Guohai Securities·2024-03-12 16:00Investment Rating - The report maintains a "Buy" rating for COSCO SHIPPING Energy Transportation (600026 SH) [1] Core Views - COSCO SHIPPING Energy Transportation is a global leader in oil and LNG shipping, with its performance highly correlated to the oil shipping cycle [7] - The oil shipping industry is cyclical, with market cycles driven by supply and demand but heavily influenced by external factors, leading to significant price volatility [7] - The crude oil shipping cycle is on an upward trend, while the refined oil shipping market remains at a high level [7] - The company's earnings elasticity is primarily driven by its VLCC fleet, with marginal revenue increasing by RMB 1 058 million for every USD 10 000/day increase in TCE [7] Company Overview - COSCO SHIPPING Energy Transportation is a global leader in oil and LNG shipping, with a focus on oil and gas transportation since its 2016 restructuring [5][7] - The company's market position is strong, ranking among the top global oil tanker owners and being a major LNG shipowner [5][15] - Financial indicators show that international oil shipping is the primary source of earnings elasticity, while domestic oil shipping and LNG transportation maintain stable gross margins [18] Industry Overview - The oil shipping industry is highly cyclical, with customers primarily being international oil majors [5][22] - Crude oil shipping is characterized by a single product type, large volumes, and a global market with point-to-point networks [25] - Refined oil shipping involves complex product types, smaller volumes, and regional markets with triangular trade routes [28] - Shipping rates are driven by supply and demand but are highly susceptible to external shocks, leading to significant price fluctuations [33] Cycle Trends - The crude oil shipping cycle is on an upward trend, with VLCCs being the primary source of earnings elasticity [5][39] - Crude oil shipping demand is driven by factors such as increased oil production, the lifting of sanctions, and geopolitical conflicts leading to longer shipping routes [42][46][49][51] - Supply constraints in the crude oil shipping market are due to low new orders, an aging fleet, and limited shipyard capacity [56][58][63] - The refined oil shipping market has entered a recovery phase, with demand driven by uneven refinery capacity distribution and geopolitical conflicts leading to route restructuring [65][69][71] Investment Recommendation - The company's earnings elasticity is highly dependent on its fleet structure, with the VLCC fleet contributing the most to marginal revenue [74][76] - The report forecasts COSCO SHIPPING Energy Transportation's revenue for 2023-2025 to be RMB 22 029 million, RMB 25 895 million, and RMB 27 905 million, respectively, with net profits of RMB 3 676 million, RMB 7 024 million, and RMB 8 330 million [76] - The company's PE ratios for 2023-2025 are projected to be 19 09x, 9 99x, and 8 42x, respectively, supporting the "Buy" rating [76]