By Yifan Wang
Cosco Shipping Holdings Co. shares jumped in both Hong Kong and China on Thursday after the container-shipping company guided for a 74% rise in first-half net profit.
The stock had risen as much as 7.9% by the mid-day trading break in Hong Kong, and was last up 4.6% at 11.36 Hong Kong dollars (US$1.45). In Shanghai, the company’s A-shares rose 6.7% to 14.85 yuan (US$2.21).
The sharp upturn came after Cosco Shipping issued its first-half profit guidance late on Wednesday, expecting a result of CNY64.72 billion due to high export transportation fees on prime shipping lines amid tight capacity and port congestion. It cited higher transportation demand from companies seeking to accumulate inventory amid pandemic-triggered manufacturing disruptions as another driver.
However, analysts have been warning of a coming slowdown in the booming market for container shipping.
“The two-year freight bull cycle for liners looks set to peak out” in the third quarter of 2022, Citi analysts said in a recent note, pointing to potentially lower rush demand as port congestion eases. They noted that shipping capacity is also improving, which will bring down freight rates.
In late June, the bank cut its target price on Cosco Shipping to HK$17 from HK$23, but maintained a buy call due to the company’s rich cash resources.
The company’s Hong Kong-listed stock is down 25% so far this year. Its Shanghai shares are down 20.5%.
Write to Yifan Wang at [email protected]
(END) Dow Jones Newswires
July 07, 2022 00:18 ET (04:18 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
