NJTC(601975)2024-10-22 09:11Investment Rating - The report initiates coverage on China Merchants Jinling Shipping (招商南油) with a "Buy" rating [2]. Core Views - China Merchants Jinling Shipping is a leading player in the refined oil transportation sector in the Far East, demonstrating excellent earnings elasticity. The company has been expanding its fleet steadily, operating 74 vessels as of 2024H1, and reported revenue of 3.528 billion yuan, a year-on-year increase of 11.78%, with a net profit of 1.22 billion yuan, up 44.76% year-on-year [2][4]. Summary by Sections Company Overview - China Merchants Jinling Shipping, established in 1993 and headquartered in Nanjing, is a specialized oil transportation company under the China Merchants Group. The company focuses on the transportation of crude oil, refined oil, chemicals, and liquefied gas [8][4]. Financial Performance - Following a strategic restructuring in 2015, the company has shown improved management capabilities and profitability. The financial results for 2024H1 indicate a revenue of 3.528 billion yuan and a net profit of 1.22 billion yuan, reflecting strong performance [2][8]. Foreign Trade Refined Oil Transportation - The ongoing Russia-Ukraine conflict has led to a restructuring of global refined oil trade, increasing transportation distances and demand for oil shipping. The sanctions on Russian oil exports have shifted trade routes towards emerging markets in Asia and Africa, benefiting the shipping sector [2][18]. - The Red Sea crisis and conflicts in the Middle East have further catalyzed demand for shipping, as vessels are rerouted, increasing shipping times and costs. The average TCE-TC7 rental rate for the company reached 37,732 USD/day in 2024H1, a 32% increase year-on-year [2][34]. Supply and Demand Dynamics - The supply side is under pressure due to a slowdown in new ship deliveries and stricter environmental regulations, which are increasing the average age of the fleet. As of Q3 2024, the global MR2 fleet consists of 1,762 vessels, with 300 on order, representing about 17% of the fleet [2][18]. Domestic Trade Oil Transportation - The domestic oil and hazardous chemical transportation segment has maintained stable performance, contributing to the company's steady earnings base. The domestic fleet remains a leader in the market [2][18]. Profit Forecast and Valuation - The report forecasts revenues of 7.015 billion yuan, 7.614 billion yuan, and 8.025 billion yuan for 2024, 2025, and 2026, respectively, with year-on-year growth rates of 13.21%, 8.54%, and 5.39%. The net profit is projected to be 1.931 billion yuan, 2.028 billion yuan, and 2.132 billion yuan for the same years, with corresponding EPS of 0.40 yuan, 0.42 yuan, and 0.44 yuan [2][4].