Goldman Sachs: COSCO Shipping Energy (1138.HK) FY25 Results Review: Missed on Delayed High TCE Recognition; Management Guides Normal Load Factors Outside the Gulf
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COSCO Shipping Energy reported FY25 net profit of RMB 4.0 billion, with 4Q25 recurring profit of RMB 1.3 billion missing Visible Alpha consensus by 35%. This miss stemmed primarily from a timing lag between revenue recognition and industry booking TCE, alongside higher charter-out exposure. The company declared a final dividend of RMB 0.38 per share, yielding a 51% payout ratio based on recurring profit.
During the earnings call, management noted that 4Q25 recognized VLCC spot TCE exceeded $70,000 per day, with partial recognition delayed into 1Q26. The company currently has eight vessels, including three VLCCs and three LR2s, trapped inside the Persian Gulf. Since cargo is already loaded, these vessels cannot collect demurrage. To mitigate disruptions, COSCO diverted over 10 VLCCs to routes including Yanbu, Brazil, the US Gulf of Mexico, and West Africa. Yanbu is prioritized due to shorter voyage times, achieving TCE of $170,000–$180,000 per day. Management estimates that over 70 VLCCs are currently trapped globally, representing 8% of the fleet. For the remaining fleet operating outside the Gulf, load factors remain at 50–55%, consistent with pre-conflict levels.
Regarding supply, 195 planned VLCC deliveries through 2029 cannot meet replacement demand for 376 VLCCs exceeding 20 years of age, sustaining net demand. Goldman Sachs maintains a Buy rating, with a 12-month target price of HKD 29.00 for the H-shares and RMB 32.00 for the A-shares.