\u3000\u3000 Shanghai Zhonggu Logistics Co.Ltd(603565) (603565)
Domestic trade container shipping is a private leader, with the shipping network covering the whole country and the transportation capacity ranking 18th in the world. It focuses on water transportation and actively develops multimodal transport: Shanghai Zhonggu Logistics Co.Ltd(603565) was established in 2003. It is one of the earliest enterprises specializing in domestic trade container shipping in China. The company's airline network covers the whole country and focuses on building the eastern coast, the Yangtze River, the Pearl River The "three horizontal and one vertical" network layout formed by the connection between Beijing, Tianjin and Hebei. According to Alphaliner data, the company's comprehensive transport capacity ranks eighteenth in the global shipping companies, and the second largest Chinese mainland, with a total capacity of 124 thousand and 600 TEU. The revenue of the company is mainly water transportation. In 2020, the revenue of water transportation business accounted for 77.96% of the total revenue. At the same time, due to the active development of multimodal transport in recent years, the revenue of land transportation accounted for 22.04%.
The demand for domestic trade centralized transportation has been improving for a long time, and the change from scattered to centralized transportation + multimodal transportation has brought deterministic growth: the overall demand for domestic trade centralized transportation has a high correlation with the macro-economy, and the growth rate of traffic volume from 2013 to 2020 is basically higher than that of GDP. Since 2020, the "new development pattern with China's big cycle as the main body and China's international double cycle promoting each other" has been constantly mentioned. It is expected that the demand for domestic trade and centralized transportation will maintain steady growth in the future. In addition, the development of bulk to centralized transportation and multimodal transport will bring deterministic demand growth for domestic trade and centralized transportation: 1) the containerization proportion of developed countries is generally more than 50%, and the containerization proportion of ports in China was only 20.72% in 2018. There is still much room for improvement. Considering the requirements of environmental protection, quality improvement and efficiency, China is expected to continue to promote "bulk to centralized transportation". 2) The 14th five year plan clearly points out that the State encourages the development of multimodal transport such as iron water, public water and air rail. By 2025, the national railway and waterway freight volume will increase by about 10% and 12% respectively over 2020, and the container iron water intermodal transport volume will increase by more than 15% annually.
The total supply of the industry is tight and the company expands against the trend: under the influence of many factors, the supply of domestic trade centralized transportation is tight and it is expected that the transportation capacity will not expand significantly in the short term: 1) the transportation capacity supply in the domestic trade centralized transportation market is cyclical. With the intensive production of new shipbuilding since 2017, the growth rate of transportation capacity has continued to decline in recent years. 2) In 2021, due to the high prospect of foreign trade, it is expected that about 20% - 30% of domestic trade capacity will be transferred to foreign trade. 3) Steel prices remained high, and shipbuilding and second-hand purchase costs continued to rise. 4) Global shipbuilding new orders have increased significantly since November 2020, reaching 201.46 million dwt by October 2021, close to the high position before 2019, and the shipbuilding efficiency is low due to the impact of the epidemic. With years of experience in deep domestic trade, the company ordered 18 4600teu container ships at the low shipbuilding price. The new ships will be launched successively from 2022q4, accounting for 66.6% of the company's existing transportation capacity. The industry's capacity increment in the next three years mainly comes from Zhonggu. Under the background of tight total supply, the company has greatly increased its capacity and fully grasped the business cycle.
The domestic trade centralized transportation market is highly concentrated and the industry competition pattern is good. Compared with the main competitors, it has business advantages: 1) Pan Asian shipping, Shanghai Zhonggu Logistics Co.Ltd(603565) and Antong Holdings Co.Ltd(600179) account for more than 80% of the total transportation capacity, and the market concentration is high. Due to the development of the industry and the increase of ship types, the entry threshold continues to rise. At the same time, due to the non universality of domestic and foreign trade ships, there are natural barriers between domestic trade and foreign trade, and the competition pattern of the industry is good. 2) Pan Asia, the competitor, was transformed into a Cosco Shipping Holdings Co.Ltd(601919) holding subsidiary after mixed reform in 2017, and the growth rate of revenue from 2018 to 2021 was lower than that of the middle valley; AVIC was in the period of bankruptcy and restructuring in 2020, and was seriously damaged due to the introduction of China Merchants Port Group Co.Ltd(001872) trust. Compared with the two main competitors, the management of the company is stable, the operation is in good condition, and as a private leader, it has certain advantages in decision-making efficiency.
The company has been deeply engaged in the industry for many years, has deep barriers, takes the lead in exploring the domestic trade centralized transportation network mode, and has strong competitive advantages: 1) from the perspective of transportation capacity layout, the company builds new ships at low prices and sells old ships at high prices, improves its own transportation capacity while updating the fleet, timely arranges prosperous foreign trade business, and drives the unit income of the fleet to rise. 2) From the perspective of development mode, the company continues to layout the "bulk to bulk" and multimodal transport vigorously developed by the state, promote the large ship strategy, and explore the domestic trade centralized transportation network mode of direct navigation of large ship trunk lines and hanging of small ship branch lines to the port. Under the condition of stable growth of domestic trade centralized transportation demand and sufficient supply of goods, the efficiency is better than that of peers. 3) From the perspective of financial data, the company's net profit margin and gross profit margin are relatively stable and better than peers, and the unit TEU operating cost is about 20-40% lower than that of Anton. Various financial indicators highlight the company's operating advantages.
Investment suggestion: driven by the improvement of the overall supply and demand of the industry, the improvement of the launching capacity of the company's new ships and leading peers in operating efficiency, it is expected that the company's performance will continue to grow steadily in the medium term and have broad space in the long term. The demand for domestic trade and centralized transportation has been improving for a long time. Under the development of internal circulation based economy, the transformation from scattered transportation to centralized transportation + multimodal transportation has brought deterministic growth. The market concentration of the industry is high and the competition pattern is good. After the epidemic, part of the transport capacity flows to foreign trade, resulting in tight supply. The difference between supply and demand drives the freight rate to continue to rise. The company seizes the industry opportunity to expand transportation capacity. In the next two years, the main increment of industry transportation capacity will come from Zhonggu, and the new ships will be launched successively from 2022q4. In terms of operation, the company's mode of direct navigation of large ship trunk line + transfer of small ship branch line has been gradually verified, and its operation efficiency is better than that of its peers. At the same time, it actively explores foreign trade business, charters ships to increase its performance, and actively explores near Ocean foreign trade on its own. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 2.41/23.2/2.79 billion respectively, corresponding to 12.6/13.0/10.9 times of the current share price PE, which is covered for the first time and given a "Buy-A" rating.
Risk tip: domestic trade demand declines due to macroeconomic fluctuations; The calculation assumptions such as containerization rate and multimodal transport rate are not as expected; The industry turns to foreign trade, and the transportation capacity exceeds the expected return; Deterioration of domestic trade competition pattern; The prosperity of foreign trade decreased; Fuel costs have increased significantly.
