Ge Long Hui·2025-08-10 03:33Core Viewpoint - The company's 1H25 performance fell short of expectations, with significant declines in revenue and net profit, primarily due to lower TCE rates and industry freight rates [1][2]. Financial Performance - Revenue for 1H25 was $1.019 billion, a year-on-year decrease of 20.5% - Net profit attributable to shareholders was $26 million, corresponding to an earnings per share of HKD 3.9, down 55.6% year-on-year - The company sold 5 old vessels during the first half of the year, and if asset disposal gains are excluded, the basic earnings for 1H25 would be $22 million, a 50% decline year-on-year [1]. Market Position - Despite the decline in freight rates, the company's TCE rates for small and large handy vessels were $11,010/day and $12,230/day, respectively, which were 27% and 40% higher than market indices, despite year-on-year declines of 7% and 11% [1]. - The BHSI and BSI indices fell by 21.6% and 30.0% year-on-year, indicating that the company's performance was better than the industry average [1]. Shareholder Returns - The company continued its share buyback program, having repurchased 93 million shares, or 1.8% of the initial share capital, using $16.4 million of the planned $31.2 million for 2025 [2]. - The dividend payout ratio for 1H25 was approximately 50%, excluding gains from vessel sales, maintaining a stable dividend policy [2]. Balance Sheet Strength - As of 1H25, the company had a net cash position of $6.6 million, with significant reductions in long-term debt compared to the end of 2024, improving cash flow and reducing future interest payment pressures [2]. - The company expects all convertible bonds to be converted or redeemed by August 14 [2]. Industry Outlook - Limited new supply is anticipated, with expectations for improved demand for small vessels, benefiting from global economic growth and seasonal increases in grain exports [2]. - The company is optimizing its fleet structure by selling older vessels and acquiring newer ones, enhancing long-term competitiveness [2]. Earnings Forecast and Valuation - The company's earnings forecast remains largely unchanged, with the current stock price corresponding to 9.8 times the 2025 earnings and 8.8 times the 2026 earnings [2]. - The target price has been raised by 14.3% to HKD 2.4 per share, reflecting a potential upside of 4.3% from the current stock price [2].