I have said less recently, mainly because the logic is slowly being realized, and everything that needs to be said has been said. When I said it before, some people often said that the freight rate is so low, and then it will rise. But it really rose slowly, and the stock price rose early.
In the process of slowly releasing profits, the stock price reacted to expectations ahead of the freight rate.
Simple static comparison is meaningless. For example, if the current oil freight rate does not increase, it will be maintained. Then these oil transportation companies are not worth the market value, so the current increase implies that the freight rate will continue to rise sharply in the future. expected in.
As for how much the freight rate can rise, don’t guess, no one can guess. The real high point is come out, not guessed.
Since the logic is almost the same, it is up to everyone to take the money away in this big oil transportation cycle, and in the end, someone must pay the bill.
In order not to make myself the one who pays the bill, let me talk about how to look at the freight bill and how to track it. The rest is up to luck, I hope everyone can make money.
1. How to read the freight bill of VLCC
Let me post a chart of freight rates first. This is the most important type of VLCC for oil tankers. In fact, whether oil transportation can be profitable or the most flexible is VLCC. This has been discussed before.
I explain one by one what the above is.
1. Serifos is the name of the ship, and the number in parentheses is the construction time. This is the ship in 2009, 13 years old.
2. The modem is the emission reduction device it uses, the scrubber is the desulfurization tower, and the VLSFO is the low-sulfur oil.
This year, we see that the freight rates of low-sulfur oil are very low, mainly because the cost of low-sulfur oil is too high. At the peak, the price difference between low-sulfur oil and high-sulfur oil reached 600, and now it has recovered to around 300.
The ship currently has 7+7 towers, and 7 ships will be installed in the second half of the year. The sea energy is not clear, and there should be few. There are many foreign countries with towers, but why do they still lose money, because the foreign operating costs are too high, and they cannot be compared with the domestic two.
As DHT is known as the king of towers, 27 of 28 ships have installed towers, and as a result, the second quarter has just turned losses.
3. Status-Reported
The status of this order, On subs means that the order is being signed. Basically, the terms of the charter have been agreed, and some additional contracts have not been signed.
Fixed means that everything has been signed and the contract has begun.
Failed means that the contract is invalid. There are two situations here. One is that the shipowner has broken the contract, and the freight rate has risen sharply during the contract signing process, so the contract will be broken and a higher one will be signed. Conversely, if the price falls, the oil tycoon will also break the contract and sign a lower contract.
The general contract from On subs to Fixed is about a week. The faster it is completed, the tighter the boat will be, and the oil tycoon is more willing to settle down quickly, otherwise there will be too many boats.
4. Operator
The operator, China VLCC Company is China Merchants Steamship, and COSCO is Sea Energy.
5. Trade
The route, WAfr/EClndia in the picture is from West Africa to East India.
China Merchants Steamship ranked second in the West Africa route, and Haineng ranked fourth. China Merchants Steamship ranked second in the Great Triangle Route, and Haineng ranked third. The Middle East route ranks first in sea energy, and China Merchants Steamship ranks third. Both companies are global leaders.
6. Charterer
Lessee, IOS
7. Rate
The shipping rate is what many people often say about how much the shipping rate has risen, and that’s it.
It is usually represented by WS. There is no picture in the above picture. I will put another one. This is very important.
Where WS is the New World Tanker Nominal Freight Index, which took effect from January 1, 1989. This value is adjusted annually.
The WS index is a percentage, a percentage of market shipping and base shipping rates.
It’s a bit difficult to understand. The way this benchmark freight is formulated is that the “Worldscale Association” calculates a 75,000-ton tanker with a speed of 14.5 knots every year based on the operating expenses such as port dues, fuel costs, and canal dues in the previous year. , the freight level at which the route reaches the break-even point under the most economical conditions.
So the meaning of WS57 in the above picture is: the ratio of the freight of this ship from West Africa to China to the benchmark freight is 0.57, and the percentage is 57.
