Cosco Shipping Shares Jump Despite Profit Warning

Cosco Shipping Holdings shares jumped in Hong Kong as investors shrugged off the company’s profit warning and welcomed analysts’ optimism about the stock’s attractive valuations.

The stock rose as much as 6.4% and was recently 5.4% higher at 7.80 Hong Kong dollars (US$1.00).

Tuesday’s rally was Cosco Shipping’s third straight day of gains, as buying interest got a boost from a stock upgrade by Citi analysts.

It came despite the company’s guidance Monday for a 64% drop in first-half net profit on lower freight rates in the container shipping industry as trade activity and demand for physical goods cooled.

In a note Friday, Citi analysts said the Asia shipping industry has proved more resilient than expected amid a dim demand outlook due to global economic slowdowns. “Liners have been disciplined on capacity to avoid a full-blown price war thus far,” they said.

Citi upgraded Cosco Shipping to buy from sell and raised its target price to HK$8.20 from HK$6.80, citing “undemanding valuations and a positive risk-reward [profile].”

“When the ongoing capacity discipline meets the demand pickup we expect in 2024, the stock could rerate,” the analysts said.

Source: Hellenic Shipping News

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