COSCO Shipping Energy (1138.HK) Conference Call Summary Company Overview - **Company**: COSCO Shipping Energy - **Ticker**: 1138.HK - **Market Cap**: HK$28.8 billion / $3.7 billion - **Enterprise Value**: HK$59.5 billion / $7.7 billion Key Financial Results - **1Q25 Net Profit**: Rmb707 million, a decrease of 43% YoY and an increase of 14% QoQ, which missed market expectations [3][16] - **Freight Rate Decline**: Significant drops in freight rates for crude (-21% YoY) and product tankers (-52% YoY) attributed to delayed restocking and oversupply [3][17] - **Cost Increase**: Total cost of goods sold (COGS) rose by 14% YoY, driven by higher shipping turnover, despite a 3% YoY decrease in unit COGS [17] Capital Expenditure and Financing - **Proposed A-share Private Placement**: Approved to raise up to Rmb8 billion for purchasing new vessels, including 6 VLCCs, 3 Aframaxs, and 2 LNG carriers [3][17] - **Capex Guidance**: Increased total Capex for 2025-28 from Rmb25 billion to Rmb28 billion, with 2025 Capex now guided at Rmb7.3 billion [17] Market Performance - **Share Price Movement**: A/H shares have retreated by 10%/3% YTD, compared to +11%/-4% for HSCEI/CSI 300, reflecting missed freight rates and potential dilution from the private placement [3] - **Target Price Revision**: Target prices for H/A shares revised down to HK$8.80/Rmb14.70 from HK$9.40/Rmb15.70 due to lower P/B valuations [16] Shipping Market Dynamics - **International Oil Transportation Turnover**: Increased by 18% YoY in 1Q25, with international crude oil and refined oil turnover both rising by 18% and 16% YoY, respectively [3] - **VLCC-TCE Expectations**: Anticipated to remain elevated due to China's crude restocking efforts amid lower-than-average crude inventory [3] Financial Ratios and Projections - **P/E Ratio**: Expected to decrease from 9.6 in 2024 to 4.3 by 2027 [11] - **EPS Growth**: Projected to grow from Rmb0.80 in 2024 to Rmb1.31 in 2027 [11] - **Dividend Yield**: Expected to increase from 5.6% in 2024 to 11.6% in 2027 [11] Additional Insights - **Shipping Rate Trends**: BDTI TD3C TCE decreased by 21% YoY, while BCTI TCE saw a larger decline of 52% YoY [17] - **Cost Control Measures**: Despite rising costs, the company managed to reduce unit COGS, indicating effective cost management strategies [17] This summary encapsulates the critical financial and operational insights from the conference call, highlighting the challenges and strategic directions of COSCO Shipping Energy in the current market environment.