The average freight rates for carriers in the Asia-Pacific region covered by Citigroup are expected to rise 20% this year, and drop 14% and 8% respectively in the next two years.
The Zhitong Finance App learned that Citi released a research report stating that it reaffirmed the COSCO Maritime Control (01919) “buy” rating, saying that the current valuation is equivalent to 0.9 times the predicted market account ratio, with room to rise, and the target price is HK$14. The average freight rates of carriers in the Asia-Pacific region covered by the bank are expected to rise 20% this year, and fall 14% and 8% respectively in the next two years; this means that the average return on core equity for the covered carriers between 2024 and 2026 is 11%, 3%, and 1%, respectively.
The bank said that the long-awaited trans-Pacific agreement allows shippers to turn Red Sea disturbances into a catalyst for net profit from this year to the first half of next year has been achieved. Towards the peak season in the third quarter, shipping rates are expected to rise further due to tight short-term capacity supply but a recovery in demand; however, Red Sea disruptions are not a powerful tool for shippers, as new capacity will be supplied one after another for the next two years.