Bohai Ferry (SH:603167) Tianfeng Securities·2024-06-03 02:07Investment Rating - The report initiates coverage with a "Buy" rating for Bohai Ferry, setting a target price of 11.42 CNY per share [49][67]. Core Insights - Bohai Ferry focuses on its core business of roll-on/roll-off (RoRo) transportation, having divested from less profitable international ferry and cruise operations, which is expected to enhance overall profitability [3][28]. - The acquisition of Weihai Haida Passenger Transport in 2020 has strengthened Bohai Ferry's market position in the Bohai Bay RoRo market, achieving full coverage of passenger routes in the Jiaodong Peninsula [6][28]. - The company is actively expanding its cargo RoRo transportation business, which is expected to benefit from the growth in new energy vehicle production and sales [3][13]. Summary by Sections 1. Focus on Core Business - Bohai Ferry has streamlined its operations by divesting from international ferry and cruise services, which were either marginally profitable or loss-making, thereby improving its profitability outlook [3][28]. - The company has seen stable performance in its core RoRo transportation business, with a notable increase in passenger and vehicle transport volumes from 2010 to 2019 [3]. 2. Acquisition and Market Position - The acquisition of Weihai Haida has allowed Bohai Ferry to enhance its competitive edge, achieving full route coverage in the Jiaodong Peninsula and improving operational efficiency [6][28]. - The net profit of Weihai Haida turned positive in 2023, contributing positively to Bohai Ferry's overall performance [6]. 3. Cargo Transportation Growth - The cargo RoRo segment has shown significant improvement, with revenue and gross profit increasing substantially from 2021 to 2023 due to the addition of new cargo vessels and resource integration [9][12]. - Bohai Ferry is attracting hazardous materials and other cargo vehicles, which complements its passenger transport business [13][15]. 4. Pricing Strategy and Market Dynamics - Despite a decline in passenger volumes due to economic slowdown and changes in travel preferences post-pandemic, Bohai Ferry has managed to increase its ticket prices, which has helped recover profitability [23][30]. - The competitive landscape in the Bohai Bay RoRo market is improving, with fewer players leading to potential price increases in the future [35]. 5. Financial Projections - The report forecasts stable earnings for Bohai Ferry from 2024 to 2026, with expected net profits of 4.06 billion CNY in 2024, 3.85 billion CNY in 2025, and 3.87 billion CNY in 2026 [67][69]. - The company’s revenue is projected to remain stable, supported by its core RoRo transportation business and improved operational efficiencies [48][67].