CSICL(SH:601989)2024-07-26 06:01Investment Rating - The report gives a "Buy" rating for China Shipbuilding Industry Company Limited (601989) [6][9]. Core Views - The shipbuilding market is experiencing a significant upward trend, driven by increased shipping demand and a tight shipyard capacity. The report highlights that the demand for new orders is expected to rise due to aging fleets and environmental pressures [6][10]. - China Shipbuilding's order book has improved significantly, with a notable increase in the proportion of civil ship orders compared to military ones. The report estimates that civil ship orders will account for 83% of total revenue by 2026, up from 36% in 2019 [6][10]. - The report anticipates a substantial increase in net profit for China Shipbuilding from 2024 onwards, with projected profits of 2.2 billion, 4.8 billion, and 9.4 billion yuan for 2024, 2025, and 2026 respectively [8][9]. Summary by Sections Market Data - As of July 25, 2024, the closing price is 5.25 yuan, with a market capitalization of 119.71 billion yuan. The price-to-book ratio is 1.4 [3][4]. Financial Projections - Total revenue is projected to grow from 46.69 billion yuan in 2023 to 81.35 billion yuan by 2026, with a compound annual growth rate (CAGR) of 29.8% [8]. - The report forecasts a return to profitability in 2024, with a PE ratio of 54, 25, and 13 for the years 2024, 2025, and 2026 respectively [9]. Order Book and Delivery - The report notes a significant increase in the order book, with the amount rising from 11.6 billion USD in May 2023 to 22.4 billion USD by June 2024, marking a 93% increase [6][10]. - The delivery amounts for civil ships are expected to increase significantly from 21.7 billion yuan in 2024 to 44.9 billion yuan by 2026 [6][10]. Cost and Pricing Dynamics - The report indicates that the current new ship price index is at 187.23 points, with significant room for price increases due to lower steel prices and higher domestic equipment localization rates [6][10]. - The report emphasizes that the current steel prices are only 62% of the previous peak, which is expected to enhance profit margins for shipbuilders [6][10]. Competitive Landscape - The report highlights that China Shipbuilding holds a competitive edge with a historical low P/Orderbook ratio of 0.75, compared to its peers [9][10].