Gelonghui, January 10 | Damo released a report saying that COSCO Offshore's net profit last year according to China's accounting standards was 24 billion yuan, a year-on-year decrease of 78.2%. This means that the recurring net profit for the fourth quarter of last year was 1.8 billion yuan, a sharp decrease from 5.5 billion yuan in the third quarter. Profit before interest and tax was 3.4 billion yuan, also down from 8.5 billion yuan in the third quarter. Damo believes that COSCO Offshore's profit last quarter was lower than expected. Assuming a dividend payout ratio of 30 to 50%, COSCO Offshore's implied dividend rate for the second half of last year was 2 to 3%, which is not attractive. Also, a short-term rebound in freight rates may lead to an increase in profits in the first quarter of 2024, but the downward cycle caused by oversupply is not over yet. And any sign of normalization of Red Sea shipping would be a negative stock price catalyst. The bank rated COSCO Offshore Control as “reduced holdings”, with a target price of HK$6.