The street-beating 1Q22 result will be followed by a big dividend announcement. Besides, once lockdowns in China ease, the release of pent-up demand is likely to push up container shipping rates to new records in 3Q22, so we expect RCL to continue posting strong earnings for quarters ahead.
The current stock price implies a YE22 PBV of only 0.9x and a 2022 PER of 1.7x—cheaper than the YE07 PBV of 1.1x and 2007 PER of 5.0x (before RCL turned a loss for 2008). Current market capital is close to replacement value and cash on-hand comprises 36% of market capital. Hence, we think the current share price has almost priced in the worst-case scenario of a shipping rate collapse (we don’t see that as a plausible threat right now, given prevailing shipping market conditions). So there doesn’t seem to be much risk of further share price downside. Our TRADING BUY call stands unchanged.
Beat with new record high net and core earnings!
RCL announced all-time-high 1Q22 NPAT of Bt8,223m, up by 180% YoY and 1% QoQ. The number was 46% ahead of our estimate (higher revenue per TEU and a lighter cost-of-sales than assumed) and 25% above the consensus. Stripping out extra items, core profit would be Bt8,146m (also a new record), up by 179% YoY and 13% QoQ. The core number was 44% ahead of our estimate (higher revenue per TEU and a lighter cost-of-sales than assumed) and 24% above the consensus.