Zhonggu Logistics(SH:603565) Tianfeng Securities·2024-06-11 01:02Investment Rating - The report assigns a "Buy" rating to the company with a target price of 12.40 yuan based on DDM valuation and comparable company PE estimates for 2024 [7][20][31]. Core Insights - The company, Zhonggu Logistics, is a leading player in China's domestic container shipping market, providing multimodal transport services centered around container water transport. The company has experienced significant revenue and profit growth from 2014 to 2022, although it faced a temporary decline in 2023 due to falling shipping rates [29][67]. - The report anticipates a rebound in profitability for 2024-2025, driven by rising international shipping rates, which are expected to positively impact domestic shipping rates as well [20][31][67]. - The company's rental business is projected to see substantial profit increases due to a significant rise in container ship rental rates, with potential for increased rental volume and profitability [12][15][18][44]. Summary by Sections Company Overview - Zhonggu Logistics is recognized as a leader in domestic container shipping, integrating water, road, and rail transport resources to provide comprehensive logistics solutions. The company has maintained a high return on equity (ROE) above 15% and a significant dividend payout ratio, reaching 88% in 2023 [29][67][59]. Market Dynamics - The report highlights a correlation between international and domestic shipping rates, suggesting that an increase in international rates will lead to higher domestic rates. This is attributed to the interrelated nature of shipping demand and capacity adjustments [11][29][61][63]. Rental Business Outlook - The rental business is expected to benefit from a surge in container ship rental rates, with projections indicating that a 10,000 USD/day increase in rental rates could lead to a gross profit increase of approximately 1 billion yuan [12][18][44]. The company is poised to increase its rental fleet significantly, enhancing revenue and profit potential [15][18]. Financial Projections - The financial outlook for Zhonggu Logistics includes a forecasted recovery in revenue and profit for 2024, with expected earnings per share (EPS) of 1.04 yuan in 2024 and 1.20 yuan in 2025, reflecting a positive growth trajectory [20][46].