Core Viewpoint - The Chinese shipbuilding industry is experiencing a significant recovery, with the country leading the world in shipbuilding orders and deliveries, indicating a positive trend for the sector's performance in the second half of 2023 [1][2]. Group 1: Industry Performance - From January to June 2023, China's shipbuilding completion volume, new orders, and backlog accounted for 49.6%, 72.6%, and 53.2% of the global total by deadweight tonnage, respectively, maintaining the world's top position [1]. - The shipbuilding price index has risen continuously, increasing by 3% since the beginning of 2023 and by 33% compared to early 2021, indicating a favorable pricing environment for shipbuilders [2]. - The cumulative revenue of 74 key monitored shipbuilding enterprises reached 137.64 billion yuan, a year-on-year increase of 31.3%, while total profit turned positive at 4.64 billion yuan [3]. Group 2: Company-Specific Developments - Major shipbuilding companies like China Heavy Industry and China Shipbuilding have reported significant profit improvements, with China Shipbuilding expecting a net profit of 500 million to 600 million yuan in the first half of 2023, a year-on-year increase of approximately 155.43% to 206.51% [5]. - Companies such as Yaxing Anchor Chain and China Marine Defense have shown substantial growth in net profits, with Yaxing reporting a 122.02% increase in the first quarter [4]. - The performance recovery of shipbuilding enterprises is supported by a combination of rising order volumes and declining raw material costs, particularly steel [2][5]. Group 3: Market Trends and Future Outlook - The shipbuilding industry is expected to see accelerated delivery of new orders starting in 2023, with a projected delivery volume of 17.13 million CGT, 16.88 million CGT, and 14.29 million CGT for the years 2023 to 2025 [1]. - The industry is witnessing a tightening of capacity utilization, with global shipbuilding utilization rates reaching 93.9% in 2021, indicating a robust demand environment [2]. - As the shipbuilding sector recovers, related companies in the upstream and downstream markets are beginning to explore IPO opportunities, reflecting a broader industry revival [6].

Group 1: Marine Economy Overview - The national marine production value has surpassed 10 trillion yuan for the first time, growing by 5.9% year-on-year, accounting for 7.8% of the GDP [1] - The marine economy is becoming a new engine for economic growth, driven by the "blue economy" [2] Group 2: Marine Engineering ("Marine Engineering") - China's new ship order volume, completed ship volume, and hand-held ship order volume have all exceeded 50% of the international market share for the first time [4] - In the first quarter, the marine engineering equipment manufacturing industry saw significant growth, with new orders, delivered orders, and hand-held orders increasing by 57.1%, 114.3%, and 24.2% respectively [4] - The construction of green ship technologies is advancing, with a carbon capture system achieving over 80% CO2 capture rate [3][4] Group 3: Marine Aquaculture ("Marine Products") - The marine aquaculture sector is evolving into a modern "grain warehouse," with a 4.0% increase in marine fishery value added, reaching 488 billion yuan [6] - The average offshore distance for aquaculture has increased from 10 kilometers in 2018 to 18 kilometers currently, indicating a shift towards deep-sea and intelligent aquaculture [6][7] - The development of marine ranches is expanding, with new intelligent platforms and processing facilities being established [5][6] Group 4: Marine Renewable Energy ("Marine Wind") - The offshore wind power sector is entering a new phase of large-scale and clustered development, with a nearly 30% increase in offshore wind power generation in 2024 [9] - The marine new industries' added value has grown by 7.2% year-on-year, with significant advancements in marine pharmaceuticals and bioproducts [9] - The establishment of innovation platforms in marine engineering, offshore wind power, and marine pharmaceuticals is being actively pursued by coastal regions [9]

