$ZIM$-The Shipping stock hits 15-month high, Is There Still Room to Run?

​$ZIM Integrated Shipping Services Ltd.(ZIM)$ is one of the largest container shipping corporation in the world, and its main business is to provide transportation services to customers all over the world on major international routes.

Benefiting from the record high freight and preparing to pay dividends to shareholders on a large scale, the share price of ZIM has risen for eight consecutive months. Based on the IPO price of US $15, the share price of ZIM has risen to US $85.24, an increase of nearly five times. The unexpected performance is the catalyst for the soaring share price.

The epidemic has become a key turning point for ZIM and other shipping companies around the world. Driven by the strong demand from Europe and the United States, the global container freight rate has soared rapidly since the second half of 2020. Under the epidemic dividend, ZIM was successfully listed on the New York Stock Exchange in January 2021, becoming the first shipping stock successfully listed in the United States in six years.

In the past year, the stock prices of major airlines have soared together with freight rates, and the hot shipping market has made shipping companies earn a lot of money. The main reason why these shipping companies make profits is the soaring freight rates.

In the past year, the demand for cargo transportation was strong. However, due to port congestion, container shortage, ship delay and other reasons, the effective capacity could not keep up with the demand, and the freight rate also soared. So far, there is still no ceiling.

Taking ZIM as an example, the average freight of the company was USD 1,550/TEU in 2020 and USD 2,786/TEU in 2021, an increase of 79.7% year-over-year.

A number of international shipping companies have successively announced their annual results and forecasts for 2021, and their profits have increased several times.

In 2021, the total revenue of ZIM was 10.7 billion US dollars, a year-on-year increase of 170%%；The net profit was 4.65 billion dollars, a year-on-year surge of 790%; Cash flow from operating activities was 5.97 billion dollars, up 580% year-on-year. This is the highest annual revenue, EBITDA, net profit and cash flow in the company's history.

Behind the surge in profits, expanding capacity is still the mainstream direction of the development of shipping company Weilai. Last year, ZIM signed four charter agreements for 36 new shipbuilding to meet the growing demand for capacity.

Besides, ZIM also showed a better growth level than its peers. In 2021, the freight volume was 3.481 million TEU, a year-on-year increase of 23%, higher than the industry average of 6%; Seventeen new airline services were launched, which made the growth rate of satellite freight volume three times that of global freight volume.

Under the background of excellent performance in 2021, it is predicted that the adjusted EBITDA will be 7.1 billion-7.5 billion US dollars and the adjusted EBIT will be 5.6 billion-6 billion US dollars in 2022.

For 2022, ZIM expects the spot container freight rate to be normalized to a certain extent in the second half of this year, but warns that there is no trace of demand slowdown and no significant capacity growth this year, and the supply chain interruption is likely to last until 2023 and keep the freight rate at a high level.

Therefore, shipping stocks are still in a high boom cycle at least in the first half of the year, and stock prices may still go up.