Description of the event

Xiamen Xiangyu revealed its 2024 mid-year report: In the first half of 2024, the company achieved revenue of 203.48 billion yuan, a year-on-year decrease of 12.9%, and net profit of 0.78 billion yuan, a year-on-year decrease of 12.6%; in the second quarter of 2024, the company achieved revenue of 98.91 billion yuan, a year-on-year decrease of 5.3%; and net profit to mother of 0.37 billion yuan, an increase of 7.6% year-on-year.

Incident comments

Stable supply chain management, and the shipbuilding boom is rising. In the first half of 2024, the company's operating volume remained flat year on year, maintaining a scale of 0.1 billion tons or more, and revenue decreased by 12.9% year on year. Looking at business by sector, commodity operating revenue decreased by 14.1% year on year. Among them, metal minerals/agricultural products/energy chemicals/new energy revenue was -16.8%/-26.7%/+9.8%/-39.0%, respectively. Affected by weak macroeconomic demand, sector revenue showed a downward trend, but the Singaporean marine fuel business boosted energy and chemical revenue growth. Commodity logistics revenue increased 24.4% year-on-year. Among them, integrated logistics/agricultural product logistics/railway logistics revenue was +6.8%/-32.3%/+138.4%, respectively. The decline in the State Reserve's business volume dragged down agricultural product logistics, while the export volume of Xinjiang coal boosted railway logistics revenue. Manufacturing revenue increased sharply by 28.0% year on year. Among them, shipbuilding revenue increased sharply by 73.5% year on year. Benefiting from the shipbuilding boom cycle, shipbuilding delivery and production volume reached record highs in the first half of the year, with 81 ships in hand.

Shipbuilding contributed to increased performance, and preparations to accrue bad debts increased. In the first half of 2024, the company's net profit to mother decreased by 12.6% year-on-year.

Looking at business by sector, commodity supply chain operating margin fell 7.9% year on year (corresponding decrease of 0.26 billion yuan). Among them, current margin of metal minerals and energy chemicals fell 9.2% and 50.3% year on year, respectively, and current margin of new energy increased 5.0% year on year. Agricultural products actively adjusted business strategies to control inventory exposure, and current margin turned loss into profit. The gross profit of commodity logistics fell 8.7% year on year (corresponding decrease of 0.03 billion yuan), mainly affected by the decline in the volume of the State Reserve's business volume. The gross profit of the manufacturing sector increased sharply by 106.0% year on year (corresponding increase of 0.37 billion yuan), mainly due to the rise in the shipbuilding sector, gross profit doubled to 0.61 billion yuan year on year. In addition, the company's preparation for bad debts accruing accounts receivable increased by 0.18 billion over the same period last year. Ultimately, net profit to mother decreased by 0.11 billion yuan to 0.78 billion yuan year-on-year.

International expansion is accelerating, and the shipbuilding sector is being strengthened. In the first half of 2024, the company achieved a total import and export volume of 7.75 billion US dollars. Benefiting from the continued increase in the shipbuilding sector's ability to accept international orders and the increase in exports of steel, aluminum and other categories, the company achieved a total export volume of 1.47 billion US dollars, an increase of 33.27% over the previous year. The company has accelerated the construction of international logistics channels, opened up nearly 100 overseas logistics suppliers, and continuously enhanced international logistics capabilities in Southeast Asia, Africa, and the Asia-Europe Land Bridge. At the same time, the company transferred 5% of the shares (consideration 0.078 billion yuan) from the small shareholders of the holding subsidiary, Xiangyu Haizhuang, and increased its capital by 0.318 billion yuan to hold 51% of the shares in Xiangyu Haizhuang. The company seized the booming cycle of the shipping market, increased production capacity and lean management levels, and increased R&D and development efforts for the second main ship model.

The operation gradually stabilized, and the valuation cost ratio was outstanding. Facing a complex external environment, the company continues to optimize business strategies, risk management and inefficient business, actively expand international business, grasp the shipbuilding cycle, and strengthen merchant credit risk management and control. The business performance is expected to gradually stabilize and recover. The company's net profit for 2024-2026 is estimated to be 1.8/2.25/2.73 billion yuan, respectively, and the corresponding PE is 5.9/4.7/3.9X, respectively, confirming the “buy” rating.

Risk warning

1. Commodity prices fluctuate greatly;

2. Supply chain business operation risks;

3. Risk of exchange rate fluctuations.