Cosco Shipping Holdings Co.Ltd(601919) (601919)
The freight rates of the European line long-term association have been signed one after another, and the profitability of the head ship owner is expected to continue to improve in 2022
The long-term agreement of European routes in 2022 has been signed recently. Different from the relatively loose contracts in the past, this year’s long-term agreement presents a more obvious trend of the seller’s market. In addition to the significant increase of the price by 2.5-5 times, some head shipping companies are more picky about the signing conditions of the long-term agreement than in the past. From the current situation, the overall long-term association of the centralized transportation industry has exceeded expectations in both the price dimension and the term dimension. We believe that on the one hand, this will continue to improve the profitability of the leading enterprises compared with 2021, and on the other hand, it will lock in the stability of the industry’s profits.
The new long-term cooperation pattern may mean that the proportion of direct customers in the industry will increase and customers’ demand for stable supply chain will dominate
Combined with the hot negotiation of the long-term association this year and the improvement of shipowners’ pickiness towards customers, we believe that the main factor behind it is that some manufacturing enterprises have changed from freight forwarding booking to direct signing with shipowners, resulting in the increase of the demand of the long-term association, which is expected to greatly increase the proportion of direct customers of the leading freight forwarders compared with the past, The pattern of the industry is expected to have a more obvious marginal improvement. In addition, on the premise of substantial price increase, the demand is still hot, which reflects that customers’ sensitivity to price has been reduced and replaced by the pursuit of stability and security of the supply chain. To sum up, the centralized transportation industry is currently enjoying the industry cycle dividend, but it still needs to think about the source, build its own differentiated service capacity and better meet the needs of customers.
The construction of digital capacity is urgent, and the company’s gsbn and synconhub layout are leading in the industry
At the current time point, the visualization and digitization of shipping are facing an unprecedented opportunity for upgrading. Firstly, as the process has changed from booking space for freight forwarders to booking space directly for ship owners, the shortening of the process chain has simplified the process, and the response ability of shipping companies on Logistics visualization services can be more effectively and quickly reflected; Secondly, for shipping companies, higher profits than in previous years can support them to increase investment in this area. In the first year of the 21st century, gsbn jointly initiated by COSCO Shipping Container, OOCL container, COSCO Shipping Port and five other liner and ports under the company announced the realization of substantive operation in Hong Kong, China, the import electronic suitcase service was fully launched in China, and the blockchain electronic bill of lading service was successfully implemented in Malaysia, The first application product “paperless delivery” has been officially launched in China and Southeast Asia; Synconhub e-commerce platform operated well, and the trading volume of foreign trade e-commerce platform H1 increased by 280%.
End to end service capability is also the key to service differentiation, and the company is the benchmark in the industry
Since the shipping probability only covers part of the whole transportation process, it is obviously more convenient for customers to complete all transportation needs through one service provider. The end-to-end and even door-to-door service capacity is expected to become the core competitiveness of shipping companies. In this regard, the company gives full play to the advantages of route network and multimodal transport services, strengthens the linkage between Hong Kong and shipping, and sea rail connectivity, and has launched services such as China EU land and Sea Express Line and Prince port express line, which has become a benchmark in the industry, and customer stickiness is expected to continue to improve.
Investment suggestion: in the short term, the industry is facing a window of freight rate recovery in the small peak season. In the medium and long term, the improvement of the long-term association and service capacity is expected to lead to the differentiation of the service capacity of the industry, and then drive the profit stability of the head company. Considering that Cosco Shipping Holdings Co.Ltd(601919) has a leading layout and the signing of the long-term association is better than expected, The company’s profit forecast for 21-23 years was raised from 903.42, 522.77 and 423.98 to 903.42, 131.769 and 98.822 billion yuan, corresponding to PE valuation of 3.32, 2.28 and 3.03x, maintaining the “buy” rating!
Risk tips: the global economy is falling faster than expected, the industry freight rate is falling faster than expected, safety accidents, etc
