HSBC raised COSCO Shipping’s target price to HK$9, upgraded rating to Buy

 

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COSCO Shipping Holdings’ preliminary EBIT came in at 24.7 billion yuan in the first half of 2023, with a net profit attributable to shareholders at 16.6 billion yuan, which implied that the company’s EBIT in the second quarter was 15.4 billion yuan, up 66% quarter over quarter, HSBC Global Research said in a note. 

The broker believed that earnings improvement was due to robust renewed contract rates and steady spot freight rates under stabilized volumes and more importantly continued cost control.

While the industry remained uncertain on whether a normal peak season will emerge from the third quarter of 2023, HSBC Global Research contended that the the worst inventory correction period has passed, with volume normalizaiton and sequential improvement expected to occur in the rest of the year.

The broker raised the forecast of the company’s 2023 revenue and net profit by 3% and 34%, respectively. The target price on the stock was added from HK$8.4 to HK$9, with its rating upgraded from Hold to Buy.