Damo: Maintaining COSCO Marine Energy's (01138) target price of HK$26 and reaffirming the “increase” rating

The Zhitong Finance App learned that Morgan Stanley released a research report stating that it reaffirmed the “increase” rating of COSCO HNA (01138) and maintained the target price at HK$26; the bank expects COSCO HNA's profit for the third quarter of this year to improve on a quarterly basis, benefiting from increased freight rates and utilization rates.

Management believes that the current sharp rise in freight rates for oversized tankers mainly reflects a drastic tightening of effective capacity, which contrasts with the increase in shipping demand. Recently, the three-year VLCC charter contract in the market had a daily rent of 100,000 US dollars. Management believes this provides a stronger mid-term pricing signal. The company's management expects that most of the sharp rise in freight rates in September will be reflected in fourth-quarter results. In addition, the Strait of Hormuz will disrupt or last longer than expected, supporting the continued bullish market for tanker shipping.

COSCO Marine holds orders for 6 VLCCs, and 6 bareboat leased VLCCs will be delivered from 2027 to 2028. Despite high spot freight prices, management remains cautious about chartering expansion.