Shenwan Hongyuan: Verification of Shipping Industry Prosperity, Focus on Express Price Increase Market

According to the Zhitong Finance and Economics APP, Shenwan Hongyuan released a research report stating that the improvement trend of gross profit margin in the shipbuilding sector in Q2 has been confirmed. China Shipbuilding disclosed a civilian ship order amount of 199.639 billion yuan, which is basically consistent with the previous estimate of 27.1 billion US dollars based on Clarkson data. Bulk cargo and ethane transport ship orders are gradually being finalized, and the growth rate of outstanding orders is expected to increase. It is worth noting that the mid-year reports of related targets in the highway sector are under different degrees of pressure. The overall performance pressure of eastern road network companies is limited, and the sector's low volatility dividend asset attributes have been verified. In addition, the express delivery industry's semi-annual report meets expectations, and the State Post Bureau has proposed anti-"internal competition" in the express delivery industry, which is expected to start a peak season price increase trend.

Shenwan Hongyuan's main points are as follows:

Q2 non-GAAP net profit is increasing, and transportation targets with a dividend yield of over 3% include Bohai Ferry, Huamao Logistics, COSCO Shipping, Xiamen Xiangyu, Sichuan Chengyu, Changlian Shares, COSCO Shipping Special, Yantian Port, Sumida, Tangshan Port, Zhongyuan Expressway, Jilin Expressway, Ninghu Expressway. The probability of a hard landing in the United States is decreasing, export expectations are marginally improving, and high dividend recommendations include China Shipping Development (601598.SH) and Huamao Logistics (603128.SH).

The improvement trend of gross profit margin in the shipbuilding sector in Q2 has been confirmed. China Shipbuilding disclosed a civilian ship order amount of 199.639 billion yuan, which is basically consistent with the previous estimate of 27.1 billion US dollars based on Clarkson data. Bulk cargo and ethane transport ship orders are gradually being finalized, and the growth rate of outstanding orders is expected to increase. Recommendations include China Shipbuilding (600150.SH), China Heavy Industry (601989.SH), Sumida (600710.SH), attention to China Power (600482.SH), and CSSC Defense (600685.SH).

Global tanker stock performance has been basically disclosed, with US stock Frontline rising together after the release of its performance on Friday, indicating the end of the off-season. Pessimistic expectations are sufficient, and recommendations continue for COSCO Shipping Energy Transportation (600026.SH), China Merchants Shipping (601872.SH), China Merchants Nanyou (601975.SH), and Xing Tong Shares (603209.SH).

Aviation Airports: In the first half of 2024, aviation demand continued to grow. According to the Civil Aviation Administration and company announcements, the civil aviation industry completed a total passenger transport volume of 350.714 million in the first half of 2024, reaching 109% of the level in the same period in 2019. In the first quarter, there was a mix of peak and off-peak seasons, with both volume and price rising during the Spring Festival peak season. In the second quarter, the aviation market gradually entered the off-peak season, with adjustments in airline pricing strategies leading to a more significant year-on-year decline in ticket prices due to the increasing sensitivity of passenger prices and consumption trends. Business route ticket prices are under pressure, and the recovery of China-US routes is facing bottlenecks. The three major airlines recorded losses in the first half of the year, while the profitability of private airlines is further strengthened. Airport companies are experiencing continuous growth in performance as passenger traffic recovers.

Continuing to emphasize the dual investment theme of "international + supply," focusing on the progress of the recovery of international routes after additional flights, and attaching importance to the intensified supply-side logic of the global aviation supply chain disorder. The outlook for the aviation market's continued recovery remains positive, with recommendations for China Eastern Airlines (603885.SH), Spring Airlines (601021.SH), Air China (601111.SH), Southern Airlines (600029.SH), and attention to Baiyun Airport (600004.SH), Shenzhen Airport (000089.SZ), Shanghai Airport (600009.SH), and CIB Leasing (02588) Railway and Highway Sector: Influenced by macroeconomic factors and weather conditions, the overall growth rate of national highway traffic in the first half of the year was under pressure, with the growth rate of truck traffic being more significantly affected. Companies in the highway sector reported varying degrees of pressure in their interim reports, with companies in the eastern road network sector experiencing limited overall performance pressure, validating the sector's low volatility dividend asset attributes. It is recommended to focus on China Merchants Expressway, and pay attention to Anhui Expressway, Ningbo-Hangzhou Expressway, and Fujian Expressway. The railway passenger transport sector remains prosperous, while the railway freight transport sector has experienced some differentiation in performance trends due to macroeconomic factors and freight policies.

In the first half of the year, railway passenger traffic showed a high growth rate from a low base, with related companies maintaining high growth in performance. The railway freight transport sector exhibited differentiation, with the multimodal transport track maintaining high growth under the policy dividend. It is recommended to focus on Beijing-Shanghai High-Speed Railway (601816.SH), Daqin Railway (601006.SH), and pay attention to China Railway Logistics (600125.SH), Guangzhou-Shenzhen Railway (601333.SH), and China Railway Special Cargo (001213.SZ).

Express Delivery Sector: The semi-annual report overall met expectations, and it is recommended to continue focusing on investment opportunities brought by the peak season price increases. In the first half of the year, the express delivery industry saw a year-on-year increase of 23.1% in parcel volume, with corresponding data for the Tongda series showing year-on-year growth rates: ZTO Express 11.8%, YTO Express 24.81%, Yunda Express 30.02%, STO Express 32.47%; net profit per single ticket: YTO Express 0.17, Yunda Express 0.10, STO Express 0.04 (RMB/ticket). At the same time, the State Post Bureau proposed to counter the "internal competition" in the express delivery industry, which is expected to initiate a peak season price increase trend. At the current point in time, the valuation of the express delivery sector is attractive, and it is recommended to focus on STO Express with high performance elasticity and YTO Express (600233.SH) with successful digital transformation, while paying attention to Yunda Express (002120.SZ) and the Hong Kong-listed ZTO Express (02057).

Risk Warning: Chinese brands going global falling short of expectations, a substantial increase in new shipbuilding orders, significant expansion of shipyard capacity, and the end of crude oil inventory replenishment