COSCO Marine Controls announced its 2024 three-quarter report, and Q3 results achieved significant growth. COSCO Marine Holdings released its 2024 three-quarter report. In the first three quarters, it achieved operating income of 174.737 billion yuan, +29.80% year over year, realized net profit of 38.124 billion yuan, +72.73% year over year, and realized net profit without return to mother 38.059 billion yuan, or +73.13% year over year. Among them, the third quarter achieved operating income of 73.513 billion yuan, +72.00% year over year, realized net profit to mother 21.254 billion yuan, +285.70% year over year, and realized net profit after deduction of 21.239 billion yuan, or +288.62% year over year.

CCFI rose sharply from month to month, leading to the release of the company's performance. In the third quarter, COSCO Maritime Control achieved cargo volume of 6.58 millionteU, an increase of 2.3% over Q2, but achieved route revenue of 67.36 billion yuan, an increase of about 42.7% month-on-month, mainly due to the increase in CCFI. The average CCFI value in the third quarter reached 1991 points, an increase of 552 points over Q2, which is a significant improvement. In total for the first three quarters, Maritime Control achieved a business volume of 19.0397 millionteU, +9.07%. By route, cargo volume across the Pacific, Asia, Europe, Asia, other international and mainland China routes was +12.26%/-13.87%/+11.50%/+7.91/ +26.33%; achieved route revenue of 157.75 billion yuan, +32.56%. By route, across the Pacific, Asia, Europe, Asia, other international, and mainland China, respectively 38.05%/+17.49%/+18.01%/+0.05%

However, it is worth noting that since shipping companies' profits and the CCFI freight index both lag behind the spot market, the freight rate performance in Q4 still needs to be observed.

The terminal business is steady. COSCO SHIPPING's throughput in the first three quarters was 107.2673 millionteU, +7.08% year over year. Among them, the holding terminal's throughput was 24.5566 million TEU, +6.89% year over year. By region, the Bohai Rim, Yangtze River Delta, southeast coast, Pearl River Delta, southwest coast, and overseas terminal throughput was +7.11%/+13.83%/+1.48%/+6.20%/+14.25%/+4.07%, respectively.

Risk warning: The global economy declined beyond expectations, security incidents, and the impact of the Red Sea crisis weakened beyond expectations.

Investment advice:

The Red Sea crisis caused the global Far East-Europe route to take a detour to a corner of good hope, and the phased mismatch between supply and demand has brought about a marked increase in the prosperity of the shipping industry. However, the one-time impact of the Red Sea crisis on growth has begun to weaken. Spot freight rates are gradually declining. The CCFI freight rate index may have declined significantly in the fourth quarter, and we still need to continue to observe the consumer demand situation in Europe and the US. Considering that the company's performance in the third quarter exceeded our previous expectations, we adjusted our 2024-2026 performance forecast from 38.1/24.36/23.95 billion yuan to 46.6/25.38/25 billion yuan, corresponding to the PE valuation 5.0/9.2/9.3 times, maintaining the “superior to the market” rating.