DBS: Raises COSCO SHIPPING Holdings (01919) target price to HK$19.3; third-quarter results beat expectations

DBS issued a research report stating that COSCO SHIPPING Holdings (01919) recorded a net profit of RMB17.2 billion in the third quarter, beating market and the bank's expectations, but earnings are expected to normalize significantly in 2027. The "Hold" rating is maintained, with the target price raised from HK$18.4 to HK$19.3. The bank noted that freight rates are expected to remain resilient in the fourth quarter, but accelerated fleet deliveries next year are expected to lead to a sharp correction in freight rates. Based on the better-than-expected third-quarter performance and relatively resilient recent freight rates, the bank raised its revenue forecasts for COSCO SHIPPING Holdings for 2026 and 2027 by 7% and 9% respectively, and lifted its 2026 net profit forecast by 45% to RMB37 billion, while expecting 2027 net profit to fall 43% year-on-year to RMB21.3 billion. The bank believes that although the company's recent results and freight rate outlook are positive, earnings are expected to normalize significantly in 2027, leaving limited room for further re-rating. It expects the group's dividend per share for 2026 and 2027 to be RMB1.21 and RMB0.69, implying dividend yields of approximately 7.4% and 4.2% respectively.