Goldman Sachs raises COSCO SHIPPING Energy's target price by 48% to 16 yuan, expecting upward potential in freight rates

Goldman Sachs released a report stating that international freight rates still have further upward potential, as the exit of shadow fleets and sanctioned fleets from the market or their low utilization will result in effective capacity being lower than market expectations. It is anticipated that COSCO SHIPPING Energy (01138.HK) will benefit from this round of rising freight rates, assuming that oil transportation from Venezuela will shift from shadow fleets to mainstream fleets.

The analysis indicates that in extreme scenarios, if sanctions on Russian or Iranian oil are completely lifted, it could further accelerate the exit of shadow fleet capacity, as unsanctioned oil would no longer require shadow fleets for transportation. At the same time, shadow fleets are also unlikely to return to mainstream or compliant fleets, as these vessels generally have high ages, increasing maintenance demands, and rising regulatory risks, which should lead to their dismantling. According to data from Clarksons and S&P Global, currently, 18% and 16% of the total tanker capacity, calculated by deadweight tonnage, belong to shadow fleets and sanctioned fleets, respectively.

The firm raised its net profit forecasts for COSCO SHIPPING Energy for 2026 and 2027 by 11% and 12%, respectively, to reflect higher freight rates, and increased the target price for COSCO SHIPPING Energy's Hong Kong stock by 48% to HKD 16, while raising the target price for COSCO SHIPPING Energy (600026.SH) A shares by 10% to RMB 18, maintaining a "Buy" rating