Huatai Securities published a report stating that since the beginning of this year, due to strong export demand and the effect of shipping avoiding the Red Sea, container freight rates have risen sharply, and the market is highly prosperous. Looking forward to the second half of the year, the bank expects that sailing around the Red Sea may continue and route adjustments may lead to an increase in transshipment volume, and since May, port congestion has gradually appeared. In terms of demand, the traditional peak season in Europe and America will come in the third quarter, and the volume of goods will increase by season, with freight rates expected to rise further by season. In the medium and long term, it is expected that new ships will be added from 2023 to 2026, but the industry restructuring will cause structural changes in capacity deployment, the addition of new capacity in emerging markets will significantly increase the demand for ton-miles and push up the industry's profit center.

Considering the upward trend in freight rates, the Bank has revised up its net profit forecast for COSCO SHIPPING Holdings Ltd. (01919.HK) from 2024 to 2026 to RMB 58.6 billion, RMB 16.4 billion and RMB 24.5 billion respectively. The original forecast was RMB 24.6 billion, RMB 16.1 billion and RMB 23.3 billion. The valuation premium is mainly due to the current industry prosperity. The target price of H shares has been raised from HKD 11.5 to HKD 19.8, assuming a dividend payout ratio of 50%, corresponding to a full-year dividend yield of 10%, and reiterating the "Buy" rating.

Huatai Securities expects that COSCO SHIPPING Holdings Ltd.'s net profit this year will be RMB 58.6 billion, based on an annual increase of 50% in the average freight rate of the European and Trans-Pacific routes. As of the end of the first quarter, the company had cash of RMB 174.4 billion, and it is expected that by the end of the year, the company's cash will further increase to RMB 202.1 billion.