-ST Ship (600150): Turnaround from profitability to profitable SOE reforms to help inject future assets

* ST Vessel (600150): Turning losses into profitable SOE reforms to help inject future assets

1.

Event On March 20, the company released its 2018 annual report and achieved operating income of 169.

1 ppm, an increase of 1 per year.

31%, net profit attributable to mother 4.

US $ 8.9 billion, turning losses into profits. At the same time, the company has submitted an application to compensate for the early warning of delisting risks on the company’s stock.

2.

Our analysis and judgment (I) The company’s performance in 2019 will maintain steady growth.According to Clarkson data, the number of gradual shipbuilding completions in 2018 will decrease and decline 8.
.

8%. In 2018, the company’s non-attribution profit was -3.

44 trillion, down 8 a year.

15%, indicating that the company’s actual net profit is basically consistent with the trend of the domestic civil ship market.

The annual ship-on-hand orders in 2018 increased by 2 each year.

2%, the minimum budget. The number of shipbuilding completions before 2019 will maintain a certain increase, and the company’s performance growth rate can be guaranteed.

(2) The gradual and progressive development of asset impairment for two consecutive years. Clearing obstacles The company conducted centralized asset impairment 杭州桑拿 in 2016 and 2017, with a total of 64 asset impairment losses.

480,000 yuan, the company’s asset impairment loss in 2018 was 3.

92 ppm, returning to normal year levels.

After the centralized asset impairment, the company basically digested the accumulated asset depreciation losses previously. It is expected that the company’s asset impairment losses in the next three years can be controlled within a reasonable range, eliminating the impact of subsequent asset impairment losses on the company’s performance.

(3) State-owned enterprise reforms to help inject future assets At present, the main domestic unlisted shipbuilding companies are Jiangnan Shipyard and Hudong Zhonghua Shipyard, both of which belong to China Shipbuilding Industry Corporation.It also has enhanced strength in the field of civil ship construction, and is a high-quality asset in shipbuilding enterprises.

As the reform of military industrial enterprises has gradually entered the deep-water area, many military industrial groups have set targets for asset securitization rates, and the future progress of asset securitization of military industrial enterprises will accelerate.

In this context, the asset injection of Jiangnan Shipyard and Hudong Zhonghua Shipyard is worth looking forward to.

The main listed shipyard companies of China State Shipbuilding Corporation are ST ships (600150.

SH) and China Shipbuilding Defense (600685.

(SH), if Jiangnan Shipyard and Hudong Zhonghua Shipyard carry out asset securitization, it may inject the above two listed companies into the possible penetration.

From a geographic perspective, Jiangnan Shipyard, Hudong Zhonghua Shipyard and ST Ship (600150.

SH) Waigaoqiao Shipyard is also located in Shanghai, using ST ships (600150.

SH) Expected advantages in subsequent asset injections.

3.

Investment proposals are expected to return the company’s net profit to its parent from 2019 to 2021.

28 billion, 5.

7.6 billion and 6.

3.3 billion yuan, EPS is 0.

38 yuan, 0.

42 yuan and 0.

46 yuan, the current expected corresponding PE is 50x, 46x and 42x, maintaining the “recommended” level.

Risk reminder: Civil ship market and capital injection are less than expected risks.