Today we are going to talk about one of the largest container shipping companies in the world – $ZIM.US $ .

Perhaps this company is little known, but many Niu friends should still remember the crazy situation of global shipping last year: high freight rates and “hard-to-find” containers took turns.

The booming shipping market has not only made shipping companies a lot of money, but also the money bags of shareholders. From the perspective of stock price, after rising more than three times last year, Estar Shipping has risen by nearly 50% this year against the market trend, while the S&P 500 index has fallen by nearly 13% during the same period.

So what kind of company is Star Shipping? How is the performance? Is it worth the investment?

Pioneer of Container Shipping – Star Line

Yixing Shipping was established in 1945, and it only owned its first cargo ship, “Oriental” in 1947, and now it has become one of the top 20 shipping companies in the world. The company successfully landed on the New York Stock Exchange in 2021, becoming the first shipping company to successfully conduct an IPO in the United States in the past five years.

At present, the company’s main business is to provide transportation services on major international routes for customers around the world. Among them, Star Line ranks tenth in terms of capacity, with a capacity of 470,000 TEU, accounting for 1.8% .

It currently has about 30,000 customers, with the top 5 customers accounting for 10% of freight revenue in 2020. The group’s customers are usually end users or intermediaries, including freight forwarders. Over the past five years, end users have accounted for an average of 39% of freight traffic. The star’s size helps it target SME customers , those who can ship 100 TEUs per year.

Different from other shipping companies, the biggest highlight of Star Shipping is that it operates in an asset-light mode . The company ranks as the tenth largest container shipping company with an actual control capacity of 470,000 TEU, and the leased capacity is as high as 94%.

Starship has a fleet mainly of chartered ships and has a global reputation. Compared to other listed shipping companies, Starship’s unique image may bring unique advantages.

And because it is not obsessed with building large ships, Star Shipping can rent the best quality ships at any time according to the needs of the route while maintaining a very good financial and cash flow.

In addition to “not addicted to building big ships”, the company has an independence, that is, it does not join any alliances. The company only cooperates with 2M alliance partners Maersk and Mediterranean Shipping on some routes.

At the same time, with the continuous exploration and innovation of Star Shipping, the company cooperated with Alibaba to carry out cross-border e-commerce services for shipping in October 2020, and reached a strategic cooperation agreement framework for “direct procurement services for shipowners” to enhance Alibaba’s international station. The seller’s logistics service experience.

Best Q1 quarterly results in history, huge dividend announced

Following the record financial results achieved in 2021, Yixing Shipping is off to a good start in the first quarter of this year.

In the first quarter, Yixing Shipping’s container volume reached 859,000 TEU, a year-on-year increase of 5%; the freight per container reached US$3,848, a year-on-year increase of 100%; the operating income reached US$3.716 billion, a year-on-year increase of 113%; net profit reached US$1.711 billion, a year -on-year increase. Up 190%; free cash flow increased to $1.483 billion.

In addition, there is a bright spot in the financial report, the company announced that it will pay a dividend of 342 million US dollars, or 2.85 US dollars per share, which is equivalent to 20% of quarterly net profit.

The company’s CEO Eli Glickman said that based on the current strong performance, considering that the long-term freight rate in 2022 is much higher than the level in 2021, the company has raised its annual performance forecast. It is expected that the adjusted EBITDA in 2022 will reach 7.8-8.2 billion US dollars, EBIT reached 6.3-6.7 billion US dollars.

Is this company worth holding for the long term?

Currently, under the impact of the new crown epidemic and the Russian-Ukrainian war, the global shipping industry is experiencing the strongest and most volatile market ever. In the first few months of the 2020 Covid-19 outbreak, major global container shipping lines were shut down on a massive scale. When U.S. demand rebounded sharply last year, the continued tightness in capacity caused freight rates to soar. Spot rates have been well below their highs since the start of the year.

CITIC Construction Investment stated that the worst time for container shipping has passed, the freight rate has bottomed out during the year, and the negative two-month epidemic has passed. The freight rate of the South American line has already begun to rise, and some shipping companies have raised the European line. In addition, after the unsealing of the epidemic in Shanghai, there will be a wave of shipments, and freight rates will rise again.

And with Star Shipping as an excellent shipping company, it benefits from the huge dividends brought by the increase in shipping costs. In addition, it remains unique in the asset-heavy shipping industry – it does not blindly pursue the scale of shipping capacity, and insists on operating in an asset-light manner mainly in the form of leasing. At the same time, it can quickly and flexibly adjust the operation mode and route network according to market changes.

And the company’s current dividend yield is as high as 29%. In the current turbulent market, high-dividend stocks may be one of the best choices for investors.

The current average price target for Star Line by Wall Street analysts is $75.2 , implying a potential upside of 10% from the latest closing price.

However, investors need to pay attention to the following risk points:

1) The company has the operating characteristics of leased fleet and a high proportion of spot freight. Although these characteristics make the company more flexible when the cycle is booming, when the cycle is down, the company’s profitability is also greatly affected by the fluctuation of freight rates.

2) When the epidemic gradually subsides and the disturbance to the supply side of the industry caused by the supply chain crisis in Europe and the United States dissipates, the rapid restoration of the effective capacity of the market may bring the industry back to the past development dilemma of oversupply.

3) Under the trend of alliance operation, the advantages of the head will expand, and long-term development may be an unfavorable factor for Yixing.

From a single ship in the beginning to a huge fleet today, Star Shipping has spanned more than half a century. The wheels of history are rolling forward. Where will this “big ship” sail in the future? Maybe it’s worth looking forward to~

This article is reprinted from: https://news.futunn.com/post/15908152?src=3&report_type=market&report_id=206701&futusource=news_headline_list
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