* ST Ship (600150): Turning losses into profit in 2018 is about to take off stars
I. Events: The company released its 2018 annual report, and net profit attributable to mothers in 20184.
USD 8.9 billion, turning losses into profits, and has applied to cancel the early warning of stock delisting risks.
According to the relevant provisions of the Shanghai Stock Exchange’s Stock Listing Rules and the company’s 2018 operating conditions, the company meets the conditions for applying to cancel the early warning of stock delisting risks.
In the next 5 trading days, the company’s stock will not be suspended, and the company will take off the cap.
Second, in 2018, we turned losses into profits and realized revenue (169.
1 trillion, +1.
31%), net profit attributable to mother 4.
89 ppm; and determine the 172 revenue plan for 2019.
There are two main reasons for the company to turn losses into profit in 2018: 1) In terms of main business: In 2018, the ship market index rankings have significantly improved in 2016, and revenue has increased slightly.The changes are; civil ship products are settled in US dollars, and the growth of the US dollar against the RMB exchange rate in 2018 has increased more of the current exchange gains; market-oriented debt-to-equity swaps have caused the average expenditure to expand more and the expenditure to decrease.
2) The impact of non-recurring gains and losses: divestiture of Jiangnan Changxing Heavy Industry, CSSC Shenghui, CSSC Cruise Technology and other companies, investment income increased; Hudong Heavy Machinery, a wholly-owned subsidiary, received compensation for land acquisition and storage; carried forward to otherGovernment subsidies for income, etc .; the amount of the above non-recurring gains and losses has reached 8.
The price of raw materials such as steel is the main factor affecting the gross profit of shipbuilding and repair business.
Revenue of the company’s shipbuilding business in 2018 (114.
560,000 yuan, -2.
06%), accounting for 67% of total revenue.
7% is the main component of the company’s revenue.
The company’s main business gross profit margin in 2018 was 12.
80%, down 4 each year.
91 units, of which the gross profit margin of the ship repair and maintenance business decreased by 7 each.
01 single, the first is the significant increase in steel prices in 2018.
Take Shanghai’s 20mm thick plate as an example, its average price in 2018 was 4,670 yuan / ton, and the average price in 2017 increased by 16 each year.
With a cape size of 180,000 dwt, the amount of steel used is about 2.
7 Assume that the ratio of the cost of steel plates for this type of ship in the case of constant ship prices is 36 in 2017 and 2018, respectively.
However, since August 2018, the price of ship steel plates has shown a downward trend. The price of 20mm thick steel plates in Shanghai area has dropped from 4880 yuan / ton to the current 4360 yuan / ton.
The company announced its 2019 business plan and achieved revenue of 172.
60 ppm, a ten-year increase2.
1%; and the company has plenty of orders on hand, and we believe that profits will gradually improve with rising ship prices and falling steel prices.
As of the end of 2018, the company had an order volume of 84 ships / 1311.
860,000 deadweight tons, 30 ships for maintenance, 70 for offshore engineering.
As the leader of our national ship, the company has plenty of handheld orders, and the focus is on whether the shipyard’s profit will improve.
We believe that the scale, the company gradually undertake luxury cruise ships, FPSO, chemical tankers, asphalt ships and other high value-added ships, which is conducive to profit improvement; response, affected by the ship design and dispatch cycle, the shipyard from the ship import and export contract to the start interval 0.
1 year or so; combined with the 1-2 year construction period of the ship and the revenue recognized in accordance with the percentage of completion method, how much of the ship’s 2018 revenue will be from 2016?The contribution of orders in 2017 caused the company to deduct non-attributed net profit in 2018.
However, as of 2017, the number of new shipbuilding orders in China has increased synchronously with the price, and the prices of steel plates for overlapping ships have fallen. We expect the shipyard’s operating results to improve quarter by quarter.
Cash flow statement: The net cash flow from operating activities in 2018 was 22.
4.9 billion yuan, an annual decrease of 58.
