Financial Association News October 31st (Reporter Chen Mo) Following the market-controversial merger proposal of two ships that caused a decline in stock prices, last night, China CSSC (600150.SH) presented a disappointing quarterly report, with Q3 single-quarter net profit dropping by over 50%, and revenue growth also showing a quarterly decline. Some institutional personnel told the Financial Association reporters that they were not satisfied with the Q3 performance.

iFinD Financial Terminal data shows that by the end of October, a total of 14 institutions have made forecasts for China CSSC's 2024 performance in the past six months, with a mean of 5.283 billion yuan. According to the third quarter report, the company's net profit for the first three quarters was 2.271 billion yuan. According to the profit distribution situation in previous years, the performance of the first three quarters constitutes the main part of the annual performance, and basically determines the scale of the annual performance. Currently, China CSSC still has a gap of about 3 billion yuan from the institutional full-year performance expectations.

Specifically, China CSSC announced last night that the company achieved revenue of 56.169 billion yuan in the first three quarters, a year-on-year increase of 13.12%; net income of 2.271 billion yuan, a year-on-year decrease of 11.35%; among which, in the third quarter, revenue reached 20.152 billion yuan, a year-on-year increase of 5.35%; net profit attributable to shareholders was 0.858 billion yuan, a year-on-year decrease of 57.26%.

Regarding the significant decline in Q3 net profit, China CSSC stated in the announcement: In the same period last year, the company's wholly-owned subsidiary, Shanghai Waigaoqiao Shipbuilding, disposed of non-monetary assets exchange gain of 1.987 billion yuan. Excluding the impact of this item, the net profit attributable to shareholders of the listed company in Q3 increased by 3918.42% year-on-year; the net profit attributable to shareholders of the listed company in the first three quarters increased by 5530.70% year-on-year. However, the company did not elaborate on the reasons for the surge in performance after excluding the impact factor.

However, from a revenue perspective, China CSSC is facing downward pressure on its growth rate. In the first quarter report, semi-annual report, and third quarter report this year, the revenue growth rates were 68.84%, 17.99%, and 13.12% respectively, showing a significant sequential decline. Compared with the same period last year, the revenue growth rates in the semi-annual report and third quarter report have also reduced by 10 to 15 percentage points. According to iFinD Financial Terminal data, the mean forecast for China CSSC's revenue growth rate in 2024 is 16.31%, with the third quarter report growth rate already falling below expectations.

From the perspective of the shipbuilding market, the Financial Association reporters learned that Jiangnan Shipyard, a subsidiary of China CSSC, has scheduled civilian new ship orders until 2028. Currently, Jiangnan Shipyard plans to increase production capacity, expecting the number of ship dockings to increase to 6-7 batches next year, and to reach 8 batches from 2025 to 2026. The higher the frequency of ship dockings, the more shipbuilding orders will be added for subsequent construction.

At the same time, relevant personnel from Jiangnan Shipyard also revealed to Financial Association reporters that ships delivered in the second half of this year are already profitable, and it is expected that the shipyard will remain profitable as a whole in 2025. The new ship orders scheduled for delivery starting from 2026 are high-priced orders.

However, the merger of the two ships has obviously increased the difficulty for investors to predict the future, as the assets, business, and other aspects of the listed companies will all undergo changes. The third quarter shareholder list shows that active investment institutions mostly choose to reduce their holdings: as of the end of September, compared to before the restructuring suspension on September 2, among the top ten circulating shareholders of China CSSC, the northbound funds (Hong Kong Securities Clearing Company Limited), civil-military integration industrial investment fund, and CITIC Securities - Changfeng single asset management plan each reduced their holdings by approximately 9.3 million shares, 0.65 million shares, and nearly 4.3 million shares.

Comparing the candlestick chart, the above reduction operation was completed within 8 trading days after the company resumed trading following the announcement on September 19. During this period, despite the rebound in the overall market and the general rise in individual stocks, the mentioned institutions still chose to sell off. For details on the merger proposal of the two ships, please refer to previous reports by Caixin Media and reader comments: The billion-dollar merger proposal for North and South ships sets the "dissenting shareholder protection price" at 80% of the 120-day average price, respectively lower by 13.3% and 18.8% compared to before the suspension.

Just before and after the disclosure of the merger proposal for the two ships, the stock price of China CSSC moved continuously with three consecutive large-volume bearish candlesticks, reflecting the mainstream market sentiment. Another detail worth noting is that from the end of June to September 2, apart from the possibly "belated" northbound funds still increasing their holdings in China CSSC, civil-military integration industrial investment fund, and CITIC Securities - Changfeng single asset management had preemptively reduced their holdings by 2.45 million shares and 36 million shares respectively.