China Shipbuilding Industry Group Co., Ltd. (CSIC) is an A-Shares listed company (stock code 600482), headquartered in Baoding, Hebei Province. It was listed on the Shanghai Stock Exchange in July 2004.
- Industry: CSIC is a constituent of the machinery industry; railway, shipbuilding, aerospace and other transportation equipment manufacturing (according to CSRC industry classifications)
- Products: CSIC covers seven major areas: gas power, steam power, chemical power, all-electric power (including electric propulsion), civil nuclear power, diesel engine power and hot air power. The products are widely used in automobiles, ships and marine engineering, construction machinery, petrochemicals, land power stations, civil nuclear power and distributed energy fields. CSIC is the full range of power equipment suppliers in China and around the world.
- Market: The company’s operating revenue is mainly from the domestic market (90%).
Source: www.eastmoney. com
CSIC’s semi-annual report for 2018 shows an operating income of ¥11.968 billion with a YoY increase of 2.81%. The main revenue is from non-marine civilian products, ¥7.60 billion with a YoY increase of 12.56%; the military products income was ¥1.966 billion with a YoY decrease of 6.17% and marine civilian product income was ¥2.40 billion with a YoY decrease of 14.10%. Net profit attributed to the parent company (China Shipbuilding Industry Corporation) was ¥617 million with a YoY increase of 10.04%.
The company’s expenses were ¥ 873 million with a YoY decrease of ¥151 million. Sales expenses increased slightly, and both management and financial expenses decreased (the significant increase in the three expenses from 2016 due to the restructuring of the company, see below for details).
Characteristics of the Shipbuilding Company
- The Only Domestic Leader of the Power Sector
- Gas Turbine Technology Breaks Monopoly; The Performance of CSIC Gas Turbine Sectors Will Grow Rapidly
- Monopoly; Nuclear Equipment Supply on Aircraft Carrier Production
Domestically, the electric propulsion industry has high barriers to entry and the market is monopolized. At present, CSIC and Xiangtan Electric Manufacturing dominate the domestic Electric Push manufacturing market. CSIC accounts for 60% of the domestic market share. Electric propulsion is one of the main sources of profit for CSIC. Its gross profit margin in 2017 was 33% (2nd highest).
Potential Cautions for the Industry
- The Company’s Power System Technology Has a Long R&D Cycle and High Failure Rate
- The Slowdown in the Reform of Research Institutes Leads to the Process of the Group’s Asset Securitization Being Slower Than Expected