The Zhitong Finance App learned that Guotai Junan released a research report saying that maintaining COSCO Haineng (01138)'s “increase in holdings” rating, the 24Q1 deduction for non-net profit increased sharply year-on-year, in line with expectations. Continue to be optimistic about oil transportation super bull market options; suggests the 24Q2 high base effect. The second half of the year can be expected optimistically, with a target price of HK$11.87. The oil transportation industry's capacity utilization rate has reached a threshold. Supply and demand will continue to improve in the next few years. The rise and continuation of the economy will exceed expectations, and there is room for performance valuation. The bank recommended reducing short-term fluctuations and focusing on central trends.

Guotai Junan's main views are as follows:

The 202401 deduction performance surged 40% year-on-year, in line with expectations.

Net profit for 202401 was 1.2 billion yuan (+13%), a sharp increase of 40% year-on-year (23Q1 ship sales revenue exceeded 200 million yuan), which is in line with expectations. 1) Foreign trade oil transportation: The average value of VLCCTD3 CTCE corresponding to the 2023-24Q1 single quarter was 3.4/5.2/3.1/2.9/42,000 US dollars. The 24Q1 off-season was not poor. The gross profit was 1.22 billion yuan, which was the same as the previous year. Considering the elimination of old VLCC vessels, it was in line with expectations. 2) Domestic oil transportation: 24Q1 gross profit of 370 million yuan, a year-on-year increase of 30%. 3) LNG: Net profit of 24Q1 was close to 200 million yuan, which continues to be stable. 4) Financial expenses: The debt structure was actively optimized, and the 24Q1 was reduced by 150 million yuan year-on-year.

The profit center has risen, and optimism can be expected in the second half of the year.

Oil freight rates and profit centers have risen in the past two years, but the pace of trade still affects quarterly fluctuations in the short term. After the Spring Festival in 2023, the pace of crude oil trade was positive, driving high 23Q2VLCCTCE, and the profit performance of oil transportation companies was impressive; while lower oil production and high prices in the Middle East suppressed trade demand in the second half of the year, leading to pressure on the freight center and poor peak season. The 2024 oil transportation market capacity utilization rate has reached the threshold.

1) Demand: Traditional energy sources are resilient, and Asian strength is expected to exceed expectations. The restructuring of crude oil trade deepens and continues, and the Atlantic region will continue to increase production and extend the flight distance. 2) Supply: VLCC accounts for 5% of in-hand orders. The shadow fleet sanctions are getting stricter, which is expected to speed up the elimination of old ships. Furthermore, environmental policies will restrict effective capacity flexibility. Supply and demand will continue to improve in the next few years, and the rise and continuation of the boom will exceed expectations. It suggests the high base effect of 24Q2. At the same time, shipowners are optimistic about the central freight rate expectations for the peak season in the second half of the year, and the profit center will continue to rise.

The oil transportation industry is booming in the next few years, and returns to the company's shareholders will continue to rise.

In 2023, the company will implement equity incentives for executives, demonstrating confidence in the upward trend, which will help show profit flexibility and improve market value management. The company's dividend rate increased to 50% in 2023. Considering the impact of 2023 and the upward trend in the industry over the next two years, it is expected that the company's shareholder returns will continue to improve in the future.

Risk warning: economic downturn, environmental protection policies not strictly implemented, geographical situation, safety accidents, etc.