Citigroup issued a report saying that the long-awaited trans Pacific contract allows shipping companies to transform the Red Sea interference into a catalyst for net profits from this year to the first half of next year. As we move towards the peak season of the third quarter, due to the tight supply of short-term transport capacity but the recovery of demand, it is expected that the shipping rate will further rise; However, the Red Sea interference is not a powerful tool for shipping companies, because new capacity will be available in the next two years.
The bank said that COSCO Marine Holding's current valuation is equivalent to 0.9 times of the predicted market book ratio, with room for improvement. The target price is HK $14, reiterating its "buy" rating.
The average freight rate of shipping companies in the Asia Pacific region covered by the bank is expected to rise by 20% this year, and fall by 14% and 8% respectively in the next two years; This means that the average core return on equity of the shipping companies covered from 2024 to 2026 is 11%, 3% and 1% respectively.
