The previous article introduced the definition of ROIC and Maersk’s ROIC and invested capital data over the years.
In the first half of 2022, Maersk’s invested capital was close to US$50 billion, with a ROIC of 62.5%, which means that in the past 12 months, Maersk has earned more than US$30 billion after tax through these US$50 billion in assets.
The main assets of the container shipping industry are ships and containers. This article introduces the acquisition cost of container ships and containers.
1. How long does it take for a container ship to launch and how much does it cost?
Data excerpted from COSCO SHIPPING Holdings Annual Report as an example.
1. In 2015, a shipbuilding agreement was signed, 4 ships of 19,000TEU type, the negotiated ship price totaled USD 541.2 million, and the contracted shipbuilding progress payment was paid USD 27.06 million. The progress payment is 5% of the total payment.
2. In 2016, the contracted shipbuilding progress payment of USD 13.53 million was paid. This progress payment is 2.5% of the total payment.
3. In 2017, the contracted shipbuilding progress payment of USD 85.24 million was paid. This progress payment is 15.75% of the total payment.
4. In 2018, the contracted shipbuilding progress payment of USD 318.15 million was paid. This progress payment is 58.79% of the total payment.
5. In 2019, pay the contract shipbuilding progress payment of USD 101.49 million. This progress payment is 18.75% of the total payment.
From the perspective of payment progress, it took 5 years from the signing of the shipbuilding order to the full payment, and the payment in the fourth year accounted for the largest proportion. It is expected that the ship will be launched in the fourth year, and the final payment will be paid in the fifth year.
2. What about building a container fleet?
At the end of 2021, Maersk owned 311 container ships and leased 427 ships, totaling 738 ships, with a total capacity of 4.305 million TEUs.
How much does it take to build such a fleet?
Both the “property, plant and equipment” and “right-of-use assets” assets under Maersk’s balance sheet asset class refer to the acquisition costs of ships and containers.
At the end of 2021, the acquisition cost of ships and containers attributable to “property, plant and equipment” was US$47.804 billion, and the acquisition cost of ships and containers attributable to “right-of-use assets” was US$6.136 billion. The two figures add up to $53.94 billion. In other words, Maersk invested 53.94 billion US dollars to build the current container fleet.
The 2020 COSCO SHIPPING Holdings annual report mentioned the size of the container fleet and its capacity: “As of the end of 2020, the company’s fleet of container ships was 536 vessels and 3,073,684 TEUs, an increase of 3.6% over the end of 2019, and its capacity continued to rank No. 1 in the world. three”
The 2021 COSCO SHIPPING Holdings annual report did not mention the size of the container fleet: “As of the end of the reporting period, the capacity of COSCO SHIPPING Holdings’ self-operated container fleet exceeded 2.94 million TEUs, and the fleet size continued to rank first in the industry.”
It is roughly estimated that by the end of 2021, the size of the COSCO SHIPPING fleet will be around 520 ships, with a capacity of 2.94 million TEUs.
The two assets “fixed assets” and “right-of-use assets” under the asset class of COSCO SHIPPING Holdings’ balance sheet refer to the original book value of ships and containers.
At the end of 2021, the original book value of ships attributable to “fixed assets” was 84.4 billion yuan, the original book value of containers was 21.6 billion yuan, and the original book value of transport ships attributable to “right-of-use assets” was 58.07 billion yuan. The sum of the three data is equal to 168.57 billion yuan, and the RMB: US dollar exchange rate is 6.4639 in the annual report, which is equivalent to the original book value of 26.079 billion US dollars. The ratio of the original book value of the ship to the original book value of the container in “Fixed Assets” is 100:26.
3. The purchase cost per TEU capacity?
The acquisition cost of Maersk is US$53.94 billion, the total capacity is 4.305 million TEUs, and the acquisition cost per TEU is US$12,500.
The original book value of COSCO SHIPPING Holdings was US$26.079 billion, the self-operating capacity was 2.94 million TEUs, and the original carrying capacity per TEU was US$8,900.
COSCO SHIPPING Holdings ordered four 19,000TEU vessels in 2015, with a total negotiated ship price of US$541.2 million, or US$7,120 per TEU. According to the 100:26 ratio between the original book value of the ship and the original book value of the container, the original book value of each TEU is 0.712*1.26=0.90 million US dollars
After purchasing a TEU capacity, how long can the discounted cash flow value be greater than 0?
And listen to the next decomposition.
Tip: Click on “My Column” to see this series of articles. Personal self-questioning and self-answering works, reprints need to indicate the source.
$COSCO SHIPPING Holdings(01919)$ $Orient Overseas International(00316)$ $COSCO SHIPPING Holdings(SH601919)$
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