\u3000\u3 Shengda Resources Co.Ltd(000603) 565 Shanghai Zhonggu Logistics Co.Ltd(603565) )
Event: Shanghai Zhonggu Logistics Co.Ltd(603565) released the annual report of 2021, and achieved an operating revenue of 12.291 billion yuan in 2021, a year-on-year increase of + 17.79%; The net profit attributable to the parent company was 2.404 billion yuan, a year-on-year increase of + 136%. The company distributes cash dividends of 15 yuan to all shareholders for every 10 shares; At the same time, the capital reserve is converted into share capital, with 4.8 shares added for every 10 shares.
In 2021, domestic trade prices rose, foreign trade was actively developed, and the company’s revenue increased steadily. In 2021, the domestic trade centralized transportation capacity was tight, and the price rose as a whole. According to the PDCI index, the annual industry average freight index was + 22% year-on-year. At the same time, under the high boom of foreign trade, the company actively explored foreign trade operation. During the year, the company invested a total of 11 ships for foreign trade. In 2021, the revenue from water transportation business reached 10.162 billion yuan, a year-on-year increase of + 25.10%. Due to the reduction of domestic trade capacity and the adjustment of business structure, the land transportation business revenue brought by multimodal transport in 2021 was 2.129 billion yuan, a year-on-year increase of – 7.27%. Finally, the company achieved a total revenue of 12.291 billion yuan, a year-on-year increase of + 17.79%.
With reduced transport capacity and improved efficiency, the annual transport volume achieved year-on-year growth. In 2021, the company sold four self owned ships, with a weighted average self owned capacity of 1.47 million dwt, a year-on-year decrease of – 5.06%. The decline of external rental capacity was equivalent to that of self owned capacity, a year-on-year decrease of – 4.6%, making the weighted average total capacity – 5% year-on-year. At the same time, the transport capacity structure has changed. By the end of 2021, the domestic trade transport capacity of the company has decreased by about 23% year-on-year. In view of the tight supply of transportation capacity, the company continued to tap the potential of operation efficiency and improve the ship load rate (year-on-year + 7pts) and turnover rate, resulting in the annual transportation volume of 13.26 million TEU, a year-on-year increase of 1.33%.
Under the improvement of efficiency, the cost increase is controllable, the net profit increases significantly and the dividend rate is high. The operating cost of the company in 2021 was 9.677 billion yuan, a year-on-year increase of + 7.98%, which was mainly affected by the increase of ship rent and fuel cost. With the improvement of efficiency, the operating cost of single TEU increased by only 6.56%. The overall cost side remained stable. The comprehensive cost rate in 2021 was 3.64%, with a year-on-year rate of -0.09pts. Finally, the company realized a net profit of 1.59 billion yuan, a year-on-year increase of + 102.62%. In terms of dividends, the company maintains a high dividend proportion and gives back to shareholders. It plans to pay a cash dividend of 1.438 billion yuan, corresponding to the current dividend rate of 5.53%.
Looking forward to 2022, the annual freight rate is expected to continue to grow, the new ship Q4 will be launched one after another, the foreign trade will be explored in an orderly manner, and the land transportation logistics park will continue to promote. It is optimistic about the performance and maintain steady growth. As the domestic trade capacity will flow out in stages in 2021, if there is no return of domestic trade capacity in 2022 or the domestic trade capacity continues to flow out, the industry weighted average capacity will further decline. At present, the freight rate of foreign trade is still at a high level, and there is no sign of turning back the transport capacity of the industry. Since mid February, the PDCI index has continued to rise, reaching 1793 points as of March 18, with a year-on-year increase of + 50.55%. The average freight rate of the whole year is expected to continue to grow. In terms of transportation capacity, the company’s 18 new ships will be launched successively from the fourth quarter of 2022. After the launch of this batch of ships, the main source of goods is bulk to bulk goods. According to the company’s layout, the demand for source transportation is sufficient. In terms of foreign trade, the company has opened two self operated routes and will continue to explore the combination of domestic and foreign trade business in 2022. In terms of land transportation, the company’s logistics park continues to promote, and Rizhao, Xiamen and other logistics park projects are expected to be implemented this year to improve land transportation efficiency and increase the gross profit margin of land transportation business. Based on the supply and demand situation of the industry, the improvement of the company’s efficiency and various early-stage inputs, we are optimistic about the steady growth of the company’s performance in 2022. In addition, the target operating revenue announced in the company’s 2022 financial budget report was 12.858 billion yuan, a year-on-year increase of + 4.61%; The target net profit attributable to the parent company was 2.3 billion yuan, a year-on-year increase of – 4.32% (the decrease was due to the one-time ship sale income in 2021).
Investment suggestion: in the short term, the flow of industrial transport capacity to foreign trade makes the supply and demand of domestic trade tight. Under the difference between supply and demand, the year-on-year growth of domestic trade freight rate in 2022 has high certainty. In addition, the company actively explores foreign trade and develops foreign trade business by means of self support and rental cooperation. In the medium term, the company will seize the opportunity of the industry to expand its transport capacity. The main increment of the industry’s transport capacity in the next two years will come from Zhonggu. New ships will be launched successively from 2022q4, with high capacity elasticity in 2023 and 2024. In the long run, the demand for domestic trade and centralized transportation is good, and the carbon emission of sea transportation is significantly lower than that of road transportation. Under the development of internal circulation based economy, the transformation from scattered transportation to centralized transportation + multimodal transportation will bring deterministic growth. The company’s mode of direct navigation of large ship trunk line + transfer of small ship branch line has been gradually verified, the operation efficiency is better than that of peers, and the market share is expected to continue to increase. It is estimated that the company’s net profit attributable to the parent company from 2022 to 2024 will be RMB 23.3/27.8/3.02 billion respectively, corresponding to 11.1/9.4/8.6 times of the current share price PE, maintaining the “Buy-A” rating.
Risk tip: domestic trade demand declines due to macroeconomic fluctuations; 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.
