Citibank: Lowering COSCO Offshore's (01919) rating to “sale” and reducing the target price to HK$12.1

The Zhitong Finance App learned that Citi released a research report saying that the 2026 net market ratio covering the three Asia-Pacific liner companies is about 0.8 times, and the return on equity is estimated to be about 5% to 9%. The bank believes that COSCO SHIPPING's (01919) stock price has risen by about 20% year on year since the beginning of the year, and the intensification of trade tension between China and the US has brought negative risks and rewards, so it downgraded COSCO SHIPPING's H share rating from “buy” to “sell” in one fell swoop. The target price for H shares was also reduced from HK$13.3 to HK$12.1. Citigroup indicated that Evergreen Shipping is now the only one of the three Asia-Pacific liner companies covered by the bank to receive a “buy” rating because it should benefit from the Ocean Alliance's capacity adjustments and additional port charges for ships manufactured in mainland China by the United States Trade Representative.

The most common discussion with investors is whether the Asian shipping industry (investment story) has been completed and how to allocate positions. Citi believes that based on the equal tariff rate in early April, the container industry still has room for development in the second half of the year. Shipments from US retailers have slowed moderately, while container imports have declined year over year since May, meaning demand for restocking. Furthermore, the industry's supply of new total tonnage will gradually slow down by 2026.