At the end of the first half of the year, the market value and position of the public offering held in the shipbuilding sector have both set new historical records, and the same is true for the Northbound Capital.

Fund managers have analyzed from various dimensions and concluded that the prosperity of the shipbuilding sector is expected to continue to rise.

The reorganization announcement issued by China Shipbuilding and China Shipbuilding Industry Corporation on September 3, and the export data released by the General Administration of Customs on September 10, have raised the market's expectations for the shipbuilding sector.

According to the reorganization announcement, China Shipbuilding is planning to absorb and merge China Shipbuilding Industry Corporation by issuing A-shares to all shareholders of the latter, in order to "further focus on the country's major strategies and the main responsibilities of strengthening the military through equipment, accelerate the high-quality development of ship assembly business, plan for the competition of the same industry, and improve the operating quality of the listed company."

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The export data from the General Administration of Customs shows that from January to August 2024, 3,888 ships were exported, with an export value of 202.55 billion yuan, an increase of 27.30% and 81.00% respectively year-on-year.

Looking at the public offering holding data, at the end of the first half of the year, the market value and position of the shipbuilding sector (limited to the constituent stocks of CITIC Shipbuilding Index) have both set new historical records, and the Northbound Capital is also the same.

Fund managers have analyzed from various dimensions and concluded that the prosperity of the shipbuilding sector is expected to continue to rise, and some even believe that the high prosperity will be maintained for the next 4 years.

The performance is eye-catching, let's first look at the performance.

The mid-year report data shows that the performance growth rate of China Shipbuilding and China Shipbuilding Industry Corporation in the first half of the year is very eye-catching.

The former's operating income in the first half of the year was 36.017 billion yuan, and the net profit attributable to the parent company was 1.412 billion yuan, both at the highest level in history, increasing by 17.99% and 155.31% respectively year-on-year.

The latter's operating income was 22.102 billion yuan, and the net profit attributable to the parent company was 532 million yuan, both at the highest level since 2017, increasing by 31.05% and 177.13% respectively year-on-year.

Among the other 5 constituent stocks of CITIC Shipbuilding Index, except for the decline of 7.55% in operating income of Asia Anchor Chain, all have increased, Jianglong Boat, China Shipbuilding Technology, Tianhai Defense, and ST Ruike increased by 76.50%, 58.62%, 3.31%, and 51.85% respectively.

In terms of net profit attributable to the parent company, Tianhai Defense, China Shipbuilding Technology, and ST Ruike decreased by 6.07%, 260.05%, and 29.91% respectively year-on-year, while Jianglong Boat and Asia Anchor Chain increased by 62.21% and 26.52% respectively.

In general, the operating income and net profit attributable to the parent company of CITIC Shipbuilding Index increased by 23.26% and 114.32% respectively year-on-year in the first half of the year.

Therefore, although the index has risen by 8.11% this year, its valuation level has decreased, from 112.34 times at the beginning of the year to 79.29 times.

From the perspective of gross profit, the gross profit of the index in the first half of the year was 6.869 billion yuan, an increase of 42.54% year-on-year, and the gross profit margin increased from 9.23% last year to 10.68%, an increase of 1.45 percentage points.

Looking at the contract liability, among the 7 constituent stocks of CITIC Shipbuilding Index, there are 4 with a decline in contract liability year-on-year at the end of the first half of the year, namely Tianhai Defense, Jianglong Boat, ST Ruike, and Asia Anchor Chain, while China Shipbuilding, China Shipbuilding Industry Corporation, and China Shipbuilding Technology have increased.

Overall, the contract liability of the index increased by 18.32% year-on-year, and has been increasing for 4 consecutive years since 2020.

According to the data from Choice of East Money, at the end of the first half of 2020, the total contract liability of CITIC Shipbuilding Index was 52.8 billion yuan, and in the same period from 2021 to 2024, it was 80 billion yuan, 86.7 billion yuan, 98.1 billion yuan, and 116 billion yuan respectively, with a compound annual growth rate of 21.75%.

The "2024 First Half-Year Ship Statistics" released by China Shipbuilding Industry Association shows that in the first half of the year, the completion volume of China Shipbuilding was 25.02 million deadweight tons, the new order volume was 54.22 million deadweight tons, and the order backlog was 171.55 million deadweight tons, an increase of 18.40%, 43.90%, and 38.60% respectively year-on-year.

The data also shows that by the end of the first half of the year, the Clarkson New Ship Price Index was 187.23 points, up 55% from the 121 points when the market started in 2020, only one step away from the historical highest point (191.6 points).

The historical high of public offering position is from the public offering holding, its holding market value and position of the shipbuilding sector have both set new historical records.

According to the data from Choice of East Money, at the end of the first half of the year, the market value of the shipbuilding sector held by the public offering was 30.8 billion yuan, an increase of 61.08% compared to the beginning of the year, exceeding the increase of CITIC Shipbuilding Index (22.36%) by 38.72 percentage points.

At the same time, the holding ratio of the public offering to the shipbuilding sector (the proportion of the holding market value to the circulation market value of CITIC Shipbuilding Index) increased from 20.96% at the beginning of the year to 27.40%, an increase of 6.44 percentage points.

Historical data shows that the public offering started to increase its holding of the shipbuilding sector in the first half of 2021, with a holding market value of 2.9 billion yuan at the end of the period, an increase of 46.48% compared to the beginning of the year.

At the end of 2021, the holding market value increased to 7.9 billion yuan, and then slightly decreased to 6.7 billion yuan at the end of the first half of 2022, and then increased continuously for 4 and a half years, and for the first time exceeded 10 billion yuan at the end of 2022, reaching 11.4 billion yuan, and the holding market value at the end of the first half of 2023 and the end of the year increased to 17.6 billion yuan and 19.1 billion yuan respectively.

