Core views:

The world's leading special ships are starting a strategic transformation. The company operates a fleet of multi-purpose, heavy cranes, pulp, semi-submersible, timber, asphalt, and automobile vessels, totaling 164 ships, with a total load tonnage of 4.816 million DWT. During the “14th Five-Year Plan” period, the company seized the opportunity and focused on market opportunities brought by Chinese automobiles, fans, machinery and equipment going overseas, focusing on developing the automobile, pulp, and heavy gondola businesses.

Multi-purpose, heavy-lift, semi-submersible vessel business: robust and flexible. In the context of China's production capacity going overseas, exports of machinery, wind power equipment, etc. are growing rapidly, providing an increase in demand for the multi-purpose and heavy gondola business and reducing its cycle fluctuations. Considering that the current multi-use economy is in the middle to low level, its performance stability has been greatly enhanced. At the same time, the dry bulk market, which is strongly linked to its cycle, is in a state of transition from late recession to early recovery. There is a possibility that the boom will strengthen in 2025 and beyond and that economic spillover will drive the launch of multi-purpose ships.

Automobiles, pulp ships: core growth points. Both the pulp and motor ship business have benefited from the boom in the automobile ship market, and the boom in the automobile ship market stems from the rapid development of Chinese automobile exports. Looking ahead to the future market, even if the auto ship market returns to a new normal, it will maintain a medium to high level of prosperity. The company's performance will also benefit from the following two aspects: 1. Volume growth: automobiles and pulp ships are the key directions for the company's fleet introduction in the next two years. 2. Return of price: In the past, the company mainly participated in automobile ship operations through joint ventures. In April 2024, the company's profit scale was increased, and the rental level of the automobile shipping business is expected to return to the market average.

Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 1,523 billion yuan, 16.77, and 2,024 billion yuan, respectively. Considering the steady increase in the company's share of growth business, the valuation method for stocks according to the original cycle is slightly unreasonable. Refer to historical centers and comparable companies, and give a certain growth premium. A 25-year PE 10X was given, and the corresponding reasonable value was 7.81 yuan/share. The first coverage gave a “gain” rating.

Risk warning. The risk that automobile exports fall short of expectations; the risk that exports of machinery and equipment fall short of expectations; the risk of a sharp decline in the macroeconomy.