Goldman Sachs' research report indicates that the management of COSCO Shipping Holdings (01919.HK)(601919.SH) remains cautiously optimistic about the long-term freight rate performance of the industry. This is due to the fact that more than 25% of the existing cargo ships will be over 20 years old between 2028 and 2030, necessitating their retirement. Meanwhile, freight volumes are experiencing robust growth, particularly on routes to Southeast Asia, Europe, and Africa.
Management also noted a rebound in spot freight rates in October, primarily driven by Black Friday and the advance shipments resulting from the originally scheduled U.S. tariff hikes on Chinese goods. As for the better-than-expected third-quarter earnings, management attributed this to strong freight rate performance, given the company's higher proportion of intra-Asia routes, as well as superior cost control compared to its peers.
Based on its financial performance, the firm has raised its net profit forecasts for 2025 to 2027 by 25% to 46%, mainly reflecting better-than-expected third-quarter earnings and the delayed collection of port fees at U.S.-China ports; the H-share target price has been increased from HKD 11.5 to HKD 12.5, and the A-share target price from CNY 14.7 to CNY 16, maintaining a 'Neutral' rating.