China Special Valuation Logic continued to ferment during the year, and large-capitalization Chinese stocks frequently "danced with elephants", among which, the CSSC concept sector had the largest cumulative increase of 56.26% during the year, and the overall performance was even no less than that of the artificial intelligence sector.
Behind the sharp rise in the stock prices of CSSC listed companies, the market generally believes that in addition to the lower valuation, the more important reasons are the reversal of the shipbuilding industry's difficulties, the sudden emergence in the new cycle, and the expectation of asset integration brought about by the merger and restructuring of central enterprises.
Analysts pointed out that from the perspective of supply and demand, under the current difficult supply expansion situation, superimposed on the long-term strong demand, shipbuilding listed companies are expected to usher in the certainty of rising volume and price. And the actual life of the ship is usually 20~30 years, is 2~3 medium cycles, the tanker is shorter and at least one medium cycle, from the time dimension, the ship replacement cycle has considerable scarcity.
From the perspective of medium special estimation, the Chinese ship system is the pillar of mainland shipbuilding, and the Chinese ship system is soaring. At the same time, shipbuilding takes into account, and the military industry logic in the world of great controversy is also one of the core directions of Zhongte Estimate.
▌The shipbuilding industry long boom cycle reproduced 20 years ago? The stock price of A-share leader China Shipbuilding soared 60 times between 2002 and 2008 This cycle is relatively gentle but lasts longer
The start of a new round of shipbuilding cycle has become a consensus in the industry, but compared with the previous round of shipping and shipbuilding super cycle (2002-2008), CITIC Securities Liu Haibo and others pointed out in a research report on May 7 that the driving factors of this round of shipping and shipbuilding cycle are more on the supply side, and the peak of different ship types in this cycle is relatively dislocated, so the overall cycle is relatively flat, but it lasts longer.
In the last cycle (2002-2008), the stock price of China, the A-share shipbuilding leader with 100 billion yuan, rose by a staggering 60.3 times.
According to the analysis of a research report by Liu Haibo and others of CITIC Securities on May 7, the surge in demand (globalization and the rise of China) and the inelasticity of supply (the long-term depression of shipping in the 80s and 90s of the last century, and the continuous clearing of excess capacity) led to a serious mismatch between supply and demand, giving birth to the 2002-2008 super cycle of shipping and shipbuilding.
Can today's shipbuilding cycle replicate the market of 20 years ago? At the stock price level, the industry said that such an exaggerated increase is difficult to replicate in the context of the economy has not yet fully recovered. However, at the industry level, it is expected that the current round of shipbuilding strong cycle will continue.
From the supply side, the fleet capacity caused by the last round of shipyard capacity expansion is basically cleared, and the fleet size is expected to begin to grow in the future. Clarksons data shows that the proportion of shipyard orders in hand to capacity has fallen to a minimum of 8.4% in 2021, and the proportion of orders in hand to capacity has rebounded to 10.3% in 2022. At the same time, the cyclical basic span of ship dismantling is about 20 years, the average age of the current fleet continues to increase, and the replacement demand is approaching, the data shows that the global ship age has continued to increase after 2013, and by 2022, the average age of ships with a gross tonnage greater than 100 tons has reached 21.7 years.
Referring to the relative dislocation of the peaks of different ship types in this cycle, CITIC Securities believes that the increase in orders in this round is mainly container ships and LNG ships, and the supply chain disruption caused by the epidemic in 2020-2022 and the sharp increase in consumer demand in Europe and the United States led to monetary easing policies contributed to this round of container transportation super cycle. The surge in demand for LNG seaborne trade brought about by the European energy crisis and the Russia-Ukraine conflict in 2021-2022 and the tight capacity in the spot market contributed to this round of LNG maritime super cycle. Since 2022, the continuous fermentation of the Russia-Ukraine conflict has led to the European oil ban and price cap, which has also reshaped the global oil trade pattern and routes on an unprecedented scale, and is pushing oil transportation into a strong cycle.
In the secondary market, the stock price of China Shipbuilding hit a seven-year high on June 21, and the industry pointed out that the period of the sharp rise in the stock price of listed companies in the shipbuilding industry is often in the delivery year, not the order year, and the ship order delivery cycle is about 2 years. Overall, from 2021 to 2022, the total number of global new ship orders will be 53.3 million (a year-on-year increase of 113.6%) and 42.78 million CGT, respectively, and the total value of global new ship orders will be 117.3 billion (a year-on-year increase of 129.6%) and 124.3 billion US dollars, respectively, and the total number and total value of orders received within two years have reached a new high since the last round of super cycle (2002-2008).
It is worth mentioning that from the perspective of industry capital expenditure, capital expenditure in the shipping industry has accelerated significantly since 2021, especially the investment in container ships and LNG tankers has increased significantly, and oil tankers are still falling, but with international oil prices at a high level and oil tanker capacity, the market expects that the oil and gas cycle will drive the increase in oil tanker orders. This can also be seen from the financial report of China Shipbuilding, in 2020, the company's inventory increased sharply, or prepared raw materials for orders, and the corresponding company's accounts receivable, contract liabilities, and capital expenses have also increased significantly.