Core Viewpoint - Zhoushan City is leveraging its strategic position in the Yangtze River Delta to develop a modern marine industry cluster, focusing on three pillar industries: green petrochemicals, shipbuilding and marine engineering, and marine fisheries, while also promoting emerging industries such as clean energy and digital ocean technology [1][15]. Industry Overview - New Quality Productive Forces (新质生产力) is defined as an advanced productive force characterized by innovation, high technology, efficiency, and quality, aimed at driving high-quality economic development [2][3]. - The modern marine industry system in Zhoushan is structured around the "3+X" matrix, integrating traditional and emerging industries to enhance competitiveness and sustainability [1][15]. Economic Performance - In 2024, Zhoushan's GDP is projected to reach 222.62 billion yuan, with a year-on-year growth of 5.9%, driven by robust performance across all three industrial sectors [5][8]. - The industrial investment in Zhoushan is expected to total 60.8 billion yuan in 2024, with manufacturing investment growing by 6.4% [7][10]. Key Industries and Companies - The green petrochemical sector is represented by Zhejiang Petrochemical Co., which operates the world's largest integrated refining and chemical project, producing over 40 million tons annually [22][23]. - The shipbuilding industry includes companies like Zhoushan Xinya Shipbuilding and China COSCO Shipping Heavy Industry, focusing on high-end vessels and marine engineering equipment [22][23]. - Emerging industries such as clean energy and marine electronics are also gaining traction, with companies like Zhongguang Nuclear and Zhejiang Xincheng New Energy leading in offshore wind and LNG projects [22][23]. Policy Background - The local government has introduced a series of policies to support the development of new quality productive forces, including initiatives for economic quality improvement and low-altitude economy development [12][13]. - The focus is on creating a comprehensive policy framework that supports innovation, investment, and the integration of marine tourism and sports industries [12][13]. Development Trends - The development trends in Zhoushan highlight a shift towards high-end industrialization, digital innovation, and ecological collaboration, with traditional industries evolving into high-value sectors [25][26]. - The integration of technology and digitalization is expected to enhance productivity across various sectors, including marine equipment and fisheries [27][28]. - Regional collaboration with the Yangtze River Delta is emphasized to improve infrastructure and promote sustainable development [28].

Group 1 - The core viewpoint of the news highlights the development of Jining as a major inland shipping center in Northern China, leveraging advanced technologies and green initiatives to revitalize the Grand Canal [1][3][6] - The construction of a 182TEU pure electric inland container ship for the French shipping group CMA CGM marks a significant milestone in China's inland shipping industry [1][5] - Jining's Dragon Port is equipped with advanced automation technologies, including unmanned vehicles and smart logistics systems, which have significantly improved operational efficiency [3][4] Group 2 - The new energy vessels being developed by Shandong Xineng Shipbuilding are expected to reduce carbon emissions by over 15% and other pollutants by more than 90% compared to traditional vessels [5][6] - Jining is establishing a regional demonstration zone for comprehensive new energy vessel utilization, aiming to foster a billion-level green intelligent shipbuilding industry cluster [6][8] - The integration of port and industry in Jining is leading to the establishment of multiple industrial parks, significantly increasing local economic output from 400 million to over 20 billion yuan [8]

Core Viewpoint - The merger between China Shipbuilding and China Shipbuilding Industry Corporation has received approval from the China Securities Regulatory Commission, marking a significant milestone in the shipbuilding industry and creating the world's largest publicly listed shipbuilding company by asset size, revenue, and order backlog [2][4][7]. Summary by Sections Merger Approval and Details - On July 18, China Shipbuilding announced that it has received approval for the absorption merger with China Shipbuilding Industry Corporation from the China Securities Regulatory Commission, allowing for the issuance of 3.053 billion new shares [4]. - The merger will involve China Shipbuilding issuing A-shares to all shareholders of China Shipbuilding Industry Corporation, leading to the latter's delisting and the transfer of all assets, liabilities, and rights to China Shipbuilding [5]. Financial Impact and Performance Forecast - Post-merger, the total asset scale of the surviving company will exceed 400 billion yuan, positioning it as the global leader in the shipbuilding sector [3][7]. - China Shipbuilding expects a net profit increase of 98.25% to 119.49% for the first half of 2025, while China Shipbuilding Industry Corporation anticipates a net profit growth of 181.73% to 238.08% during the same period [3][10]. - The combined net profit for both companies is projected to reach between 4.3 billion to 4.9 billion yuan, reflecting a year-on-year growth of approximately 121% to 152% [11]. Market Reaction and Future Outlook - Following the announcement, the stock prices of both companies saw slight increases, with total market capitalization reaching 259.3 billion yuan [8]. - Analysts suggest that the merger will enhance operational efficiency and profitability through synergies, with a focus on high-value ship orders and improved cost management [7][12]. - The shipbuilding industry in China is expected to maintain its leading position globally, benefiting from cost advantages, technological innovation, and a favorable order structure [12].

