After a "crazy year" of global shipping, the container shipping giant intends to sprint to the port exchange

Under the background of the continuous heat of the maritime market, Zoomlion Shipping, which ranks 22nd in the global container shipping company, intends to sprint to the IPO of the Hong Kong Stock Exchange.

Recently, the Hong Kong Stock Exchange disclosed that Zoomlion Shipping Co., Ltd. (hereinafter referred to as "Zoomlion Shipping") officially submitted a prospectus to the Hong Kong Stock Exchange on January 31 to be listed on the main board, with CICC and Citi as joint sponsors.

According to the prospectus, the net proceeds raised by Zoomlion Shipping's IPO will be used to purchase new vessels, optimize fleet structure, expand logistics business, expand service networks and build digital capabilities. However, the company did not specify a timetable or disclose the amount of funds to be raised in the IPO.

Proposed listing on the Hong Kong Stock Exchange

According to public information, Zoomlion Shipping is a container shipping enterprise, founded in 2005, headquartered in Shanghai, the main business involves container liner transportation, ship management, international shipping agency and other fields. As of December 31, 2021, Zoomlion Shipping's container shipping services have covered 57 ports in 21 countries and regions around the world.

Currently, Zoomlion Shipping operates a fleet of 33 vessels with a total capacity of 83,100 TEU and an integrated shipping network of 52 routes, mainly operating near-ocean routes (including intra-Asian routes) and ocean-going routes (including Asia-Europe, trans-Pacific and Asia-India subcontinent and Middle East routes).

According to Deluri, about 30.1% of the world's container throughput in 2020 will come from Chinese mainland ports, six of the world's top ten ports are located in Chinese mainland, and Zoomlion Shipping has operations in these six ports; according to Alphaliner's statistics, as of December 31, 2021, Zoomlion Shipping ranked 22nd among global container shipping companies.

From the perspective of business development, Zoomlion Shipping adopted the Allegro container carrier operation solution in 2019 to assist customers with real-time cargo tracking, digital bill of lading management, and online real-time ship query. In 2020, Zoomlion Shipping invested in Putbox, a land transportation platform focused on container truck management, and in 2021, it introduced Smart Reefer, a digital IoT freezer solution.

In the context of container shortage and high freight rates in the maritime market, the number of containers used by Zoomlion Shipping from January to September 2021 increased by more than 3 times, and the percentage of self-owned shipping containers in the total number of shipping containers in operation increased from 8.1% on December 31, 2020 to 32.2% on September 30, 2021.

According to the prospectus of Zoomlion Shipping, its revenue in 2019 and 2020 was 401 million yuan and 612 million yuan respectively, and the corresponding net profit was 20.4 million yuan and 87.2 million yuan, respectively. It is worth mentioning that in the first nine months of 2021, the net profit of Zoomlion Shipping surged from 34.341 million yuan in the same period of 2020 to 1.179 billion yuan, an increase of 3333.2%.

The industry is highly cyclical

In the view of industry insiders, the performance of Zoomlion Shipping has soared in recent years, mainly driven by industry background factors such as the surge in market demand after the epidemic and the high cost of shipping.

Gao Xueheng, managing director of international freight forwarding company Flexport Fei xiebo Asia, once analyzed the media that the outbreak of the new crown pneumonia epidemic in the world has made the global supply chain and international trade and logistics face unprecedented challenges, "at the beginning, the factory stopped production, resulting in export stagnation, and then China took the lead in resuming work and production, the international market, especially the European and American markets, the demand for consumer products is strong, resulting in a sharp increase in exports, and the current export volume is even higher than the level before the outbreak of the epidemic." ”

According to customs statistics, the total import and export value of mainland trade in goods in 2021 will be 39.1 trillion yuan, an increase of 21.4% over 2020. Among them, exports were 21.73 trillion yuan, an increase of 21.2%,; imports were 17.37 trillion yuan, an increase of 21.5%. Compared with 2019, the mainland's foreign trade imports, exports and imports increased by 23.9%, 26.1% and 21.2% respectively.

In addition, problems such as port congestion, declining ship turnover and slow container returns have also repeatedly boosted shipping rates.

"International Finance News" reporter has previously learned from a number of shipping, foreign trade and freight forwarding companies that due to the superposition of a series of black swan events such as the port epidemic and the Blockade of the Suez Canal in March, since the second half of 2020, the contradiction between supply and demand in the container liner transportation market has been expanding, involving ships, terminals and inland transportation, etc., and the bottleneck of terminal processing capacity has also led to a decline in the effective supply of consolidation, resulting in a systematic capacity shortage in the whole supply chain, resulting in a series of problems such as ship congestion, ship schedule delay, container shortage, etc. In this context, last year, the price of shipping on all routes has risen, ranging from 6-10 times, of which the US line has the largest increase, from two or three thousand US dollars before the epidemic in 2019 to an average freight rate level of about 10,000 US dollars.

According to the export container freight rate index released by the Shanghai Shipping Exchange, on September 1, 2021, the China Export Container Index (CCFI), which represents the settlement price, closed at 3079.04 points, a record high at that time, up 269% compared with the lowest point of 834 points last year.

For the current development of the international container market, Zhang Yongfeng, chief consultant of the Shanghai International Shipping Research Center and director of the International Shipping Research Institute, said in an interview with the International Finance News reporter: "The maritime market itself is a cyclical industry, from the historical experience of industry development, counter-cyclical operations for shipping companies may be more in line with the investment characteristics of this industry, but the impact of the epidemic is different from previous crises, the impact time is longer, the uncertainty factors are more, and the corresponding difficulty in judging the market is also improved." Under the epidemic, crisis and opportunity coexist, and the uncertain market has pushed up freight rates, bringing potential investment opportunities, but there are also greater investment risks, especially after a large number of new orders are delivered in 2023-2024. ”

"Although the current high freight rates in the container shipping industry are not reduced, the long-term price of liner companies is generally higher than that of the previous year, and many companies even predict that this state will continue for 1-2 years, it is undeniable that the epidemic is still the most critical factor affecting the market trend." Whether it is the changes in consumer demand in Europe and the United States, port congestion, ship turnover, smooth global supply chain, terminal employment, etc. will be adjusted with the changes in the global epidemic, and the current global container logistics chain, industrial chain and liner enterprise competition strategy are also gradually adjusted. However, when the epidemic is under control, overseas production capacity is gradually restored, and there is also some room for correction in China's container export demand, and the downward adjustment risk faced by the market cannot be ignored. Zhang Yongfeng said.

In the view of industry insiders, the current situation in the maritime industry may help Zoomlion Shipping's performance to further improve. However, the company also hinted at the risks in its prospectus, saying that factors such as the ongoing global recession, the volatility and cyclicality of the global container shipping industry, the decline in the level of exports of goods from China and Asia, and the sensitivity of the company's fleet of leased ships to market price fluctuations could adversely affect the company's profitability.

This article originated from the International Finance News