In a report released yesterday, Andrew Lee, CFA from Jefferies upgraded COSCO SHIPPING Holdings Co (CICOF – Research Report) to a Buy, with a price target of HK$14.60.
Andrew Lee, CFA has given his Buy rating due to a combination of factors impacting COSCO SHIPPING Holdings Co. His analysis indicated that container spot freight rates have significantly increased to their highest level since September 2022, driven by successful rate increases on major shipping routes from Asia to Europe and the United States. Lee’s assessment is rooted in the current Red Sea situation, which has diverted shipping away from the Suez Canal, contributing to higher freight rates that are likely to persist into the third quarter of 2024. He anticipates that the tight capacity, aggravated by the peak shipping season starting in June, will further strain resources and support the continuation of elevated freight rates.
Moreover, despite the long-term concerns regarding the large number of new vessel deliveries expected by the end of 2025, which could lead to an oversupply in shipping capacity, Lee maintains a positive short-term outlook. He believes that the container shipping market has effectively absorbed the influx of new vessels thus far, and the higher-than-anticipated freight rates will sustain profitability in the near term. Consequently, Lee’s revised earnings projections reflect this trend, leading to an upgrade of COSCO SHIPPING Holdings Co to a Buy rating, as he expects the company to benefit from the current and forthcoming rate dynamics, preferring pure-play container shipping companies over diversified maritime conglomerates.
In another report released on April 30, HSBC also upgraded the stock to a Buy with a HK$11.50 price target.
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COSCO SHIPPING Holdings Co (CICOF) Company Description:
COSCO SHIPPING Holdings Co. Ltd. engages in the provision of container shipping, managing and operating container terminals and container leasing services. It operates through following business segments: Container Shipping, Container Terminal, and Corporate and Other Operations. The company was founded on March 3, 2005 and is headquartered in Tianjin, China.