Core Viewpoint - The report anticipates that convertible bonds with positive performance in Q2 2025 will be concentrated in high-end manufacturing sectors such as communication, electronics, military, automotive parts, transportation equipment, industrial control equipment, energy equipment, and electric power equipment, as well as in non-ferrous and basic chemical industries benefiting from price increases [1]. Group 1: Industry Performance Insights - The profit growth in the non-ferrous metal mining industry is expected to reach 41.7% year-on-year, driven by rising prices and increased production and sales of metals like gold, copper, zinc, and silver [2]. - The railway, shipbuilding, aerospace, and other transportation equipment manufacturing sectors are projected to see a profit increase of 56% year-on-year, benefiting from global shipping recovery and significant orders for LNG carriers and container ships [2]. - The computer, communication, and other electronic equipment manufacturing sectors, along with electrical machinery and general equipment manufacturing, are expected to maintain double-digit profit growth due to high demand for AI hardware, smart terminals, and industrial control equipment [2]. - The agricultural and sideline food processing industry is anticipated to experience a profit growth rate of 38.2%, primarily due to the demand for high-value-added products like prepared dishes and health foods [2]. Group 2: Company-Specific Performance - Among the companies that have disclosed their H1 2025 performance forecasts, 272 companies are expected to achieve a non-net profit growth of over 30% in Q2 2025, mainly in the basic chemicals, electric power equipment and new energy, machinery, electronics, and automotive sectors [3]. - In the basic chemicals sector, companies are expected to benefit from price increases in phosphates, pesticides, and refrigerants [3]. - The electric power equipment and new energy sector's high-performing companies are expected to benefit from increased overseas photovoltaic storage orders, domestic ultra-high voltage and smart grid construction, and rising domestic orders for new energy vehicles and military products [3]. - The machinery sector's growth is driven by high demand for industrial mother machines, semiconductor equipment, energy equipment, shipbuilding, and rail transit equipment [3]. - The electronics sector's growth is attributed to increased investment in AI computing power, accelerated domestic substitution of semiconductor equipment and materials, and growth in consumer electronics and smart terminal shipments [3]. - The automotive sector is expected to see high growth due to increased sales of domestic new energy vehicles and accelerated exports of commercial vehicles and automotive parts [3]. Group 3: Performance Forecast Adjustments - A list of 13 convertible bond targets has been identified, which have seen their average net profit forecasts raised by over 5% in the past three months, with more than three forecasting institutions involved, indicating potential marginal improvements in performance [4].

Summary of Conference Call Records Industry Overview - The shipbuilding industry is experiencing improved profitability, as indicated by the significant profit growth forecasted by China Shipbuilding for the first half of 2025, driven by high-priced order deliveries, falling steel prices, and early deliveries [1][4] - The new ship order volume in June 2025 increased month-on-month but saw a substantial year-on-year decline due to a high base in June 2024 [1][8] Key Insights - The Clarksons newbuilding price index stabilized in June 2025, with a month-on-month increase, although different ship types showed varied performance, with container ship prices rising while oil tanker prices fell [1][5] - The shipbuilding sector has become a safe haven for performance amid the current macroeconomic backdrop, with steel price declines enhancing the profitability of shipbuilders [2] - The market is witnessing a structural adjustment, with first-tier shipyards experiencing weak order intake while second and third-tier shipyards are seeing considerable order volumes due to capacity anxiety [1][6] Company Performance - China Shipbuilding's profit forecast for the first half of 2025 is between 2.8 billion to 3.1 billion, significantly exceeding previous expectations [3][4] - Other companies like China Heavy Industry and China Power also reported substantial profit growth, attributed to high-priced order deliveries and early payments [4][22] Order Trends - In the first half of 2025, China maintained a leading global market share of 56% in new shipbuilding, while South Korea's share increased from 10% to 30%, driven by a surge in container ship orders [10] - Container ship orders increased by 24% year-on-year, while orders for other types of ships like LNG and oil tankers saw a decline of over 70% [9] Market Dynamics - The current newbuilding market is in a brief downturn within an overall upcycle, with historical data indicating that downturns can occur even during upcycles [15][16] - The low demolition rates of older ships are causing many to remain active in the market, which could lead to supply vulnerabilities if demand surges suddenly [18][19] Future Outlook - The potential demolition volume over the next decade is estimated at 16,000 ships, which could significantly impact the supply-demand balance in the shipbuilding market [20] - Investors are advised to focus on leading companies like China Shipbuilding for stable investments, while considering second-tier companies for higher return potential [23] Additional Considerations - The geopolitical landscape and oil price fluctuations are affecting the cruise market, leading to concerns about new ship deployments [12] - LNG ships and car carriers are expected to have strong growth potential due to increasing demand for alternative fuels and the rise of China's electric vehicle exports [13]

