China Merchants Shipping (601872): Acquisition of bulk carrier assets to resolve industry competition
Event: China Merchants Shipping announced (1) the acquisition of the original Sinotrans reduced (368).
HK) each of the bulk cargo and LNG ship assets, and also repays shareholder debts, the total transaction price is tentatively set at 65.
7 ppm (2) Total asset impairment provisions for seven Capesize bulk carriers and seven general cargo ships are equivalent to RMB 5.
Resolving competition in the same industry, increasing the share of bulk cargo.
The cash acquisition has resolved the company’s expected competition with Sinotrans.
With reference to the 2018 interim report of Sinotrans, the company has 38 bulk carriers and 25 leased capacity. After the asset acquisition, the company will add Panamax bulk carriers to achieve full coverage of bulk carriers.
We consider bulk asset acquisitions to be relatively neutral.
The dry bulk sector has been repairing at the bottom since the bottom of the 2016 cycle. In 2019, the BDI shift was affected by the dam break of Vale, but the overall average was close to 2018.
In terms of market outlook, the current supply of new bulk carriers under construction accounts for 10% of supply orders at the lowest level in history. The demand side is expected to benefit from the resumption of Sino-US grain trade. The risk of a decline in the cycle as a whole is small, and iron ore is bound to be upward.Demand for coal and grain.
Impairment of bulk assets reduces the cost burden.
The Capesize vessels delivered by the company in 2011-12 and some of the general cargo ships belonging to the former Changhang International (now Shanghai Minghua), due to the relatively old age, the new ship construction cost is higher than the current level with a certain amount of impairment.
We have calculated that the oil tanker assets are substantially impaired, and the oil tanker ship assets exceed the replacement cost.
After the assets are impaired, the break-even line of dry bulk assets is reduced, and the cost burden is reduced.
The proportion of LNG ship holdings increased and profits increased.
China Merchants Shipping holds 50% of CLNG shares and 25 of the 5 LNG ships acquired this time.
5% of Sinotrans’s original joint venture with CLNG and Dynagas.
After the completion of the acquisition, China Merchants Shipping’s shareholding ratio for this part of the ship will range from 13% to 38.
5%, investment income increased.
Adjust earnings forecast and maintain “overweight” rating.
(1) Taking into account the current assets5.
400 million impairment.
(2) Affected by the acquisition, the number of operating days for the 2019-2021 LNG ship equity increased by 452, 470, and 470 days, and the investment income increased by 1.
(3) After the sanctions, some ships in CLNG were suspended. We originally scheduled CLNG in Q4 2019 to be 200 million less than the non-sanctioned state, but the recovery was better than expected. We raised the abnormal damage to 0 in 2019.
(4) Although the bulk part has increased in volume, it is still at the edge of the break-even line. As a precautionary measure, calculate the break-even part.
In summary, the company’s net profit attributable to its parent is expected to reach 16 in 2019-2021.
900 million, 49.
1 billion, 70.
200 million (previous forecast was 19.
8 billion, 47.
8 billion, 68.
800 million, corresponding to the company’s single ship TCE33518, 50,000, 65,000 US dollars / day).
Risk reminder: US crude oil exports are less than expected, the economic growth rate exceeds the importing country’s destocking cycle, 深圳桑拿网 new ship orders have risen sharply, and orders under construction account for more than 20%.