The core point is that the WS benchmark, that is, 100% of WS, will change every year, because operating expenses are changing. For example, in 2021, the oil price will rise sharply, and the benchmark of WS will be very high. Although the WS in the above list is only 57, the actual TCE freight rate Already more than 30,000, the level of profitability.
8. Last done
The rate for the last voyage, the picture above is WS50, the time is June 21, 2022, and this order is on the 30th, that is, the shipping fee has increased from WS50 to WS57 in 9 days.
9. Laycan
The ship’s loading period and cancellation period, back to the first picture on August 25-26, some orders do not have this item, which means that the shipowner is relatively strong, and the freight rate is likely to rise.
10. Laytime-Demurrage
Loading and unloading time and demurrage, the loading and unloading time of the first picture is 108 hours, and the demurrage fee is 25,000 dollars per day.
When the freight rate was low in the past two years, I lived on demurrage. When the demurrage fee soars, it also means that the ship is tight.
11. Broker
The agent of the chartering boat is of no use.
12. Actual TCE and RV TCE
Let’s first talk about what TCE is. TCE is the profit of the shipowner after paying the relevant expenses of the voyage. The relevant expenses include fuel, port, tolls, commissions, etc.
So we see that TCE is negative. It does not mean that shipowners are looking for money after shipping oil, but that the cost is greater than the income.
The price of Actual TCE is the time and price of the VLCC from the last port of discharge to the port of loading for loading, and then to the next port of discharge for unloading.
RV TCE is the time and price of the VLCC from loading at the port of loading to unloading at the port of discharge, and then to the port of loading at the loading port.
Combining these two prices with the route, we can see the comprehensive income, route and other information of the ship, and we can also see the operating capacity and route arrangement of each shipping company.
This is very complicated to say, I will not expand.
13. Breakeven TCE – 10% return TCE
This is the TCE price of the breakeven point and the TCE price of 10% profit. The figure is 21229 and 27948 respectively, while the actual TCE is 23112, so it is the state of breakeven.
You can easily calculate the performance by looking at the freight list, and you can check it for every ship.
So I don’t have to hold the freight bill and ask me every day whether this ship makes money, how much I make, whether the ship is losing money, these basic questions.
14. Coming From
The origin and departure time, the picture shows Ulsan’s departure on July 24, 2022.
15. Speed ballast – laden
Ballast speed and full load speed, one is 14.5 knots and the other is 12.5 knots. Generally, when the freight rate is very low, it will drive very slowly and slowly. With 11 and 12 knots, the cost can be reduced, and both are driven slowly. Can support the freight.
The remaining two are useless, one is idle time and the other is ballast-full load and the proportion of time in port.
The basic content is these, the software is VLCC fixtures, this is the first-hand freight rate, and it is the freight rate of each ship, although not every ship will be disclosed on it, but the trend can be seen from the daily orders.
I generally don’t look at the BDTI index, because the index is a comprehensive data and has a lag, which is far less efficient than directly looking at the orders of each ship.
Many times when I say that the freight rate has risen, some people say that the index has not risen, I say that the freight rate has fallen, and many people say that the index has not fallen.
In fact, looking at the freight list was the basic skill of the ship’s night school. At that time, many people would look at it. If the work is done carefully and every ship is tracked, the performance of the ship and the sea energy vlcc can be calculated.
The number of days in operation (the number of days in the order) is multiplied by the freight rate multiplied by the number of ships.
2. About oil transportation and China Merchants Shipping
In fact, I have said a lot about the logic of oil transportation, and most of the logic that can be covered in the future will be covered.
Dialogue with CMES Board Secretary: New Opportunities in Shipping Industry & CMES’s Growth History
The Past and Present of the Tanker Shipping Industry
China Merchants Steamship – Beneficial Target under the Dry Bulk Boom
China Merchants Steamship – Minutes of the performance meeting
The evolution history of China Merchants Steamship
Shipping strategy – the dawn of oil transportation
China Merchants Shipping Annual Report: There will be times when the wind and waves break
I have put up the articles I have written and the videos I have made, including ships and oil transportation.
