Xiaomo: Reiterates COSCO Haineng's (01138) “Gain” Rating Proposal to Take Advantage of Low Absorption

The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that it reiterated its “plus” rating for COSCO Haineng (01138), with a target price of HK$29. Investors are advised to take advantage of the low absorption, pointing out that oversized tankers (VLCC) freight rates weakened for most of last week. This is believed to be due to the fact that extreme logistics bottlenecks began to ease in September until last Thursday (1st), reflecting an increase in basic freight demand, not just a return of port congestion.

The bank pointed out that it has now seen three positive signs, including the reopening of Saudi Arabia's Yanbu Port, the transfer of ship-to-ship transfers from congested Oman, and more Indian refiners directly entering the Strait of Hormuz to release some capacity; freight rates on routes from West Africa to China, the Gulf of America to China, Oman to China and Hormuz have rebounded last Thursday, reflecting the rapid absorption of newly released capacity. Motong expects that the attack on the tanker will maintain the risk premium in the Hormuz freight rate, and that strong freight rates will also expand from VLCC to Suez and Afula tankers.