JP Morgan: COSCO Shipping Holdings (01919) first quarter net profit in line with expectations, management pointed out that effective supply is far less tense than it appears.

J.P. Morgan released a research report saying that COSCO Shipping Holdings (01919) had a stable performance in the first quarter, with a net profit of 6 billion yuan, roughly in line with the bank's expectations. The bank believes that the company's performance reflects the positive momentum in the industry before the peak season, and the company is also focused on enhancing shareholder returns; maintaining a "buy" rating, with a target price of 21 Hong Kong dollars for COSCO Shipping Holdings H shares and a target price of 22 yuan for COSCO Shipping Holdings (601919.SH) A shares. Management held a positive outlook on the industry prospects at the earnings conference, believing that the market is overly focused on supply growth while overlooking the absorption of disruptions affecting approximately 8-9% of global capacity, leading to effective supply being far less strained than superficially represented. In addition, freight rates are experiencing a rebound, with spot and contract pricing structures adjusted to effectively pass on fuel costs, and trans-Pacific contract prices have already increased year-on-year before surcharges. Furthermore, the stability and scale provided by ocean alliances offer a competitive advantage, coupled with the company's digital transformation and expansion of route networks, enabling effective capture of new trade flows and enhancing efficiency.