Many people ask me why I buy ships instead of sea energy for oil transportation, which is actually related to personal preference and risk preference. Oil transportation is really up, and neither of these will be bad. Choice is more important than effort.
When I bought China Merchants Steamship, in addition to oil transportation, I was still doing the growth expectations of the ship. From a long-term perspective, several major mergers and acquisitions of the ship are breaking the cycle and allowing the company to develop more balanced.
The acquisition of Nanjing CSC Oil Tanker has rapidly expanded the tanker fleet, the acquisition of Sinotrans Group has rapidly expanded the dry bulk, ro-ro, and container shipping fleets, and now a large number of LNG fleets are ordered to create opportunities for the prosperity of LNG in a few years.
I think the long-term risk of holding this kind of enterprise is relatively small, and the returns that can be obtained will be very high. Of course, Hai Neng is also good, and radish and cabbage have their own preferences.
In fact, not to mention growth, the profit of ship oil transportation will not be worse than that of Hai Neng. In the middle of 2020, it will be worse than Hai Neng for a period of time. It is also because Hai Neng has just lifted the ban at that time, and the position of the ship is very good, and directly received a bunch of high-priced orders. lead to. Therefore, I think that the sea energy is only equal to the ship oil tanker fleet + LNG fleet, and other dry bulk cargo, container shipping, ro-ro, and special items of ships are all free.
Of course, the market may have different views from mine, so we can compare the performance of the two companies after the oil transportation really starts.
3. The relationship between expectations, freight rates, profits and stock prices
I found that many people think that the problem is a single linear, if the freight rate rises – the stock price rises, you are very relieved, and if the freight rate falls – the stock price falls – ask everywhere. In fact, the problem is not so.
First, the stock price starts before the freight rate. This is due to changes in expectations. When the ship started to rise from 4 yuan, the freight rate was quite poor. At that time, when I talked about the ship, many people would comment on the freight rate. It’s so bad, don’t rush to buy it, if it really goes up, I don’t dare to buy it.
My principle is that it is better to spend time lurking at the bottom than to go up and chase the high.
Second, freight rates and stock prices are not completely synchronized.
Let me give an example, a 1% increase in freight rates has a 2% impact on corporate profits, and a 20% increase in the company’s stock price. In fact, the stock price has completely deviated from the fundamentals and has risen much.
After that, the freight rate continued to rise by 1%, the corporate profit increased by 2%, and the stock price fell by 5%. At this time, there will be a lot of people asking around, why the price of the stock price has risen, and whether the dealer is going to ship it!
Sorry, I can’t answer you, it seems to me to be a return to normal valuation.
Conversely, the freight rate fell by 1%, the performance decreased by 2%, the stock price fell by 20%, and the freight rate continued to fall by 1% the next day, but the stock price rose by 5%. run. It seems normal to me too.
Therefore, the problem should not be too linear, and the relationship between freight rates, performance and stock prices should be comprehensively viewed.
The most important thing here is to have a valuation system of its own and a valuation anchor for a company.
Taking China Merchants Ship as an example, I will calculate the profit of each business line of the ship, dynamically adjust the company’s profit expectations through the freight rate, and then calculate the market value according to my valuation system.
However, this valuation system is different for everyone. Maybe I will give 10pe for ships now. In the future, with the upward trend of the business cycle, I will give 8pe to 6pe or even lower. Normal profit is a valuation system + abnormal profit valuation. The value system, which is not the same.
If you do not have these, there is a high probability that you will not be able to take money from oil transportation, or even lose money here.
The volatility of oil transportation is far more intense than that of container transportation, so there is no harm in learning more.
The big cycle of oil transportation is far from over. I hope everyone can make enough money in oil transportation in the past two years.
$China Merchants Steamship(SH601872)$ $COSCO SHIPPING Energy(SH600026)$
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