performance

On August 19, 2024, Shenghang Co., Ltd. released its 2024 semi-annual report. 2024H1 achieved revenue of 0.71 billion yuan, a year-on-year increase of 22.4%; net profit to mother of 0.1 billion yuan, an increase of 10.5% year-on-year. 2024Q2 achieved revenue of 0.33 billion yuan, a year-on-year increase of 15.3%; net profit to mother was 0.05 billion yuan, an increase of 17.3% year-on-year.

profiling

The scale of the foreign trade transportation business expanded, and revenue increased year-on-year in the first half of the year. 2024H1's revenue increased 22.4% year on year, mainly due to the expansion of the company's foreign trade business. 2024H1's domestic revenue was 0.416 billion yuan, down 11.3% year on year, and overseas revenue was 0.29 billion yuan, a sharp increase of 165.8% year on year. The foreign trade market is booming, and the company is seizing the opportunity to actively develop foreign trade transportation business. As of 2024H1, the number of domestic and foreign trade ships controlled by the company has reached 52, with a total capacity of 0.399 million DWT. Of these, 15 ships are already engaged in foreign trade transportation (not including 3 foreign trade vessels leased from abroad). Accordingly, 2024H1's domestic liquid chemical waterway traffic volume was 2.6042 million tons, up 4.66% year on year; foreign trade liquid cargo dangerous goods traffic volume was 1.255 million tons, a sharp increase of 207.90% year on year.

Domestic trade market demand was weak, and gross margin declined year on year. 2024H1 is affected to a certain extent by weak market demand in the petrochemical industry and the costs of petrochemical companies. Domestic trade liquid and dangerous goods waterway transportation turnover and freight rates were affected to a certain extent. During the same period, canal congestion caused an increase in demand in the foreign trade market by tonnage, and freight rates in the chemical tanker market remained relatively high and stable in the first half of the year. 2024H1's gross margin of domestic business was 30.56%, down 2.34pct year on year; gross margin of overseas business was 31.12%, up 8.89pct year on year. Under the combined impact, the company's gross margin fell 1.9pct to 27.4% in 2024q2. Affected by the improvement in the cost ratio and the increase in investment income during the period, the net interest rate of 2024Q2 was 15.1%, an increase of 0.3 pct over the previous year.

Complete the acquisition of Haichanghua to enhance the competitiveness of domestic trade in waterway transportation of refined oil products. The company acquired 44.8679% of Haichanghua's shares in June 2024. As of 2023H1, the company held a total of 61.01 million shares of Haichanghua, accounting for 53.0555% of its total share capital. Haichanghua became the company's holding subsidiary. Haichanghua controls a total of 12 ships, with a total capacity of 0.1006 million DWT, including 8 domestic ships for refined oil products, a total capacity of 0.0797 million DWT, 4 domestic chemical vessels, and a total capacity of 0.0209 million DWT. The implementation of this equity acquisition project will help further enhance the company's market share and competitiveness level, and establish the company's leading position in the domestic liquid and dangerous goods waterway transportation market.

Profit Forecasts, Valuations, and Ratings

Maintain the company's 2024-2026 net profit forecast of 0.24 billion yuan, 0.31 billion yuan, and 0.36 billion yuan. Maintain a “buy” rating.

Risk warning

Risk of fluctuations in the chemical industry, risk of safe operation, risk of policy supervision, risk of mergers and acquisitions falling short of expectations, and high risk of holdings reduction for shareholders and directors.