COSCO SHIP HOLD(601919)2024-05-30 13:33Summary of Conference Call for COSCO SHIPPING Holdings (01919) Company Overview - The conference call pertains to COSCO SHIPPING Holdings, a major player in the shipping and logistics industry, particularly focusing on container shipping and port operations. Key Points and Arguments Investment and Privatization - The company is actively increasing its stake in COSCO SHIPPING Ports, viewing the port assets as undervalued. There is consideration for privatization, but no definitive plan has been announced yet [1] Mergers and Acquisitions - COSCO SHIPPING Holdings is continuously investing in upstream and downstream supply chain-related enterprises, indicating a strategic focus on enhancing its supply chain capabilities [1] Impact of Global Events on Shipping Rates - Shipping rates are primarily influenced by supply and demand dynamics. Current global market demand is rising, which has led to an increase in shipping rates. The ongoing Red Sea crisis has indirectly reduced shipping capacity, contributing to this situation [1] Ship Scrapping Trends - Despite a collective profit decline among global shipping companies in the second half of 2023, the scale of ship scrapping has not significantly increased. This is attributed to various factors, including EU green emission reduction requirements and the long-term trend of declining shipping rates, which makes the maintenance of older vessels increasingly costly [1] Future Supply of Vessels - The global shipping capacity is continuously increasing. The company is engaged in the construction of new energy-efficient vessels and retrofitting older ships to meet new carbon reduction requirements [1] Fleet Ownership and Leasing - Currently, approximately 70% of the company's fleet is owned, with ongoing construction of new vessels. The company maintains long-term relationships with leasing partners and does not plan to breach any contracts [1] Impact of Rising Shipping Rates on Leasing Costs - Long-term leasing contracts are not affected by short-term fluctuations in shipping rates. In extreme low-rate scenarios, leasing companies may negotiate rental prices [1] Share Buyback Strategy - The company has not provided a definitive answer regarding continued share buybacks once the stock price exceeds 1PB, but it emphasizes the importance of shareholder returns [1] Accounts Payable Increase - The significant increase in accounts payable is due to several factors: 1. Rising shipping rates leading to over 20% increases in supply chain prices 2. Investments in retrofitting old vessels and constructing new ships 3. Long-term contracts that do not settle in the short term 4. Over 85% of the company's costs are denominated in USD, with exchange rate fluctuations impacting expenses [1] Export of New Energy Vehicles - The export of new energy vehicles from China is on the rise, although recent high tariffs on imports of new energy vehicles in the U.S. may pose challenges. The company notes that the majority of overseas markets still favor fuel vehicles, which are not currently affected by new tariffs. There has been no significant increase in exports ahead of tariff implementation, and the company expects stable market share in the future [2]