Industry Rating - The industry investment rating is maintained at "Outperform the Market" [1] Core Insights - The transportation industry is experiencing a supply-driven cycle, with technology fostering new platforms [1] - The shipping and aviation sectors are seeing efficiency declines rather than capacity shortages, influenced by geopolitical tensions and global trade disruptions [2] - The logistics sector is shifting from growth to price-driven profitability, with a potential transition from trade to manufacturing [4] - New energy vehicles and autonomous driving are expected to lower transportation costs and create new platforms for ride-hailing and instant delivery services [5] Summary by Sections 1. Shipping and Aviation - The shipping cycle since 2020 has been characterized by a decline in operational efficiency rather than a shortage of capacity [2] - Future aviation cycles may also be driven by decreased aircraft turnover efficiency [2] 2. Ports and Highways - With demand growth slowing, the focus is shifting from new capacity expansion to the integration of existing capacities, which will determine profitability [3] - Mergers and acquisitions in the highway sector are expected to enhance return on equity (ROE) and price-to-book (PB) ratios [3] 3. Express Logistics - The growth rate of express delivery volumes is slowing, with single-package pricing becoming the main driver of profitability [4] - Future price competition may ease, and the transition from trade to manufacturing could influence profit growth [4] 4. Transportation Platforms - The emergence of new energy vehicles and autonomous driving technologies is expected to create significant cost savings and new business models in transportation [5] 5. Shipping Market Dynamics - Shipping rates are influenced by supply-demand cycles, with operational efficiency being a key factor [6][8] - Port congestion and rerouting of vessels have led to significant increases in shipping rates [10][11] 6. Oil Shipping - Oil tanker earnings are also subject to supply-demand dynamics, with operational efficiency impacting daily earnings [12][14] 7. Air Transportation - The aviation sector is expected to see a reversal in supply-demand dynamics by 2025, with demand gradually recovering post-pandemic [27][29] - The growth in the number of aircraft is projected to remain low, impacting operational efficiency [31][32] 8. Infrastructure Development - The growth rate of freight demand across highways, railways, and ports is expected to trend downward, affecting capacity expansion [39][41] - The integration of existing highway assets is becoming more prevalent as new construction slows [42][46] 9. Market Opportunities - The express delivery sector is witnessing a slowdown in volume growth, but revenue is still increasing due to rising e-commerce penetration [61][63] - Price competition in the express delivery market may ease, presenting investment opportunities [64][66] 10. Supply Chain Dynamics - The profitability of large commodity supply chain companies is closely tied to fluctuations in commodity prices [67][70] - The shift from trade to manufacturing in the supply chain sector is becoming more pronounced [71][73] 11. New Energy and Autonomous Transportation - The adoption of new energy vehicles is expected to significantly reduce transportation costs, while autonomous driving technologies are anticipated to enhance operational efficiency [77][79] - The rapid increase in the penetration of smart driving technologies is projected to reshape the transportation landscape [80][82]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - Container shipping: The peak of the shipping season may be postponed, and the spot freight rate center may continue to rise. The trading strategy suggests a sideways trend for the single - side operation, with a focus on buying EC2512 at low prices, and a rolling operation for the 10 - 12 spread arbitrage [4][5][6]. - Dry bulk shipping: The large - vessel market is expected to be weak in the short term, while the medium - vessel market is expected to have a slightly stronger and fluctuating freight rate [17]. - Oil shipping: The short - term freight rate increase is mainly due to the geopolitical conflict premium, and the impact of market sentiment changes on the freight rate needs to be monitored [21]. 3. Summary According to the Directory Container Shipping Market Analysis - On July 1, the EC2508 contract closed at 1904.9 points, up 8.15%. The final delivery settlement price of the EC2506 contract was 1919.34 points. The SCFI European line reported $2030/TEU on June 27, up 10.6% week - on - week [2][4]. - The spot freight rate center has gradually recovered, with different quotes from major shipping companies. Some shipping companies have raised their freight rates for the second half of July [5]. - In terms of demand, July is the peak shipping season, and the impact of tariff policies on the shipping rhythm needs to be noted. In terms of supply, the weekly average capacity from July to September has increased compared to the previous schedule, and the market is in a stage of increasing supply and demand [5]. Trading Strategy - Single - side: Sideways. Consider a long - position strategy for EC2512 at low prices [6]. - Arbitrage: Rolling operation for the 10 - 12 spread arbitrage [8]. Industry News - The manufacturing PMI in June was 49.7%, up 0.2 percentage points from the previous month. Canada cancelled the digital service tax, and the EU and the US are conducting trade negotiations on tariffs [9]. Dry Bulk Shipping Market Analysis - The Baltic Dry Index dropped to 1489 points on Monday, the lowest since June 4. The Capesize ship freight index fell to 2111 points, the lowest since May 29, while the Panamax ship freight index rose to 1500 points, the highest since March 31 [13]. - As of June 30, the freight rate of the Capesize ship iron ore route from Tubarao, Brazil to Qingdao decreased by 4.54% week - on - week, while that from Western Australia to Qingdao increased by 3.52% week - on - week. As of June 27, the freight rates of some coal and grain routes of Panamax ships had different changes [13][14]. - From June 23 to June 29, the global iron ore shipping volume decreased by 149.1 million tons week - on - week. The expected soybean export volume in Brazil in June is 1437 million tons [15][16]. Industry News - From June 23 to June 29, the total iron ore inventory at seven major ports in Australia and Brazil decreased by 18.8 million tons. Guinea's bauxite exports in the first quarter increased by 39% year - on - year [18]. Oil Shipping Market Analysis - On June 30, the BDTI was 984, down 1.80% week - on - week and 12.22% year - on - year; the BCTI was 586, down 4.40% week - on - week and 28.54% year - on - year. The short - term freight rate increase is mainly due to the geopolitical conflict premium [21]. Industry News - The average price of crude oil in this cycle first rose and then fell, and the prices of gasoline and diesel may continue to decline. It is expected that oil prices will rise in the third quarter and be under pressure in the fourth quarter. As of June 30, the crude oil arrival volume of Shandong independent refineries decreased by 17.54% week - on - week [22][23][24].

