Growth slows at Sinotrans as it begins life as a listed company

Sinotrans has received the AEO certificate issued by Beijing Customs, which is considered to enhance the company’s competitiveness.

2018 was another year of growth of Sinotrans, albeit at a lower clip than one year earlier given subdued extraordinary corporate activity, which is also implied in its total assets value, down 1% to CNY*61.5bn ($9.2bn) last year.

Revenues rose 5.7% to CNY77.3bn ($11.6bn), with total pre-tax profits up 9% to CNY4.1bn ($615m) and earnings per share surging 17.4% to CNY0.45, given CNY2.7bn of net income.

By comparison, in 2017 its top line and operating income rose almost 22% against 2016’s restated figures.

Remarkably, sea freight volumes and contract logistics soared 11.6% and 13.9%, respectively, with rising sales of CNY1.5bn in freight forwarding; CNY1.65bn in logistics; and CNY180m in storage and terminal services.

Net cash flow from operating activities (OCF), down to –CNY1.2bn in the first quarter, was almost fully offset by an aggregate positive OCF of CNY1.1bn in the second and third quarters and received a fillip at the end of the year, with fourth-quarter OCF coming in at CNY2.1bn.

External revenues for its core freight forwarding operations rose 3.3% to CNY47.6bn – about 80% was export business – against CNY46bn in 2017, but profits were flat at CNY1.1bn.

The sea freight forwarding business “mainly covers the routes between China and in Asia, Europe and America, accounting for approximately 47%, 18% and 16% of the sea freight forwarding business respectively”.

Meanwhile, external revenue for its second-largest unit – logistics – amounted to CNY20.5bn, up 8.8%, with profits at CNY697m (+7.3%), mainly driven by the increase in logistics services volume.

In his remarks to all stakeholders, chairman and president Li Guanpeng noted that “2018 witnessed a moderate growth of the world economy and a slackened momentum.”

“China’s economy sought progress while maintaining stability [and] (…) shifted from a stage of rapid growth to a stage of quality development” as foreign trade kept “a steady growth” with imports and exports hitting record highs, “whereby China could hopefully maintain the world’s largest trading nation in commodities”.

GDP recorded a year-on-year growth of 6.6%, he noted, while the total value of imports and exports of commodity trade in China rose by 9.7%. The total value of imports and exports in China “denominated in US dollar increased by 12.6% year-on-year, of which, exports and imports increased by 9.9% and 15.8% respectively.”

The board of directors has approved a proposed final dividend per share (DPS) of CNY0.13, based on the total share capital of 7,400,803,875 shares upon listing of A shares of the company.

Last year, its DPS grew to CNY0.08 from CNY0.075 in 2016.

On 18 January 2019, the company was listed on the Shanghai Stock Exchange.

Source: Transport Intelligence, April 2, 2019

Author: Alessandro Pasetti

 * CNY 7.66 = € / CNY 6.27 = $