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