Key investment points

The company's debt risk against Jiangsu Delong will be officially lifted. The debt transferee group did not announce the results of the debt asset value assessment. The controlling shareholder of the company, Xiangyu Group, plans to transfer the company's claims against Jiangsu Delong Nickel Co., Ltd. and its subsidiaries as a whole. The transfer price is 8974.2659 million yuan.

As of July 31, 2024, the book balance of the company's claims against Jiangsu Delong was 8974.2659 million yuan, and the assessed book value was 8974.2659 million yuan. Since the total market value of the collateral corresponding to such claims was greater than the book value of the claim as of July 31, 2024, the book value was used as the assessed value of the claim.

That is, there is no price discount on the transfer of the debt, and there is no need for the company to further depreciate. At this point, the company's debt risk to Jiangsu Delong will soon be officially lifted.

The fixed increase was approved by the exchange, which is expected to complement each other's advantages

The company announced that it has recently received an application for fixed increase review and approval by the exchange. The specific targets of this issuance are China Merchants Group, Shandong Port Group and Xiangyu Group. The company plans to raise capital of RMB 3219.7598 million to supplement working capital and repay debts, which can better meet the company's daily capital turnover needs, enhance the company's financial strength, improve resilience to risks, and reduce financial and operational risks.

By introducing China Merchants Group and Shandong Port Group as strategic investors, the company can achieve complementary advantages and achieve mutual benefit and win-win cooperation by deepening strategic cooperation between the two sides.

Adding shipyards, the right time for a booming shipbuilding boom

The company's Xiangyu Haisang super portable bulk carrier is second in the world, and the total number of dry bulk carriers is sixth in the world. Currently, orders are scheduled for 2029. The cost of Supramax, the top product, has risen 29% to 33 million US dollars since 2021. All orders delivered by the company after 2024 came from orders after the price increase. Combined, the cost of steel has dropped drastically, and the performance is expected to be released at an accelerated pace.

Profit forecasting and valuation

The company's 2024-2026 revenue is estimated at 447.5, 512.8, and 605.6 billion yuan, with net profit attributable to mother of 1.1, 2.2, and 2.5 billion yuan, respectively, and corresponding EPS of 0.51, 0.99, and 1.13 yuan.

Under the segmental valuation method, the profit of the bulk supply chain business is expected to be 1.63 billion in 2025, valued at 8x PE, corresponding to the 13 billion valuation; considering that the shipbuilding business has already signed closed contracts in 2025, and the vast majority of delivery orders are currently signed after the price increase in 2021, profit release is expected to accelerate. Net profit of 0.57 billion yuan is expected to return to mother in 2025. The reasonable valuation of the company under the segmental valuation method is 21.6 billion yuan billion yuan, upgraded to a “buy” rating.

Risk warning

1) Demand for commodities fell sharply; 2) New orders received by the shipbuilding business fell short of expectations, etc.