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<Research> Jefferies Raises COSCO Shipping Energy (01138.HK) TP to HKD24.6, Reiterates Buy
Recommend 8 Positive 5 Negative 4 |
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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 Indias 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. 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. (ec/w) This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. Auto-translated by AI AASTOCKS Financial News |
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