In the 20-year cycle, the global shipbuilding landscape has also undergone major changes. In recent years, the world's shipbuilding industry is centered on East Asia, and has gradually evolved from the pattern of "tripods" of China, Japan and South Korea to the situation of "two powers competing for hegemony" between China and South Korea, and in 2022, China ranks first in the world in the three indicators of shipbuilding completion, new orders received and handheld orders, accounting for about 50% of the world's share. (For details, see CaiLian News Agency's previous in-depth report: South Korea's shipbuilding three giants "trembling"!) At the time of the struggle for hegemony between the two powers, Chinese ships broke through strongly, and the leaders of the domestic fleet followed)
At the same time, domestic ships are accelerating to the high-end, aircraft carriers, liquefied natural gas ships (LNG ships), and large luxury cruise ships are known as the "three pearls" in the crown of the shipbuilding industry, and the market share of mainland global LNG ships has risen sharply from 7.4% in 2021 to 30% in 2022, a record high. Shenwan Hongyuan Securities Research Report shows that the concentration has increased, the competition pattern has improved, the technological iteration of ten years, the competitiveness of China's ships is not what it used to be, and carbon neutrality measures ensure the continuity of long-term orders.
▌When the shipbuilding cycle is hot, the first quarter performance of CSSC listed companies is seriously differentiated, and the industry says that profits may be released in the second half of the year
China's shipbuilding industry prosperity continues to improve, China Shipbuilding Group Jiangnan Shipbuilding deputy general manager Lin Qingshan, recently said that so far, civil ship orders have undertaken about 30 billion yuan, 2026 has been fully received, 2027 to receive almost half, and even some production lines have been scheduled to 2028, according to incomplete statistics of CaiLian News, China's recent related orders are as follows:
More than one Chinese ship has received soft orders, including CSSC Defense and China Heavy Industry, and the current hand-held shipbuilding orders are scheduled to 2027. Clarkson's recent report puts $1.6 trillion in newbuilding investment in demand over the next decade, with an average of 2,140 newbuilding orders per year.
According to incomplete statistics, there are 11 A-share CSSC listed companies, namely China Shipbuilding, CSSC Emergency, CSSC Hanguang, CSSC Technology, CSSC Defense, Jiuzhiyang, China Heavy Industry, China Power, China Coastal Defense, CSSC Special Gas and Kunshuan Intelligence. West China Securities recently said that most of the shipyard products of the CSSC series include military ships and civilian ships, and the military products themselves should have a high valuation premium, in addition, the construction of the Continental Army ship has a high level, and has been exported to Pakistan, Thailand and other countries along the Belt and Road, and the future military trade space is broad. In addition, the PB of sector companies is at a low level, and the sector is expected to usher in performance and valuation resonance.
Looking back at the shipbuilding process in the past 100 years, some analysts pointed out that due to the long shipbuilding delivery cycle, the profit inflection point is usually delayed by 2-3 years from the growth of orders, and this year is expected to become the first year of profit realization after the delivery of ship orders, and it is expected that the delivery of new ships in China will rise sharply in 2023, and profits will begin to be released in the second half of 2023.
According to the statistics of China Shipbuilding Industry Association, in January ~ May, 74 key monitoring ship enterprises achieved main business income of 137.64 billion yuan, a year-on-year increase of 31.3%; The total profit was 4.64 billion yuan, turning a year-on-year loss into a profit.
Zheshang Securities Wang Huajun and others pointed out in a research report on May 8 that the industry is in a cyclical boom period, and subsequent orders for oil tankers, dry bulk and gas ships are expected to continue to be issued, and Chinese ships are one of the world's leading shipbuilding leaders, with full orders in hand and strong performance certainty. It is expected that the company's net profit attributable to the parent in 2023-2025 will be 26.3, 69.2 and 9.06 billion, a year-on-year increase of 1429%, 163% and 31%.
It is worth noting that the first quarter performance of CSSC listed companies has been seriously differentiated, except for CSSC Technology, China Heavy Industry and China Haiphong, the performance of the remaining 8 shares has lost money or declined year-on-year. Among them, CSSC Technology's net profit growth rate in the first quarter was the highest, during the reporting period, the company achieved revenue of 670 million yuan, a year-on-year increase of 42.26%, and a net profit of 17.43 million yuan, a year-on-year increase of 271.72%; China Heavy Industry and China Haiphong followed, these two companies achieved net profits of 66.42 million and 15.55 million in the first quarter, up 15.96% and 0.91% respectively year-on-year. CSSC Defense's net loss expanded by 116% year-on-year, and the net profit of Kunshuan Intelligence, China Dynamics, Jiuzhiyang and CSSC Hanguang all fell by more than 20% year-on-year, down 73.27%, 54.24%, 45.23% and 20.51% respectively.
In addition, when talking about whether CSSC is expected to restructure, CSSC recently said that it has committed to solving the problem of intra-industry competition within 5 years from June 30, 2021. Some market participants boldly speculate that this statement gives people unlimited room for reverie, and the two most important listed companies of Nanbei Shipbuilding, China Heavy Industry and China Shipbuilding, may be merged and reorganized in the capital market like Nanbei Shipbuilding in the future, and the name may be "China CSSC".
This article is from CaiLian News