Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Cosco Shipping Energy Transportation Co. Ltd. (H) / Event-Driven

Cosco Shipping Energy Transportation Co. Ltd. (H)

<ul>
<li>Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB continues to buy tech. </li>
<li>Stocks in HK and mainland markets bounced a bit this week as Scott Bessent named incoming Treasury Secretary and tariff talk diverges from China. Non-economic China policy matters more near-term.</li>
<li>H/A Pairs were surprisingly un-volatile on the week. There are a fair number of wider spreads. Non-bank financials AH Premia remain at the low end of their 52-week range.</li>
</ul>


Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB continues to buy tech. 
Stocks in HK and mainland markets bounced a bit this week as Scott Bessent named incoming Treasury Secretary and tariff talk diverges from China. Non-economic China policy matters more near-term.
H/A Pairs were surprisingly un-volatile on the week. There are a fair number of wider spreads. Non-bank financials AH Premia remain at the low end of their 52-week range.


A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Equity Bottom-Up

Cosco Shipping Energy Transportation Co. Ltd. (H) / Equity Bottom-Up

<ul>
<li>Speculative liquidation of crude oil positions opens up an opportunity</li>
<li>A seasonally strong period for crude tanker rates coming up</li>
<li>Company option scheme for senior management approved. Strike above current price</li>
</ul>


Speculative liquidation of crude oil positions opens up an opportunity
A seasonally strong period for crude tanker rates coming up
Company option scheme for senior management approved. Strike above current price


Cosco Shipping Energy Transportation - Capitulation in Oil and Related Equities Almost Complete?

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>The P/B multiple of <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation (H) (1138 HK)</a> has pulled back to 0.8x now, from 1.3x three months ago. The risk-reward payoff has improved.</li>
<li>Historically, there is no long-term correlation between oil prices and share prices. Hence, we should not be overfocused on the recent pullback in oil prices.</li>
<li>Although the market consensus is high, FY24 should still see growth. The 3Q24 VLCC spot rate is 27.4% higher YoY, potentially boosting quarterly results and sustaining a high FY24 yield. </li>
</ul>


The P/B multiple of Cosco Shipping Energy Transportation (H) (1138 HK) has pulled back to 0.8x now, from 1.3x three months ago. The risk-reward payoff has improved.
Historically, there is no long-term correlation between oil prices and share prices. Hence, we should not be overfocused on the recent pullback in oil prices.
Although the market consensus is high, FY24 should still see growth. The 3Q24 VLCC spot rate is 27.4% higher YoY, potentially boosting quarterly results and sustaining a high FY24 yield. 


COSCO Shipping Energy (1138 HK): Better Safety Margin Now

<ul>
<li>The 20% retreat in the share price of <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation (1138 HK)</a> from the peak has well reflected the plunge in 3Q23 VLCC rates and 10% earnings downgrade.</li>
<li>4Q23 VLCC rates have rebounded 78.4% QoQ. Re-routing due to recent Houthi attacks on commercial ships at the Red Sea has reduced effective supply and is positive to rates.</li>
<li>Heightened energy security needs will drive demand. The medium-term supply pressure is mild as the VLCC orderbook equals just 2% of the existing fleet, fueling ROE for FY23-25F. </li>
</ul>


The 20% retreat in the share price of Cosco Shipping Energy Transportation (1138 HK) from the peak has well reflected the plunge in 3Q23 VLCC rates and 10% earnings downgrade.
4Q23 VLCC rates have rebounded 78.4% QoQ. Re-routing due to recent Houthi attacks on commercial ships at the Red Sea has reduced effective supply and is positive to rates.
Heightened energy security needs will drive demand. The medium-term supply pressure is mild as the VLCC orderbook equals just 2% of the existing fleet, fueling ROE for FY23-25F. 


COSCO Shipping Energy (1138 HK): Time for Another Look

<ul>
<li>All the business fundamentals continue to trend in the right direction</li>
<li>The sector has sold off with the general commodity sell-off</li>
<li>Investors not giving the benefit of the doubt to future oil demand</li>
</ul>


All the business fundamentals continue to trend in the right direction
The sector has sold off with the general commodity sell-off
Investors not giving the benefit of the doubt to future oil demand


Recent Sell-Off in Tanker Stocks Provides an Opportunity in Cosco Shipping Energy - 1138.HK

China

COSCO SHIPPING Energy Transportation Co., Ltd. offers marine shipping services. The Company provides refined oil transportation, crude oil transportation, and other services. COSCO SHIPPING Energy Transportation also ships iron ores, dry bulks, coal, and other products.

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)

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Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)

A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More

AH Premia were basically flat this week. Non-bank financials remain at the lowest average premia levels in a year but others are mixed.

Travis Lundy

COSCO Shipping Energy (1138 HK): Better Safety Margin Now

CSET's P/B has dropped to 0.8x, improving the risk-reward payoff. Despite the oil price pullback, long-term correlation with share prices is weak....

Osbert Tang, CFA

COSCO Shipping Energy (1138 HK): Time for Another Look

The Red Sea crisis will continue to bode well for tanker demand as well as negatively impact capacity supply. CSET has rallied 25% from its recent...

Osbert Tang, CFA

Recent Sell-Off in Tanker Stocks Provides an Opportunity in Cosco Shipping Energy - 1138.HK

Despite positive business fundamentals, the sector is being dragged down by a general commodity sell-off as investors remain skeptical about...

Rikki Malik

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More

AH Premia were basically flat this week. Non-bank financials remain at the lowest average premia levels in a year but others are mixed.

Travis Lundy

Cosco Shipping Energy Transportation - Capitulation in Oil and Related Equities Almost Complete?

Although this piece timed the bottom to the day, there is more upside. It is still a laggard as it is "only" up ~40% from a depressed price....

Rikki Malik

COSCO Shipping Energy (1138 HK): Better Safety Margin Now

​CSET's P/B has dropped to 0.8x, improving the risk-reward payoff. Despite the oil price pullback, long-term correlation with share prices is weak....

Osbert Tang, CFA

COSCO Shipping Energy (1138 HK): Time for Another Look

The Red Sea crisis will continue to bode well for tanker demand as well as negatively impact capacity supply. CSET has rallied 25% from its recent...

Osbert Tang, CFA

Recent Sell-Off in Tanker Stocks Provides an Opportunity in Cosco Shipping Energy - 1138.HK

​Despite positive business fundamentals, the sector is being dragged down by a general commodity sell-off as investors remain skeptical about...

Rikki Malik

CSET's P/B has dropped to 0.8x, improving the risk-reward payoff. Despite the oil price pullback, long-term correlation with share prices is weak....

Despite positive business fundamentals, the sector is being dragged down by a general commodity sell-off as investors remain skeptical about...