HK/China Equity Long-Short

Osbert Tang, CFA

Osbert Tang is an equity analyst with over 20 years of experience with focuses on China transport, infrastructure, industrials and utilities sectors. He has been based in Shanghai since 2003, accumulated nearly 20 years of on-ground knowledge on the Chinese economy and financial markets, and has a wealth of contacts with China corporates and government entities. 

Osbert has received votes from top-tier institutional investors and has been a highly-ranked transport and infrastructure analyst in the Asiamoney, Institutional Investors and Greenwich surveys. In addition to his extensive experience with international investment banks including RBS, ABN AMRO (both served as Shanghai Chief Representative), Paribas Asia Equity, Maybank Kim Eng and DBS Securities, he has been a senior analyst with Moody’s Investors Service with focus on ratings of China infrastructure and related LGFV issuers. He has also worked in the area of strategic development at Sun Hung Kai Properties Limited. 

Osbert holds a BBA from the Chinese University of Hong Kong, an MBA from the University of Texas at Austin and a MSSc in Applied Psychology from the City University of Hong Kong. He was accredited with the CFA charter in 1997, and is a member of both British Psychological Society and Hong Kong Psychological Society.

Three Stocks Look Attractive and Three to Avoid Amid the Sell-Off

COSCO Shipping Energy (1138 HK): Return Looks like Well Worth the Risk

COSCO Shipping Energy (1138 HK): When All the Bad News Is Out...

COSCO Shipping Energy (1138 HK): 10-Year Low Valuation Reflected Worst Case Scenario

COSCO Shipping Energy (1138 HK): Time to Take Some Money off the Table

COSCO Shipping Energy (1138 HK): It Looks Interesting Again Now!

COSCO Shipping Energy (1138 HK): Very Good News - OFAC Lifted Dalian Tanker Sanction

Equity Bottom-Up

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

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

Cosco Shipping Energy Transportation Co. Ltd. (H)

<p>We believe too many positive expectations have been built into the current 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 Co. Ltd. (H) (1138 HK)</a> (CSET) and there is risk of disappointment when the company reports its 1H21 result in Aug. So far, there is no meaningful pick-up in tanker charter rates and its international oil transportation segment is still loss-making in 2Q21, in our view. </p><p>While the pace for demolition has picked up, it is still unable to reduce net supply significantly to return to demand-supply balance. Compared CSET's cash breakeven rates of US$25,000-30,000/day, the average sport rate of US$2,800/day for 2Q21 is nothing. We forecast a 55% net profit drop in FY21, against consensus of 20%, suggesting significant room for disappointment. While its 0.41x P/B is not too expensive, its low ROE of just 3% for FY21 renders such multiple not too appealing now.  </p>

We believe too many positive expectations have been built into the current share price of Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) (CSET) and there is risk of disappointment when the company reports its 1H21 result in Aug. So far, there is no meaningful pick-up in tanker charter rates and its international oil transportation segment is still loss-making in 2Q21, in our view. While the pace for demolition has picked up, it is still unable to reduce net supply significantly to return to demand-supply balance. Compared CSET's cash breakeven rates of US$25,000-30,000/day, the average sport rate of US$2,800/day for 2Q21 is nothing. We forecast a 55% net profit drop in FY21, against consensus of 20%, suggesting significant room for disappointment. While its 0.41x P/B is not too expensive, its low ROE of just 3% for FY21 renders such multiple not too appealing now.  

COSCO Shipping Energy (1138 HK): More Downside than Upside at Current Level