股 票 Research 研 [Table_Title] Company Report: Sinotrans Shipping (00368 HK) Spencer Fan 范明 究 (86755) 2397 6686 Equity 公司报告： 中外运航运 (00368 HK) [email protected] 21 September 2018 Privatization[Table_Summary] amid Ongoing Recovery, Maintain "Accumulate" 复苏在途，计划私有化，维持“收集” Privatization planned: In accordance with SASAC rules and the Company’s [Table_Rank] valuation in recent years, we estimate 0.9x-1.0x acquisition PBR for the Rating: Accumulate Maintained privatization of Sinotrans Shipping, which corresponds to approx. 100% 公 upward price potential. We await further disclosure of details. 司 评级： 收集 (维持) Operating strategy in 1H18 was unexpectedly cautious. The Company’s 报 1H18 revenue declined 0.7% YoY to US$497 mn due to less dry bulk 6[Table_Price-18m TP目标价] : HK$2.22 告 shipping capacity in control, yet shareholders' profit surged 399.85% YoY to Revised from 原目标价: HK$2.36 US$40.018 mn amid effective cost control. The price of 70% of self-owned Company Report vessels will be locked in in 2H18 to secure stable margins. Sino-U.S trade Share price 股价: HK$1.810 tension will have limited impact on dry bulk profitability. Improving capacity structure with possible higher-than-expected Stock performance demand in 2H18. Projected supply/ demand growth has been revised to 股价表现 1.7%/ 3.2% for 2018. Average grain shipping distance might rise. Iron ore [Table_QuotePic] import is expected to stay robust amid heating housing construction; we % of return 30.0 estimate 2018 dry bulk revenue to slightly decline by 2.2% YoY. 20.0 Container business gradually forming into good shape. The Company 10.0 operates intra-Asia routes only; volume has been stable due to 证 0.0 complimentary features of trade lines. 1H18 average box price rose 10.1% 券 告 (10.0) YoY, and we expect container segment revenue to grow 9.7% YoY in 2018. (20.0) 研 报 Adjust TP to HK$2.22 and maintain "Accumulate". LNG JV may provide (30.0) stable shared profit of US$10 mn, US$23 mn, US$30 mn in 2018-2020, 究 究 (40.0) respectively, given carriers' delivery schedule. The Company's valuation has 报 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 研 a high safety margin against its PBR. Our TP (without considering effects of HSI index Sinotrans Shipping 告 the possible privatization) reflects 0.60x/ 0.58x/ 0.55x 2018-2020 PBR. 券 Equity Research Report 公司计划私有化:综合国资委规则和公司近年估值水平来分析，我们预测中外运航运的收购 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 证 价将介于 0.9-1.0 倍市净率，对应约 100%的股价上升空间。更多细节仍待公司公告披露。 股价变动 个月 个月 年 1 3 1 [Tab 上半年经营策略超预期地谨慎。因可控运力收缩，收入同比减少 0.7%至 4.97 亿美元，受 Abs. % (8.1) (15.4) (30.4) 绝对变动 % 益于有效成本管控，股东净利同比升 399.85%至 4,001.8 万美元。展望 2018 下半年，公 le_I Rel. % to HS Index (8.8) (10.8) (29.8) 司已将 70%的自有船锁定价格至年底，以确保稳定收益。中美贸易战的胶着不会对干散分 相对恒指变动 % 航 nfo1 部盈利产生较大影响。 Avg. Share price(HK$) 1.8 2.0 2.1 运 平均股价（港元） ] 下半年干散供需结构继续改善叠加下半年需求端潜在超预期。2018 年干散供需预测值已 Source: Bloomberg, Guotai Junan International. 物 调整至 1.7%/3.2%。平均运距或有可能加长。国内房地产开工加速，铁矿石进口有望维持 流 强势，我们预计公司 2018 全年干散收入将小幅同比减少 2.2%。 行 集运分部景气度逐步向好。公司仅经营亚洲区域内航线；因货源互补型，集运箱量一直较 业 稳。上半年集运单箱收入同比升 10.1%，我们预计公司 2018 年集运收入同比上升 9.7%。 调整目标价至 2.22 港元并维持“收集”。据船舶交付计划 LNG 有望在 2018-2020 年贡献 ShippingLogistics Sector & 1,000 万、2,300 万和 3,000 万美元利润。考虑较低市净率，公司股价具备较高安全边际。 我们的目标价(不考虑私有化)对应 0.60 倍、0.58 倍以及 0.55 倍的 2018 至 2020 年市净率。 Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE [Tab 年结Profit ] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 12/31 (US$ m) (US$ m) (US$) (△ %) (x) (US$) (x) (US$) (%) (%) le_I 2016A 841 (230) (0.058) n.a. (4.0) 0.448 0.5 0.005 2.2 (12.0) nfo2 2017A 1,006 32 0.008 n.a. 29.0 0.455 0.5 0.004 1.7 1.8 中] 2018F 1,046 95 0.024 200.0 9.6 0.473 0.5 0.007 3.1 5.1 中 外 2019F 1,154 113 0.028 16.7 8.2 0.491 0.5 0.008 3.7 5.9 外 2020F 1,252 125 0.031 10.7 7.4 0.510 0.5 0.009 4.1 6.2 运 运 [Table_BaseData]Shares in issue (m) 总股数 (m) 3,992.1 Major shareholder 大股东 Sinotrans & CSC 68.2% 航输 Market cap. (HK$ m) 市值 (HK$ m) 7,225.7 Free float (%) 自由流通比率 (%) 31.8 运 3 month average vol. 3 个月平均成交股数 (‘000) 3,856.7 FY18 Net gearing (%) FY18 净负债/股东资金 (%) net cash 52 Weeks high/low (HK$) 52 周高/低 (HK$) 2.730 / 1.580 FY18 Est. NAV (HK$) FY18 每股估值（港元） 3.0 Source: the Company, Guotai Junan International. Sinotrans Shipping (00368Sinotrans HK) Shipping See the last page for disclaimer Page 1 of 8 [Table_PageHeader]Sinotrans Shipping (00368 HK) Plans to go private. On 18 September 2018, Sinotrans Shipping (00368 HK, the "Company") requested a halt to trading the