Key investment points

China Ship Leasing is the world's leading ship leasing company, and the first and only listed shipyard leasing company in China. Benefiting from shareholders' professional backgrounds, a “fixed+flexible” business model, high-quality and balanced fleet assets, and a sound risk management and control system, the company has a higher performance growth rate and more efficient asset returns than its peers.

Furthermore, at this point, risk-free interest rates continue to decline, and the company's dividend yield is attractive.

Backed by China Shipbuilding Group's strong industrial background, the only domestic shipyard is a leasing company

Relying on the holding background of the world's largest shipyard, the company has ship-understanding genes. With strong expertise and rich experience in the shipping industry, it helps to seize business opportunities and move through the cycle.

Countercyclical investment and procyclical operation: The “fixed+flexible” business model calms cyclical fluctuations. Companies place large orders to build ships at low ship prices, expand operating volume, ensure steady development of the general business market, and achieve asset premiums at high cyclical levels. Since its launch in 2019, net profit has grown rapidly at an annualized rate of more than 20% in 2019-2022. 24H1's total revenue was HK$2.2 billion, up 27% year on year, and realized net profit of HK$1.33 billion, up 22% year over year. Annualized ROE and ROA were 20.2% and 6.0% respectively, the highest since listing.

High quality and balanced fleet assets: full coverage of oil and gas collection, development towards green, high quality and high added value

The company's fleet is small, low in cost, strong in circulation, and the proportion of high-tech value-added vessels such as LNG is large, and the proportion of ships is balanced. As of the 2024 mid-year report, the company has 125 ships, with an average age of 3.73 years, including 38 bulk carriers, 24 oil tankers, 19 container ships, 15 gas carriers, and 29 special ships; 23 orders are under construction, including 4 container ships, 6 oil tankers, 9 gas carriers, and 4 special ships.

Robust risk management and control system, effective cost control measures

The company has established a complete and three-dimensional risk prevention and control system. At the same time, through cost engineering and lean management, costs are reduced, and high operating efficiency has been achieved.

Continued high dividend payouts, prominent allocation value in a low interest rate environment

The company has continued to pay a high percentage of dividends since its listing. The overall dividend has accumulated HK$3.13 billion, which has exceeded the total amount of capital raised since listing in June 2019.

Profit forecasting and valuation

The company is expected to have operating income of HK$4.04, 4.16 and 4.32 billion in 2024-2026 and net profit of HK$2.1, 2.3 and 2.5 billion respectively. The corresponding earnings forecasts per share are HK$0.34, 0.37, and 0.41, respectively, corresponding to 5.2x, 4.7x and 4.3x PE, respectively. The dividend rate is expected to be 7.8% in 2024. The company is a leading global ship leasing company with “fixed+flexible” operation, steady performance and attractive dividend ratio. Covered for the first time Give it a “buy” rating.

Risk Alerts

1) Risk of a sharp drop in shipping prices; 2) risk of order default; 3) risk of global economic recession, etc.