Core Viewpoint - The five major state-owned shipbuilding enterprises in China are expected to report a combined net profit of 50.2 billion to 60.5 billion yuan for the first half of 2025, showcasing the robust strength of China's shipbuilding industry and boosting confidence in the global shipbuilding market [2][3]. Group 1: Company Performance - China Shipbuilding and China Heavy Industry are projected to achieve a combined net profit of 43 billion to 49 billion yuan in the first half of 2025, reflecting a year-on-year growth of approximately 121% to 152% [3]. - China Heavy Industry anticipates a net profit of 15 billion to 18 billion yuan, representing a year-on-year increase of 181.73% to 238.08% due to a significant rise in the number of civil ship deliveries [3]. - China Shipbuilding expects a net profit of 28 billion to 31 billion yuan, with a year-on-year increase of 98.25% to 119.49%, attributed to higher prices for civil ship products and effective cost control [3]. - China Shipbuilding Industry Corporation and China Power are also expected to report substantial profit increases, with China Power projecting a net profit of 8 billion to 11.5 billion yuan, a year-on-year growth of 68.28% to 141.9% [6]. Group 2: Market Trends - The global shipbuilding market is experiencing a downturn, with new ship orders in the first half of 2025 declining by 54% year-on-year, totaling 647 ships and approximately 19.38 million compensated gross tonnage (CGT) [8][9]. - Despite the drop in new orders, Chinese shipyards maintain a strong delivery performance, accounting for 48% of global deliveries, while South Korea and Japan hold 31% and 13%, respectively [9]. - The shipbuilding industry in China is expected to continue benefiting from cost advantages, resilient supply chains, and technological innovations, solidifying its position as the world's largest shipbuilding nation [9]. Group 3: Future Outlook - The Chinese shipbuilding industry aims to enhance its core competitiveness through increased technological innovation, talent development, and collaborative industrial chain growth, while actively participating in international market competition [10].

Investment Rating - The investment rating for the company is "Buy" and is maintained [7] Core Views - The recent announcement of the stock swap merger with China Shipbuilding Industry Corporation has been approved by the Shanghai Stock Exchange, marking a significant step towards the merger's completion. Post-merger, the company will become the largest publicly listed shipbuilding company globally, enhancing its influence while reducing competition within the shipbuilding sector [2][4] - The merger is expected to create synergies that will improve order efficiency and shipbuilding capacity, thereby enhancing profitability. Following the merger, the integration of other quality assets within the group is anticipated to commence [2][11] - The company is projected to see a continuous increase in the proportion of high-value ship orders delivered by 2025, leading to sustained performance growth. The advancement in deep-sea technology positions the company as a leader in marine engineering, which is expected to yield significant benefits [2][11] Summary by Sections Event Description - On July 4, the company announced that its application for a stock swap merger with China Shipbuilding Industry Corporation has been approved by the M&A Review Committee of the Shanghai Stock Exchange, meeting the restructuring conditions and information disclosure requirements [4] Financial Performance and Forecast - The company is expected to maintain a leading position in global shipbuilding, with a projected net profit attributable to shareholders of 73.5 billion, 100.8 billion, and 128.0 billion for the years 2025, 2026, and 2027 respectively, corresponding to P/E ratios of 20X, 15X, and 11X [11][15] - The company’s revenue is forecasted to grow from 78.584 billion in 2024 to 109.957 billion in 2027, with gross profit margins increasing from 10% to 19% over the same period [15]

