Results Review

4Q25 results in line with market expectations

COSCO Shipping Holdings announced its 2025 results: Revenue fell 6.14% YoY to Rmb219.50bn. Net profit attributable to shareholders fell 37.2% YoY to Rmb30.86bn, implying basic EPS of Rmb1.99. In 4Q25, revenue fell 12.21% YoY and 11.27% QoQ to Rmb51.91bn, and net profit attributable to shareholders fell 65.39% YoY and 60.16% QOQ to Rmb3.80bn.

The firm's freight volume grew YoY and QoQ in 4Q25, while freight rates fell YoY and QoQ. In 4Q25, the firm's container freight volume rose 5.1% YoY and 5.0% QoQ to 7.3mn TEU, with freight volume of trans-Pacific routes down 1.4% YoY and 0.2% QoQ, and that of Asia-Europe routes up 13.7% YoY and 4.1% QoQ.

In 4Q25, revenue per container fell 19.3% YoY and 16.9% QoQ, with revenue per container falling 23.7% and 16.9% YoY for trans-Pacific routes and falling 30.6% and 30.5% YoY for Asia- Europe routes.

Trends to watch

Resumption of Red Sea services to be delayed; limited new supply in 2026; 2026 dividend attractive. Due to geoeconomic factors in the Middle East, we are concerned that the resumption of Red Sea services may be delayed in 2026. We think Europe-bound shipping may continue to reroute via the Cape of Good. Alphaliner estimates net container ship supply may increase 3.8% in 2026, with overall additions remaining relatively limited.

In the near term, we think a blockade of the Strait of Hormuz would have limited impact on container shipping, as cargo passing through the strait accounts for only 3% of global volumes.

However, if the blockade persists, Persian Gulf routes may be adjusted, and factors such as schedule changes and cargo backlogs could cause congestion at international transshipment hubs such as Singapore and Port Klang, tying up available capacity and pushing up overall freight rates. Based on current earnings assumptions, the 2026 dividend yields for A- and Hshares are 5.0% and 5.7%, respectively.

Financials and valuation

Maintain OUTPERFORM rating for A-and H-shares, considering the possibly delayed resumption of Red Sea services due to geoeconomic factors, we raise our 2026 net profit forecast 14.8% to Rmb23.5bn. We introduce our 2027 net profit forecast of Rmb17.2bn. A-shares are trading at 10.0x 2026e and 13.7x 2027e P/E, and H-shares are trading at 8.7x 2026e and 11.8x 2027e.

Considering that industry supply and demand may remain under pressure in 2027, but H-shares offer a higher dividend yield, we raise our TPs 8.6% and 13.8% to Rmb17.7 (11.5x 2026e and 15.7x 2027e P/E with 15.1% upside) for A-shares and HK$16.5 (9.6x 2026e and 13.0x 2027e P/E with 9.4% upside).

Risks

Geoeconomic risks; sharp rise in fuel costs; slowing global economic growth.