Maintain an increase in holdings. The company is the only shipyard leasing company in China. It has ship-understanding genes and is committed to “countercyclical shipbuilding and procyclical operation”. The shipping boom has been rising in recent years, and it is expected that the company's short-term rental business will fully benefit, and profit sustainability will exceed expectations. The pre-increase in results for the first half of 2024 exceeded market expectations. As capital expenditure slows, dividend rates are expected to increase, and low PE will lead to potentially high dividends. Maintain the 2024-26 net profit forecast of HK$2.2/2.4/2.6 billion. PE's valuation is only 4 times. If the dividend rate increases to 50%, the dividend rate will increase to 12%. Maintain the target price of HK$2.06.

Earnings for the first half of 2024 surpassed expectations, benefiting from the shipping boom and fleet size growth. The company recently released a performance report. It is expected that net profit for the first half of 2024 will increase by 21-23% year on year, exceeding market expectations, mainly benefiting from the rise in the shipping boom and the increase in the size of the chartering fleet. At the end of 2023, the company had a fleet of 151 ships (including orders), of which 128 were in operation: 1) 102 long-term leased (financing+long-term leasing) vessels; 2) 26 short-term leased (own+joint venture) vessels. It is estimated that more than 1/4 of the company's net profit in 2023 will come from short-term leasing. Long-term leasing profits will grow steadily as on-hand orders are delivered, and the short-term leasing business will be profitable and flexible with the shipping boom.

In the first half of 2024, the refined oil freight center reached another record high, and the company's short-term rental business fully benefited. According to the 2023 annual report, the company invested in a total of 26 ships for short-term leasing, including 14 refined-product tankers, which will fully benefit from the boom in the transportation of refined oil products. In the first half of 2024, the refined oil freight center hit a record high for the same period. It is estimated that the company's short-term rental business fully benefited and profit growth exceeded market expectations. Considering that the capacity utilization rate of the refined oil transportation market has exceeded the threshold, the future boom will continue to exceed expectations, and the company's profit sustainability will exceed expectations.

Capital expenditure may be reduced, and undervaluation will lead to potentially high dividends. Since the company went public, the dividend rate has declined year by year, and the capital expenditure cycle is behind it. The dividend rate increased to 39% for the first time in 2023. The company is committed to “countercyclical shipbuilding and procyclical operation”. It signed 18 new ship orders in 2023, 2 fewer ships compared to 2022, and may continue to place orders carefully in the future. At the end of 2023, the company had orders for 23 ships, a reduction of 6 ships compared to the end of 2022, and future capital expenditure will be reduced. The company has long attached importance to shareholder returns, and it is expected that the dividend rate will gradually increase. The company's PE valuation is only 4 times. If the dividend rate increases to 50%, the dividend rate will increase to 12%.

Risk warning. Default risk, economic fluctuation, interest rate and exchange rate risk, geographical situation, etc.