Report Summary 1. Report Industry Investment Rating There is no information about the industry investment rating in the report. 2. Core View of the Report On July 1, the Sixth Meeting of the Central Financial and Economic Commission proposed to regulate low - price and disorderly competition among enterprises, which led to a rebound in the domestic commodity market. Currently, the supply - demand fundamentals of steel, coke, and coking coal markets have few contradictions, and low inventories are used as a narrative. However, if no specific measures are implemented in the short term, the market may return to the old logic of dealing with the uncertainty of production cuts. After the short - term market sentiment reaction, investors should rationally view the price - increase logic, avoid chasing high prices, and can wait for callback opportunities after the policy - driven price reaches the target level [10]. 3. Summary by Related Catalogs 3.1 Market Quotes - **Futures Market**: On July 2, the main contracts 2509 of coke and coking coal futures rose again. The coke 2509 contract reached a new high since May 20. The closing price of coke 2509 was 1442 yuan/ton, up 3.15%, with a trading volume of 30,166 lots and a position of 49,728 lots. The closing price of coking coal 2509 was 843.5 yuan/ton, up 3.18%, with a trading volume of 1,189,983 lots and a position of 529,227 lots, a decrease of 35,195 lots. The capital inflow of coke 2509 was 0.58 billion yuan, and the capital outflow of coking coal 2509 was 1.60 billion yuan [5]. - **Spot Market**: On July 2, the flat - price index of quasi - first - grade metallurgical coke at Rizhao Port, Qingdao Port, and Tianjin Port was 1220 yuan/ton, with no change. The price of low - sulfur main coking coal in Tangshan was 1195 yuan/ton, up 20 yuan/ton, while the prices in other regions remained unchanged [8]. 3.2 Technical Indicators On July 2, the daily KDJ indicator of the coke 2509 contract changed from a dead - cross to a golden - cross. The daily KDJ indicator of the coking coal 2509 contract showed a divergent trend, with the J and K values rising significantly, and the D value continuing to decline slightly, showing a trend of forming a golden - cross. The daily MACD red bars of both the coke and coking coal 2509 contracts became larger [8]. 3.3 Industry News - **Policy News**: On July 1, the Sixth Meeting of the Central Financial and Economic Commission emphasized promoting the construction of a unified national market, regulating enterprise competition, and promoting the exit of backward production capacity. The China Cement Association issued a document to promote the high - quality development of the cement industry [10][11]. - **Industry Operation**: From January to May 2025, the operation of major steel - using industries was polarized. The construction industry continued to decline, while the manufacturing industry showed differentiation. The production and export of some industries such as new energy vehicles and washing machines increased, while the production of some industries such as real estate and refrigerators decreased [11]. - **Enterprise Dynamics**: Shaanxi Coal Industry completed 121% of the investment plan from January to May. The Naoliu Highway in Xinjiang is undergoing expansion and reconstruction, and its freight capacity will reach over 40 million tons after completion. Jinmei Group successfully issued a 2 - billion - yuan science and technology innovation bond. This year, the number of LNG ship deliveries is expected to reach a record high. In the first half of 2025, the container throughput of Shanghai Yangshan Deep - Water Port increased by 7.3% year - on - year. Saudi Arabia's crude oil exports increased by 7% in June. The main line of the Trans - Guinea Railway was fully paved, and the Simandou project is expected to be put into production at the end of 2025. Russia plans to maintain its coal exports to China at about 100 million tons in 2025. Turkey's coal imports in May increased by 2.66% year - on - year [12][13]. 3.4 Data Overview The report presents multiple data charts, including the spot price index of metallurgical coke, the spot price of main coking coal, the production and capacity utilization rate of coking plants and steel mills, the national daily average pig iron output, the inventory of coke and coking coal in ports, steel mills, and coking plants, the profit per ton of independent coking plants, the production and start - up rate of coal washing plants, the inventory of raw coal and clean coal in coal washing plants, and the basis of Rizhao Port's quasi - first - grade coke and Linfen's low - sulfur main coking coal with the September contracts [15][19][23][26][27][30].