Furui: Raised target price of COSCO Shipping Energy Transportation (01138) to HKD 24.6, reiterated "buy" rating.

Fitch released a research report stating that the management of COSCO Shipping Energy Transportation (01138) believes that the Very Large Crude Carrier (VLCC) market will be structurally tight by 2026, rather than reaching a cyclical peak. In terms of demand, continuous Chinese crude oil imports, increased exports from the Middle East and Atlantic Basin, and India's shift towards non-Russian compliant crude oil support ton-mile demand growth; on the supply side, sanctions, aging ships, and increased floating storage have led to a continuous contraction of effective fleet capacity. The bank raised its profit forecast for COSCO Shipping Energy Transportation in 2026 by 11% to reflect the rise in freight rates; and raised its profit forecast for 2027 by 78% to consider the additional ton-miles due to crude oil replenishment demand and route diversions. The bank raised its target price from HK$10 to HK$24.6, reiterating a "buy" rating. The report stated that global new ship orders account for only about 22% of the existing fleet, and new ship deliveries have been postponed until 2029. By then, around 376 VLCC ships will be over 20 years old, while there are only 195 new ship orders, meaning new ships will roughly offset dismantling capacity rather than causing oversupply. Therefore, the bank expects VLCC freight rates to remain structurally high by 2026. Fitch stated that conflicts in the Middle East have led to major security restrictions in the Strait of Hormuz, with over 70 VLCCs (around 8% of global VLCC capacity) temporarily stuck in the area. The management expects freight rates to fluctuate but remain high in 2026.