Company’s shares on the HKEx starting 1:00p.m. that day amid possible privatization. As ] we1 know,r a SinotransM t h g Shipping'si R _ e ul ltimateb a T [ parent company China Merchants Group ("CMG") owns two listed shipping companies (Sinotrans Shipping and China Merchants Energy Shipping (601872 SH, "CMES")) that engages in dry bulk shipping. The privatization could take two steps: Firstly, CMG might acquire the entire shareholding of Sinotrans Shipping. Secondly, CMES may issue shares or use cash to buy related bulk shipping assets from CMG. Unlike COSCO Shipping Group, which has specialized divisions of various fleets, CMES is moving towards the path of becoming a comprehensive shipping company. In addition to bulk cargo transportation such as oil products and iron ore, CMES may be involved in automobile transportation and special cargo transportation business in the 21 September 2018 future. There has been no precedent for delisting and reorganizing state-owned shipping companies, and it's worth noting the pricing of state-owned assets in accordance with the SASAC ("国务院国有资产监督委员会") usually cannot be lower than the acquired target's book value (1.0x PBR). However, the Company's PBR has been trading at less than 1.0x PBR for a long time. In this special case, CMG's valuation on Sinotrans Shipping's book value might be less than 1.0x. Details of the acquisition awaits further disclosure. With a reasonable 0.9x-1.0x PBR, Sinotrans Shipping's share price approximately corresponds to HK$3.42-HK$3.80, with 98%-109% (100% on average) upward potential. The Company's 1H18 operations strategy was conservative. For 1H18, Sinotrans Shipping recorded total revenue of US$497.002 mn, slightly down 0.7% YoY, mainly due to reductions in dry bulk capacity. Shareholders’ profit surged 399.85% YoY to US$40.018 mn, mainly driven by less operating cost due to a cut in fleet capacity, as well ] as2 investmentr a M t h incomeg i R contributed_ e l b a T [ from the Yamal LNG joint venture (JV) project. Overall, the global dry bulk and container shipping market has been gradually bottoming out. BDI is still in its early stage of recovery amid external pressure from the Sino-U.S. trade war. Overall, we believe Sinotrans Shipping’s conservative operating strategy to be on the right track as external conditions (especially the Sino-U.S. trade dispute) remain vague. Figure-1: BDI Component Indexes Performance Figure-2: BDI and the Company's Breakeven Level BCI: Capesize BPI: Panamax BDI BSI: Supramax BSI: Handysize 2,500 4,000 2,000 (00368 HK) 3,500 3,000 1,500 2,500 2,000 中外运航运 1,000 1,500 Sinotrans Shipping's breakeven level 1,000 500 500 0 0 Sinotrans Shipping Source: The Baltic Exchange, Guotai Junan International. Source: The Baltic Exchange, the Company, Guotai Junan International. Still a cautious planner: Sinotrans Shipping initiated dry bulk cost control in 1H18. Segmental revenue declined 12.1% YoY to US$211.8 mn in 1H18, missing our expectation. After January 2018, the number of dry bulk vessels that was leased by Sinotrans Shipping decreased by 20 vessels, while corresponding scale of chartered-in dry bulk shipping capacity decreased by 1,508 deadweight tonnes (DWT), down 46.1%. Presumably, the Company's judgment on Sino-U.S. trade friction had been conservative in 1H18, while tensions had not escalated. Meanwhile, the average age of self-owned vessels decreased from 6.2 years by the end of 2017 to 6.0 years by 1H18, indicating high operating efficiency while optimizing its fleet portfolio. Average daily charter hire/ time charter equivalent (TCE) rate of self-owned vessels was US$12,430, up 30.65% YoY. By July 2018, Sinotrans Shipping’s dry bulk fleet DWT capacity totaled 5.187 mn tons. Of which, 33.9% capacity was typed as chartered-in vessels. For the remaining 70% of self-owned vessels, Sinotrans Shipping expected the price of 70% of them to be locked in in 2H18. Especially for Capesize and Panamax type ships, the Company expects price to be locked in at over 80% ratio for large vessels, roughly corresponding to 1,768 of the BCI. From the management’s view, locked-in freights could guarantee stable profit margins amid possible freight volatility in 2H18. We believe that despite being cautious, the strategy could secure stable margins Report in 2H18. The Company’s average daily TCE in 1H18 was 10.0% higher than the spot market average.