Net profit due to mother for 2024-2026 is estimated to be RMB 5.0, 10.5, and 2.42 billion yuan, up 943%, 108%, 131% year-on-year, and CAGR = 119%. The corresponding PE is 75, 36, and 16 times, maintaining the “buy” rating.
Risk warning: Shipbuilding demand falls short of expectations; 2) Raw material prices fluctuate.