Shenwan Hongyuan: Maintains "Buy" Rating on CSSC SHIPPING, High Dividend Yield Builds Moat

According to the Zhitong Finance APP, Shenwan Hongyuan has released a research report maintaining a "Buy" rating for CSSC SHIPPING (03877), citing high-quality fleet structure and cost control, as well as a high dividend yield that builds a competitive moat. Considering changes in tax policies in OECD countries, the company's effective tax rate for 2025-2027 is raised to 15%, corresponding to net profits attributable to shareholders of HKD 2 billion, 2.2 billion, and 2.4 billion for 2025-2027 (originally forecasted at 2.3 billion, 2.6 billion, and 2.8 billion), corresponding to PE ratios of 5.8, 5.5, and 5.0 times.

The report cites the company's semi-annual report, stating that in the first half of 2025, the company completed new orders for 6 new ships, with a contract value of USD 308 million, with mid-to-high-end ship types accounting for 100%, including 4 MR tankers and 2 methanol dual-fuel MR tankers. As of June 30, 2025, the company had a fleet size of 143 ships, of which 121 were in operation and 22 were under construction. The average age of operational vessels is approximately 4.13 years, making the fleet young and competitive. The average remaining lease term for contracts over one year is 7.64 years, providing a longer duration that enhances performance stability. The company's ships are primarily built in China, enhancing market competitiveness under the exemption of port fees.

Additionally, according to the semi-annual report, as of the end of June 2025, the company's comprehensive financing cost was controlled at 3.1%, a reduction of 40 basis points from the beginning of the year. As of June 30, 2025, the group's debt-to-asset ratio was 65.2%, a decrease of 2.3% from the end of last year. The scale of interest-bearing loans was approximately HKD 25.55 billion, a decrease of 7.4% from the end of 2024, which includes approximately USD 1.6 billion in loans, RMB 9.06 billion in loans, HKD 2.02 billion in loans, and EUR 140 million in loans, with diversified loan currencies effectively reducing interest expenses caused by high U.S. Treasury rates. The company declared a mid-year dividend of HKD 0.05 per share in 2025, higher than the mid-term dividend of HKD 0.03 per share in previous years. The company plans to maintain a dividend payout ratio of 30% at the end of 2024; if the payout ratio remains unchanged at the end of 2025, combined with the mid-year dividend, the corresponding annual dividend yield is approximately 7.7%