26 million, mainly due to the contract payment of some of the company’s offshore product contract transfers in 2017.
In a single quarter, the net cash flow from operating activities in Q4 2018 was 16.
310,000 yuan, an increase of 20 from the previous month.
93 ppm, which is basically a commodity sold in Q4, and the cash received for providing labor services increased significantly by 161.
7%, mainly due to uneven receipt of quarterly progress payments for products such as ships.
Third, the civil ship industry is still at the bottom of a long cycle. Under the three major trends, the profitability of civil ship leaders will increase, and the turning point in performance may have arrived.
Trend 1: The civil ship market is gradually recovering at the bottom of the long cycle.
Since the financial crisis in 2008, the shipbuilding industry has entered a stage of in-depth adjustment. Until 2016, the shipbuilding and offshore industry market has entered a double trough and overlapping stage.
Since the bottom of 2016, the global shipbuilding industry is gradually picking up.
According to data from China Shipbuilding Industry Association, in 2017, it accepted orders for new ships of 33.73 million dwt, an increase of 60 over the same period.
1%; In 2018, we took orders for new ships of 36.67 million dwt, a year-on-year increase of 8.
7%; continuing the warming trend since 2016.
We believe that the peak of the last round of shipbuilding orders was in 2007, with 10 years as a mid-cycle, and is currently at the turning point of the shipbuilding cycle.
Trend 2: Civil ship supply-side reforms continue to advance, shipbuilding capacity is expedited, and new shipbuilding orders are further concentrated in advantageous shipyards.
The shipbuilding supply-side reform is reflected in three aspects: 1) Accelerating the clearing of shipbuilding capacity: According to data from China Shipbuilding Industry Corporation, the number of active shipyards above the global 武汉夜生活网 scale has increased from 709 in 2007 to 119 in 2018, a reduction of 83%.
2) New shipbuilding orders are further concentrated in advantageous shipyards: Ten years ago, the number of new shipbuilding orders received by 10 shipbuilding companies accounted for 55% of the national total in 2014.
5% increased to the current 83.
3%. In the past, the concentration of the shipbuilding industry has further increased, and leading shipyards have gradually received orders.
3) The number of high value-added ship types is gradually increasing: the internal shipbuilding company’s shipbuilding product structure continues to be optimized at an advanced level. For example, Waigaoqiao Shipbuilding has already designed and built high-value-added ship types.Orders for high additional ships such as cruise ships and FPSOs are expected to 深圳丝袜会所 continue to increase their market share of high-end ship types in the next few years.
Trend three: The price of newbuildings is gradually increasing, and the price of steel plates is increasing, and the profitability of shipyards is increasing.
According to Clarksons data, in terms of newbuilding prices, the Clarksons newbuilding price index increased from 121 in early 2017 to the current 131, and the price of ships has gradually increased.
In addition, the price of ship steel plates is on a downward trend, which will play an important role in reducing the cost of ship products.
We believe that as the price of newbuildings rises and the price of steel plates expands, the profitability of shipbuilding companies will gradually increase.
Fourth, the previous point of view: the civil ship leader turned a profit and is about to take off the stars.
We believe that the civil ship is at the bottom of a long cycle and is gradually picking up.
As a leading company in China’s national shipping industry, the company will benefit from the gradual recovery of civil ships and the supply-side reform of the shipbuilding industry.
The company’s current PB = 1.
75, which is still at the bottom of history; the rising prices of newbuildings and falling steel plate prices promote the company’s profitability.
What do we expect in 2019?
Net profit of the company in 2020 5.
2.1 billion, 6.
29 trillion, corresponding to the current sustainable PE of 51X, 42X.
We maintain the “Buy-B” rating for Chinese ships and raise our target price to 21 yuan.
V. Risk warnings: 1) The shipbuilding market continues to be sluggish; 2) Shipbuilding steel and other raw material prices are high; 3) There is uncertainty in Sino-US trade; 4) Exchange rate changes.