On January 21, Cosco Shipping Energy Transportation Co.Ltd(600026) (600026. SH) issued the announcement of performance loss in 2021. According to the announcement, the company expects a net loss of RMB 4.92 billion to RMB 5.12 billion in 2021.
For the pre loss of performance, Cosco Shipping Energy Transportation Co.Ltd(600026) said that in 2021, the repeated covid-19 epidemic disrupted global economic activities and inhibited oil consumption demand. At the same time, the continuous digestion of oil commercial inventory has further dragged down the demand for oil transportation. The contradiction between the supply and demand structure of transport capacity has led to the international tanker freight rate hovering at a low level. The annual average equivalent time charter rate (TCE) of VLCC td3c (Middle East China) route was – 518 US dollars / day, a year-on-year drop of 48697 US dollars / day, a decrease of 101%.
In addition, uncertainties in international politics and economy have suppressed the market’s momentum. Although the group has taken a number of effective measures, such as ultra-low speed navigation, refined fuel procurement and innovative business model, it has increased revenue, reduced costs and increased efficiency. However, due to the continuous downturn of the international oil transportation market in 2021 and the rigid growth of epidemic prevention costs in the post epidemic period, the business performance of the group is still seriously affected.
According to the announcement on the provision for impairment of ship assets issued on the same day, after evaluation, the book value of 141 ships under Cosco Shipping Energy Transportation Co.Ltd(600026) before evaluation is RMB 38.165 billion on the base date of December 31, 2021. After evaluation, the recoverable value is RMB 33.204 billion. The provision for impairment of assets of Cosco Shipping Energy Transportation Co.Ltd(600026) 94 ships is about RMB 4.96 billion in total.
In the announcement, Cosco Shipping Energy Transportation Co.Ltd(600026) the reasons for the provision for impairment can be attributed to three points: first, the tanker market has been in a continuous downturn and weak recovery since 2021. Second, in June 2021, the International Maritime Organization (IMO) issued the “carbon emission reduction Convention” for the shipping industry, which makes restrictive requirements on the carbon emissions of global shipping enterprises. Third, on October 24, 2021, the State Council issued the action plan for reaching the carbon peak by 2030, which clearly put forward the overall requirements of “accelerating the formation of green and low-carbon transportation modes and ensuring that the growth of carbon emissions in the field of transportation remains within a reasonable range”.
According to the information on the official website, Cosco Shipping Energy Transportation Co.Ltd(600026) is a specialized company of COSCO Shipping Group Co., Ltd. engaged in energy transportation and chemical transportation such as oil products and liquefied natural gas. It is reorganized from the energy transportation sectors of the former COSCO and China shipping groups
Shortly after the relevant announcement was issued, the Shanghai stock exchange quickly issued an inquiry letter on Cosco Shipping Energy Transportation Co.Ltd(600026) asset impairment.
The Shanghai Stock Exchange said that the company’s performance will suffer a loss compared with the same period last year, mainly due to the provision for impairment of ship assets of 4.96 billion yuan. The company is required to further distinguish the asset groups of non foreign trade aging ships according to the ship age, transportation goods, route, etc., and disclose the number of impaired ships, book value, net amount of fair value minus disposal expenses, present value and recoverable amount of future cash flow according to the type; Supplement and disclose the specific process, selection of main parameters and basis of asset impairment measurement, compare with the external data available on key parameters, demonstrate and explain whether there is significant deviation in the evaluation, the reason and rationality of withdrawing large amount of impairment in the reporting period, and whether the withdrawing amount is accurate and appropriate.
For the reasons proposed by the company, such as the reduction of the rent level forecast of the tanker transportation market by the international authority, the impact of the “carbon emission reduction” policy and the implementation of the green development strategy. Shanghai stock exchange requires to supplement the time point when the company finds that there are signs of impairment of relevant assets, as well as the time point when the company completes the impairment test of relevant assets and confirms the specific accrued amount; In combination with the trend of ship rent level and the company’s operating performance in recent ten years, explain the specific situation of early asset impairment test and impairment provision; The specific impact of implementing the green development strategy on this impairment; By reference to the impairment provision of comparable companies in the same industry, explain whether the asset impairment of the company in the early stage is insufficient and untimely, and whether it complies with the relevant provisions of accounting standards.
In addition, according to the disclosure, the international tanker freight rate has shown a downward trend since May 2020. The Shanghai stock exchange requires the company to supplement and disclose the solutions and Countermeasures the company has taken and plans to take against the market downturn in combination with the current operation, finance and other aspects, and fully reveal the relevant risks.
