According to a research report published by Bank of America Securities, COSCO SHIPPING's net profit performance for the first quarter of the 2024 fiscal year was basically in line with the bank's forecast. However, international freight rates increased by 4% quarterly and decreased by 3% year-on-year during the same period; as for the same period, domestic freight rates fell 6% year-on-year. The bank said the above rate performance was disappointing. The bank also indicated that the company's ship leasing and liquefied natural gas business revenue was ahead of the bank's expectations, but the company's 15% effective tax rate for the first quarter of this year was lower than expected. Bank of America Securities quoted COSCO SHIPPING port management as saying that due to sluggish supply and increased exports from non-OPEC countries, crude oil tanker fundamentals are expected to show a positive trend. However, the company also acknowledged that changes in seasonality, trade patterns, and refining plans will cause fluctuations.
Due to the weak performance in the first quarter of this year, difficult business conditions in the second quarter, and the forward curve of very large tankers (VLCCs), the balance of payments will be in balance in the second and third quarters. As a result, the bank assumes that this year's international tanker freight rates will be relatively flat last year, and growth is expected to resume in 2025. The bank lowered COSCO SHIPPING Port's earnings per share forecast for the 2024-2026 fiscal year by an average of 1%. At the same time, it is assumed that interest rates will fall from year to year, which will particularly affect the domestic tanker business. However, improved revenue from the ship leasing and liquefied natural gas business, combined with increased international sales volume, will be sufficient to offset the above effects. Bank of America Securities raised the target price of COSCO SHIPPING from HK$10.5 to HK$11, with a “buy” rating.