By the end of the first half of the year, the market value of the shipbuilding sector held by the public offering has increased by 14.41 times compared to the beginning of 2021, and the increase of CITIC Shipbuilding Index during the same period is 68.59%, ranking 13th among the 284 CITIC third-level industry indexes.

At the same time, the holding ratio of the public offering to the shipbuilding sector increased from 2.61% at the beginning of 2021, to 3.89% at the end of the first half of 2021, and to 8.48% at the end of 2021, and then slightly decreased to 8.18% at the end of the first half of 2022, and then increased to 14.82%, 16.57%, and 20.96% in the next 3 and a half years.

By the end of the first half of the year, the weight of the shipbuilding sector in the A-share market value held by the public offering was 0.61%, over-allocated by 0.44 percentage points, the over-allocation increased by 0.21 percentage points compared to the beginning of the year, and increased by 0.28 percentage points year-on-year.

Moreover, from the data, the types of funds holding the shipbuilding sector have become richer compared to the beginning of the year, and even QDII and retirement target risk FOF directly invest in related targets, such as Harvest Global Industry Selection directly investing in China Shipbuilding, and Tianhong Yongfeng Steady Retirement Target One Year Holding (FOF) directly investing in China Shipbuilding Industry Corporation.

Corresponding to the development momentum of index funds - the scale increased by 16.59% at the end of the first half of the year compared to the beginning of the year - the investment strength of index funds, including ETFs, in the shipbuilding sector has been strengthened.

By the end of the first half of the year, the proportion of index funds in the shipbuilding sector held by the public offering was 39.13%, an increase of 4.04 percentage points compared to the beginning of the year.

However, there are differences in individual stocks.

Taking China Shipbuilding Industry Corporation as an example, the market value held by index funds at the end of the first half of the year accounted for 46.65% of the market value held by the public offering, a decrease of 14.28 percentage points compared to the beginning of the year.

At the same time, China Shipbuilding increased from 31.10% to 36.24%, an increase of 5.14 percentage points.

From the perspective of fund companies, the top three in terms of market value of the shipbuilding sector held at the end of the first half of the year are Huaxia, Yifangda, and Zhongou Fund, accounting for 11.97%, 9.98%, and 9.82% of the market value held by the public offering respectively.

The fund companies with the largest increase in holding market value during the same period are Yifangda, Fuguo, and Huaxia Fund, with an increase of 1.718 billion yuan, 1.55 billion yuan, and 1.499 billion yuan respectively compared to the beginning of the year, an increase of 131.18%, 212.85%, and 70.35% respectively.

However, some fund companies have cleared the shipbuilding targets, such as Xingye Asset Management, Hongli Fund, etc.

From the perspective of position changes, the shipbuilding targets that were increased by the public offering in the first half of the year are mainly China Shipbuilding, China Shipbuilding Industry Corporation, and China Shipbuilding Technology, and the rest of the targets have been reduced to varying degrees.

It is worth mentioning that the holding of the shipbuilding sector by the Northbound Capital has also reached a historical high at the end of the first half of the year.

According to the data from Choice of East Money, by the end of the first half of the year, the market value of the shipbuilding sector held by the Northbound Capital was 7.6 billion yuan, an increase of 1.37 times compared to the beginning of the year, and the holding ratio of the sector increased from 1.25% at the beginning of the year to 2.38%, an increase of 1.13 percentage points.

As for the second half of the shipbuilding sector, fund companies such as Huatai Bo Rui, Heng Yue, Dongfang, Bosi, Huafu, Jing Shun Great Wall, Huaan, Tongtai, and Zhongyou all hold an optimistic attitude.

Wang Linjun of Huatai Bo Rui, Zhao Jiong of Heng Yue Fund, Wang Fangling of Dongfang Fund, and other fund managers mentioned in the mid-term report that when talking about the prosperity of the sub-sector, they all believe that the prosperity of the shipbuilding sector is upward.

Huang Jichen of Bosi Fund even mentioned "accelerating prosperity".

Zou Hui, the general manager of the equity investment department of Xingye Fund, and Sun Hui of Yinhua Fund, based on the analysis of the supply and demand relationship, also came to a similar conclusion.

Zou Hui believes that the demand expectation of ships is stable, and Sun Hui believes that the industry has a supply-side logic, and the supply logic is still there, and it is still worth investing.

Deng Xiang of Huafu Fund even believes that the shipbuilding industry has a prosperity of 4 years.

The reason is that the tense international situation has disrupted the optimal maritime trade routes, leading to an increase in the average length of the routes, which in turn leads to a significant increase in the demand for global ship transportation capacity; on the supply side, the number of shipyards is still decreasing every year, and this supply-demand mismatch is difficult to reverse in the short term, so the shipyard orders have always been in a relatively saturated state, and the new ship prices continue to rise, "the orders in hand can ensure the continuous high prosperity for about 4 years in the future."

Considering the characteristics of shipyards as heavy assets, heavy labor, and heavy capital, Zhou Hanying of Jing Shun Great Wall believes that the "profit expansion of the shipbuilding sector is non-linear, and due to the constraints of supply, it is expected that the continuous prosperity time will be longer than the last round.

"Wang Bin from Huaan Fund, Yan Yicheng from China Post Fund, and Yang Zhe from Tongtai Fund all see potential in the export capabilities of the shipbuilding sector, but their focus varies.

Wang Bin believes that ships are export products with high technological value-added.

Yan Yicheng considers ships to have a "global advantage" just like home appliances, power transmission and distribution equipment, and commercial vehicles.

Yang Zhe, on the other hand, suggests that although the direction of going overseas is easily disturbed by overseas situations, it is still appropriate to participate in export directions that "cannot do without China," with ships being one of them.