Cosco Ship Energy 1138 (former China Shipping Development)

[winston]

not vested

COSCO SHIP ENGY(1138)

Analysis：-

COSCO Shipping Energy Transportation (1138) has announced positive profit alert, management expects the company to record a net profit attributable to the equity holders of the comp any for the year ended 31 December 2022 in the range of RMB1.28 billion to RMB1.58 billion, as compared to a net loss attributable to the equity holders of the company of RMB4.99 billion for the year ended 31 December 2021.

The expected profit for the year was mainly attributable to the international oil trade flow has undergone significant change due to the conflict between Russia and Ukraine.

The increase of oil shipping distance and the release of strategic petroleum reserve of the United States has greatly boosted tonne-mile demand during 2022.

Medium and small tankers, as the main beneficiaries of the oil trade flow switch, had a strong rate performance.

Very Large Crude Carrier (VLCC) freight rate started to recover and rose rapidly since the third quarter of 2022, owing to the improvement of the overall tanker market and the increase of long-haul voyages.

In 2022, the international oil shipping segment of the company has realized a gross profit of RMB1.47 billion, representing a year-on-year increase of 218%.

Strategy：
Buy-in Price: $8.35, Target Price: $9.20, Cut Loss Price: $7.60

Source: Phillips

[winston]

not vested

<Research> Jefferies Raises COSCO Shipping Energy (01138.HK) TP to HKD24.6, Reiterates Buy

Jefferies said in a research report that management of COSCO Shipping Energy (01138.HK) believes the VLCC market will enter 2026 in a state of structural tightness rather than facing cyclical peak risks.

On the demand side, continued crude oil imports by China, rising exports from the Middle East and the Atlantic Basin, and India shift toward non-Russian compliant crude are supporting growth in tonne-mile demand.

On the supply side, sanctions, vessel aging and increased floating storage have continued to reduce effective fleet capacity.

The report noted that global newbuilding orders account for only about 22% of the existing fleet, with deliveries postponed to 2029.

By then, about 376 VLCCs will be over 20 years old, compared with only 195 new vessels on order, implying that new deliveries will largely offset scrapping rather than create oversupply.

Therefore, the broker expects VLCC freight rates to remain at structurally high levels in 2026.

Related News: COSCO SHIPPING Energy Transportation (01138.HK) Full-Year Net Profit RMB4.037 Billion; Final Dividend 38 Cents

Jefferies added that conflicts in the Middle East have led to significant security restrictions in the Strait of Hormuz, with more than 70 VLCCs (around 8% of global VLCC capacity) temporarily stranded in the area.

Management expects freight rates in 2026 to remain volatile but at elevated levels.

The broker raised its 2026 earnings forecast for COSCO Shipping Energy by 11% to reflect higher freight rates, and lifted its 2027 earnings forecast by 78% to factor in crude oil restocking demand and longer tonne-miles due to route diversions.

Jefferies increased its target price from HKD10 to HKD24.6 and reiterated its Buy rating.

Related News - Citi: Short-term Oil Prices May Reach USD120 per Barrel, Brent Oil Could Fall to USD75 by Year-end

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN