Summary of COSCO SHIPPING Specialized Carriers Conference Call Company Overview - COSCO SHIPPING Specialized Carriers plans to integrate nearly 50 new vessels over three years, increasing total deadweight tonnage to approximately 7.6 million, with targets of over 9 million by the end of 2025 and over 10 million by 2026, significantly enhancing capacity and market competitiveness [2][3] Core Insights and Arguments - **Diverse Fleet Composition**: The company utilizes a diverse fleet including multipurpose heavy-lift vessels, pulp carriers, semi-submersible vessels, and roll-on/roll-off ships, along with innovative models like port-to-port loading and unloading to improve service quality and operational efficiency [2][4] - **Strategic Alliances**: COSCO has established strategic alliances with over 40 leading clients, achieving a direct customer ratio of nearly 80%, which positions the company to capitalize on opportunities in advanced manufacturing and new energy vehicle exports [2][6] - **Full-Chain Logistics Development**: The company aims to transition from a supply chain operator to a comprehensive solution provider, offering ground services to major clients like SANY Heavy Industry and launching innovative products such as the Zijiang Express [7][24] - **Revenue Growth**: The AC segment revenue has increased nearly 200% year-on-year, contributing approximately 10% to total revenue [7] Financial Performance - **2025 H1 Performance**: The company expects to exceed 10 billion yuan in revenue for the first half of 2025, with rapid growth in net profit attributable to shareholders and net profit excluding non-recurring items, driven by capacity expansion and innovative business models [3][10] - **Vessel Rental Rates**: In H1 2025, rental rates for various vessel types are projected as follows: multipurpose vessels at $16,000/day, heavy-lift vessels at $21,000/day, pulp carriers at $23,000/day, asphalt carriers at $10,000/day, and specialized car carriers at $50,000/day, with pulp carrier rates declining by approximately 10% year-on-year [8][9] Market Dynamics - **Container Market Trends**: The container market in Q1 2025 experienced a decline of about 10% due to the end of a shipping rush related to Brazilian tariffs, while other vessel types like heavy-lift and semi-submersible vessels saw increases [9][12] - **Wind Power Sector Impact**: The wind power sector has positively influenced the company's performance, with heavy-lift vessels being crucial for transporting wind power equipment, contributing significantly to overall growth [14][15] Future Outlook - **Long-Term Strategy**: COSCO SHIPPING Specialized Carriers focuses on a counter-cyclical development strategy, emphasizing partnerships with advanced manufacturing sectors and aiming for steady market share and profit growth [16][21] - **Capital Expenditure Plans**: Future capital expenditures will focus on team structure optimization and new project advancements, while maintaining a dividend policy of at least 30% [20][19] - **Market Positioning**: The company anticipates that high-quality resources will dominate the market in the long term, with a focus on high-value, flexible small vessels to meet growing demand [21][22] Additional Insights - **Changes in Cargo Structure**: There has been a notable shift in cargo structure, with traditional categories like steel declining and high-end manufacturing categories such as engineering machinery and new energy vehicles rising [23] - **International Market Strategies**: COSCO aims to become a comprehensive solution provider for international projects, enhancing core capabilities through multimodal transport and digital integration [24][25] - **Optimistic Growth Prospects**: The company is well-positioned to benefit from the increasing demand for Chinese equipment overseas, particularly in regions like South America and the Belt and Road Initiative [25][26]

Group 1: Business Performance - In Q1 2025, the company's revenue increased by 11% year-on-year to CNY 36 billion, driven by growth in most sectors including containers, logistics services, and energy [2][3] - Gross margin improved by 1.92 percentage points to 12.10%, while net profit attributable to shareholders surged by 550% to CNY 544 million, indicating a dual enhancement in performance and operations [3] Group 2: Marine Economy and Core Advantages - The marine engineering segment focuses on oil and gas equipment manufacturing, offshore wind power installation vessels, and specialized shipbuilding, aligning with national strategies for deep-sea, green, and safe technologies [3] - The company has achieved significant milestones, including the "Blue Whale 1/2" ultra-deepwater drilling platforms capable of operating at depths of 3,658 meters and drilling to 15,200 meters, showcasing advanced deep-sea equipment technology [3] - In 2024, the company secured orders for two FPSO hulls and one FLNG modification, enhancing its competitiveness in the global high-end marine engineering market [3] Group 3: Container Demand and Production - The easing of tariffs between China and the U.S. has led to increased demand for container orders, with the industry currently experiencing a full order book, and the company's container orders are scheduled for production until Q3 [4] - The global container fleet currently exceeds 53 million TEU, generating stable replacement demand annually [4] Group 4: Geopolitical Impact - Ongoing conflicts, such as the Israel-Iran situation, may lead to short-term oil price fluctuations, potentially boosting demand for the company's oil and gas equipment [4] - Disruptions in oil supply could increase the consumption of alternative energy sources like LNG, driving demand for the company's LNG-related equipment [4] - The company remains vigilant to geopolitical changes and is prepared to adjust its operational strategies to achieve its business objectives [4]

