Core view: China Ship Leasing is the first shipyard leasing company in Greater China, focusing on shipping and shipping. Since the company went public, it has maintained a net profit growth rate of more than 20% and a dividend payment rate of around 50%. The shipping cycle has risen after the pandemic, and ship leasing is one of the important methods of ship financing. The leasing business has significantly benefited from increases in ship leases, ship prices, and ship transactions.
The shipping boom has improved, and the company is an overlooked beneficiary target in the shipping industry chain. Since 2020, its stock price has greatly outperformed other companies in the industry chain. Currently 0.8 times PB is below the industry average, and the 7.4% dividend rate is higher than comparable companies. Considering the improvement in the shipping cycle, the ROE center of Chinese ship leasing companies is expected to gradually increase from 12%, covering it for the first time, and giving it a “buy” rating.
Backed by China Shipbuilding Group, it focuses on shipping and shipping. Ship leasing is an important method of ship financing. Compared with bank loans, it has the characteristics of a high financing ratio and more flexible operation. Ship finance customers are global customers. They have the characteristics of strong cycles, high fluctuations, and require high professionalism. The company focuses on shipping and shipping. It is a leasing company under China Shipbuilding, the largest shipbuilding group in China. It has obvious advantages over comprehensive leasing companies in asset acquisition, operation and disposal.
The market share is leading, and the financing channels are abundant. According to the Frost & Sullivan report, in terms of revenue, the company ranked 4th in the global ship leasing industry in 2018, accounting for 3.9% of the market share, and ranked 1st in the global non-bank ship leasing industry, accounting for 14.8% of the market share. Listed in Hong Kong and received a Fitch A rating and a S&P global rating A, there are significant advantages in financing channels and costs.
The benefit target of rising shipping sentiment that has been ignored by the market. With the resumption of work and production around the world after the pandemic, the prosperity of the shipping industry increased dramatically.
In Q1 2021, the container freight index SCFI rose 199% year on year, breaking through the highest level in history; the Baltic Sea Dry Bulk Index BDI rose 194% year over year, close to the highest level in 2020. The stock prices of COSCO Marine Control and Haifeng International in the industrial chain have risen 197% and 216% respectively since 2020. The company's stock price rose 0%, which is an industry where the industrial chain has been ignored.
Business volume: Benefiting from active ship transactions. Financial leasing is an important method of ship financing, and it is significantly related to the volume of new shipbuilding and used ship transactions. In Q1 2021, the revised total tonnage of new shipbuilding orders rose 158% year on year, and the cumulative used ship transaction volume (DWT) in February 2021 rose 28.5% year on year, and demand for financial leasing is expected to increase dramatically.
Operating a leasing business benefits from rising ship rents and asset prices. Compared with financial leasing, the operating leasing period is shorter, and the risk of residual value is borne by the company. Benefiting from improved shipping cycles, in March, the container rent index, bulk carrier rents rose 122% and 68% year-on-year.
After the original lease expires, the rent for the new lease is expected to rise sharply. The Clarkson used ship price index rose 11%. The company's ship market price is expected to be higher than book value, and disposal benefits are expected to increase dramatically.
First coverage, giving a “buy” rating. We expect the company's net profit of HK$13.4,16.32.0 billion for 2021-2023, corresponding PE to 5.5, 4.5, 3.7, and PB to be 0.77, 0.70, 0.63. As an overlooked beneficiary target in the shipping industry chain, the increase in stock prices since 2020 has greatly outperformed other companies in the industry chain. Currently 0.8 times PB is below the industry average, and the 7.4% dividend rate is higher than comparable companies. Considering the improvement in the shipping cycle, the ROE center of Chinese ship leasing companies is expected to gradually increase from 12%. Referring to comparable company valuations and dividend rate premiums, the shareholders' equity of the parent company was valued at 1.0-1.4 times the PB level in 2021, corresponding valuation of HK$97-13.6 billion, up 31-83%. The first coverage gave the purchase a rating.
Risk warning: Shipping cycle prosperity falls short of expectations; ship asset prices fall; financial leasers default.