Investment advice: The company is a leader in the container industry. It is involved in various fields such as energy equipment and logistics equipment. Many downstream industries are growing in resonance, optimistic about the company's future performance growth, and driving improved profitability. The estimated net profit for 2023-2025 is RMB 319/24.03/4293 million yuan, and the corresponding EPS is RMB 0.06/0.45/0.80 yuan. Considering the recovery of the company's multiple businesses, considering PE and PB valuations, the company was given a target price of HK$10.73, and an increase in holdings rating.
The US trade union petitioned for a trade investigation, which had limited impact on the company. On March 12, five major trade union organizations, including the US USW, filed a petition requesting the Biden administration to launch a trade investigation into China's “unreasonable and discriminatory” practices in the maritime, logistics, and shipbuilding industries. The company's overseas business revenue in 2022 was 17.378 billion yuan/year over year, accounting for 12.3%. The company's overall overseas share was relatively low, and the North American business share was even lower. After the US trade union petition is reported to the Biden administration, relevant investigations will be carried out. Referring to previous cases, investigations often take more than a year, and domestic companies can apply for exemptions, so it is expected that the impact of this incident on the company will be limited.
The boom in the container and offshore industry is picking up, and we are optimistic about the company's performance growth. The container industry is in the inventory removal stage, demand for containers is gradually recovering, and the price of new dry container containers remains stable in 2023. Offshore oil investment in the offshore industry is picking up well. In the first half of 2023, the overall offshore oil and gas market continued to strengthen. The capital expenditure for offshore oil and gas projects reached 68 billion US dollars/+57% year over year. We expect deep-water drilling platforms, FPSO and other industries to enter a new boom cycle.
Downstream road vehicles and energy businesses are recovering in resonance. 1) Road vehicles: In 2023, China's heavy truck sales volume was 845,500 units/YoY +25.83%; in January-January 2024, domestic heavy truck sales were 159,400 units/89.76% YoY. North American semi-trailer orders remain high, and domestic logistics and freight demand is recovering. As a leading semi-trailer company, the industry is booming; 2) Energy: Affected by overseas wars, rising international energy demand, and rising demand for natural gas and crude oil transportation, the industry has broad prospects for development.
Risk warning: Container demand falls short of expectations, economic cycle fluctuations, overseas trade protection risks.