Core Viewpoint - The fire incident on the Morning Midas cargo ship, which was transporting over 3,000 vehicles including electric and hybrid cars, raises significant concerns about the safety of transporting electric vehicles by sea, especially in light of the increasing global demand for electric vehicles [1][2]. Group 1: Incident Overview - The Morning Midas caught fire while sailing in the Pacific Ocean, leading to the abandonment of the ship by its 22 crew members, all of whom were unharmed [1]. - The ship was carrying 3,048 vehicles, including 70 fully electric cars and 681 hybrid vehicles, with the specific brands and models not disclosed [1]. - The fire situation remained unclear a day after the incident, with visible smoke still emanating from the ship [1]. Group 2: Industry Context - In 2024, China's export volume of new energy vehicles is projected to reach 1.284 million units, marking a 6.7% year-on-year increase and setting a historical high [1]. - The maritime transport of automobiles relies heavily on roll-on/roll-off (RORO) ships, which account for over 90% of automotive exports [2]. Group 3: Safety Concerns - The risk of fire during maritime transport of electric vehicles is heightened due to the potential for thermal runaway in lithium batteries, which can lead to fires or explosions [6]. - Data indicates that the economic loss from fires involving new energy vehicles typically exceeds 100,000 yuan, significantly higher than the average loss of over 30,000 yuan for traditional fuel vehicles [2]. Group 4: Regulatory and Operational Challenges - The International Maritime Dangerous Goods Code classifies new energy vehicles as dangerous goods, but allows for more lenient regulations under roll-on/roll-off transport, which may lead to inadequate safety measures [6][7]. - There is a lack of uniformity in the interpretation of regulations regarding the transport of lithium battery goods, leading to operational challenges for companies [7]. Group 5: Market Trends and Future Outlook - The construction of specialized RORO ships is increasing, with the largest RORO ship capable of carrying 9,500 vehicles recently launched, reflecting a trend towards larger vessels to meet growing export demands [10][11]. - China has become the world's largest automobile exporter, surpassing Japan, which has led to changes in ship design standards to accommodate larger vehicle capacities [11].

Investment Rating - The investment rating for the company is "Buy" and is maintained [8]. Core Views - The company has announced a share buyback plan of up to HKD 500 million to boost shareholder confidence and respond to national policy directions. The repurchased shares will be held as treasury stock and disposed of within three years [2][6]. - The company demonstrates confidence in its long-term development, as evidenced by its previous A-share buyback and the current H-share buyback plan. The company aims to achieve reasonable growth in quantity while enhancing quality in its strategic planning for the next five years [10]. - The marine engineering business is actively transforming, focusing on oil and gas while gradually expanding into new energy sectors. The company aims to enhance its technical capabilities and order acquisition in the oil and gas platform business [10]. - In container manufacturing, the company plans to maintain a stable and high-quality development approach, enhancing its competitive edge through innovation and efficient production methods [10]. - The company forecasts net profits of CNY 3.48 billion and CNY 4.47 billion for 2025 and 2026, respectively, with corresponding price-to-earnings ratios of 12 and 10 times [10]. Summary by Sections Company Overview - The current stock price is CNY 7.92, with a total share capital of 539,252,000 shares. The net asset value per share is CNY 8.94, and the highest and lowest prices in the last 12 months were CNY 10.79 and CNY 6.83, respectively [8]. Financial Projections - The company expects total revenue of CNY 177.664 billion for 2024, with a projected net profit of CNY 4.195 billion. For 2025, the revenue is estimated at CNY 174.076 billion, with a net profit of CNY 4.975 billion [14].