Summary of Conference Call Records Industry Overview - The conference call primarily discusses the container shipping industry, particularly focusing on the impact of recent tariff adjustments between the U.S. and China on shipping rates and supply chain dynamics [1][2][3][4]. Key Points and Arguments Tariff Adjustments and Market Reactions - Following the reduction of tariffs between the U.S. and China, booking volumes have significantly increased, with spot freight rates rising unexpectedly. Several shipping companies have announced adjustments in surcharges and comprehensive rates [1][5]. - The tariff changes are expected to lead to increased inventory liquidation and replenishment demand in the future, with a neutral to low overall inventory sales ratio in the U.S. and a strong replenishment intention anticipated in the mid-term [1][8]. Supply Chain Dynamics - Short-term active booking indicates a probability of concentrated exports or replenishment, which could significantly elevate prices on the U.S. routes and have a mild indirect effect on other shipping routes [1][10]. - Long-term risks to the container shipping supply chain include port congestion due to vessel capacity fluctuations and effective capacity losses, with ongoing congestion already observed on European routes [1][13]. Investment Opportunities - Large shipping companies like COSCO and Orient Overseas International are viewed favorably due to their network asset value and stable shareholder returns. Smaller shipping companies are also expected to benefit from regional cargo growth due to trade fragmentation [3][4][17]. - The ongoing trend of industrial chain transfer is irreversible, with a notable shift in trade routes expected to Southeast Asia, Canada, and Mexico, which may enhance these regional markets [3][19][20]. Price Elasticity and Market Performance - The concentrated replenishment on U.S. routes is likely to lead to price increases, which will indirectly affect other routes such as Europe, the Mediterranean, and South America. The overall price elasticity is expected to be more influenced by supply-side disruptions [1][10][18]. - The mismatch between nominal and local supply and demand on U.S. routes is anticipated to drive prices up in the short term, with significant declines in booking volumes reported [11][12]. Long-term Supply Chain Risks - The container shipping supply chain may face long-term disruptions due to effective capacity losses and supply-side disturbances, with potential for increased market volatility and price elasticity in the coming months [12][13]. - The congestion at U.S. ports is expected to further reduce effective capacity and increase transportation costs, with implications for the overall supply chain [14]. Future Market Trends - The ongoing trade fragmentation trend is likely to accelerate, with a significant portion of trade expected to shift through alternative ports post-tariff exemption period [19][20]. - The shortage of container equipment is projected to become more pronounced, negatively impacting effective capacity turnover and pushing up transportation prices [16]. Other Important Insights - The call highlighted the importance of monitoring structural opportunities in both large and small shipping companies, with specific recommendations for companies like SITC International and China Logistics [4][21]. - The oil shipping market is also discussed, indicating a positive supply-demand outlook for VLCCs, driven by OPEC's production adjustments and the impact of U.S. sanctions on Iranian oil [22][26]. This summary encapsulates the critical insights from the conference call, providing a comprehensive overview of the current state and future outlook of the container shipping industry.

Core Viewpoint - The company reported a decline in revenue and net profit for Q1 2025, indicating challenges in the oil transportation and shipping sectors, while also highlighting potential recovery in the VLCC market due to supply constraints and regulatory impacts on non-compliant trade [1][2][3][4] Financial Performance - Q1 2025 revenue was 5.6 billion yuan, down 10.5% year-on-year and 14% quarter-on-quarter [1] - Q1 2025 net profit attributable to shareholders was 870 million yuan, a decrease of 37.1% year-on-year and 50.2% quarter-on-quarter [1] - Q1 2025 non-recurring net profit was 850 million yuan, down 37.2% year-on-year and 50.6% quarter-on-quarter [2] Oil Transportation Sector - Q1 oil transportation revenue was 2.14 billion yuan, down 16.3% year-on-year, with net profit at 490 million yuan, a decline of 44% year-on-year and 15% quarter-on-quarter [2] - VLCC fleet performance outperformed indices, with 50% of operational days locked in for Q2, providing a solid foundation for future earnings [2] - The second quarter is expected to see strong fluctuations in VLCC rates due to OPEC+ production increases and tightening sanctions on Iranian oil [2][3] Market Dynamics - The impact of tariffs and the "301 port tax" on oil transportation fundamentals is limited, with U.S. crude exports to China representing only 0.4% of global oil shipping volume [3] - The ongoing tightening of sanctions on non-compliant trade is expected to benefit the formal market supply-demand dynamics [3] Shipping Segments Performance - Container shipping revenue for Q1 was 1.14 billion yuan, up 9.6% year-on-year, with net profit at 340 million yuan, a significant increase of 222% year-on-year [4] - Bulk shipping revenue for Q1 was 1.68 billion yuan, down 11.4% year-on-year, with net profit at 160 million yuan, a decrease of 55% year-on-year [4] - Roll-on/roll-off shipping revenue for Q1 was 400 million yuan, down 1.2% year-on-year, with net profit at 50 million yuan, a decline of 34% year-on-year [4] Investment Outlook - The company maintains profit forecasts for 2025-2027 at 6.48 billion, 7.66 billion, and 8.18 billion yuan, with corresponding PE ratios of 8, 6, and 6 times [4] - The current valuation is considered attractive, with a projected dividend yield of approximately 5.3% based on a 40% payout ratio [4]