Results Review

2025 results in line with our expectations

Nanjing Tanker Corporation announced its 2025 results: Revenue fell 10.13% YoY to Rmb5.82bn, net profit attributable to shareholders fell 31.73% YoY to Rmb1,311mn, and recurring attributable net profit fell 22.29% YoY to Rmb1,297mn. In 4Q25, revenue rose 5.72% YoY and 3.64% QoQ to Rmb1,551mn, net profit attributable to shareholders grew 37.41% YoY and fell 3.30% QoQ to Rmb364mn, and recurring attributable net profit was Rmb362mn.

Trends to watch

Geopolitical factors underpin freight rates; focus on improvement in industrywide supply-demand dynamics in the long term. According to Clarksons, traffic of refined oil products through the Strait of Hormuz accounts for 15% of global seaborne refined oil trade. Affected by geopolitical factors in the Middle East, some refined oil importing regions in the Pacific market, such as Australia and Africa, have partially shifted their source of imported oil from the European and American markets, leading to longer shipping routes. Coupled with the strong momentum in the crude oil market, this has driven up tanker freight rates for refined oil products.

The freight rate performance has been even stronger in the Atlantic region due to robust cargo demand. According to Clarksons, since March, the BCTI average freight rates in the Pacific and Atlantic regions have been US$30,000 and US$78,000 per day, up US$7,000 and US$55,000 per day compared with the same period last year.

Looking ahead, supply-side pressures will gradually be absorbed, in our view. The order book currently stands at 14% of the fleet capacity, while vessels over 20 years old account for 17% of the fleet. On the demand side, once crude oil inventories recover, restocking demand for refined oil products could increase. We remain positive about freight rates for the full year 2026.

Shareholder returns increase; capacity structure improves. In 2025, the company paid cash dividends for the first time since its IPO, with a dividend payout ratio of 9.6%. Taking into account the company’s share buybacks of Rmb400mn shares last year, its full-year dividend payout ratio reaches 40.14%. The firm revised its articles of association to clarify the principle of profit distribution, approved a shareholder return plan for the next three years, and stipulated that cash dividends should account for about 40% of its net profit (including share buybacks). The firm’s highly visible shareholder return plan offers support for the improvement in its valuation.

In addition, the firm continued to optimize its fleet size and planned to dispose of four old MR vessels in 2025. The firm currently has six refined oil tankers, six crude oil tankers for domestic trade, two chemical tankers, and one gas carrier under construction.

Financials and valuation

Considering that improving supply and demand dynamics are driving up average freight rates in 2026, we raise our 2026 net profit forecast 30% to Rmb1.97bn and introduce our 2027 net profit forecast of Rmb2.14bn, implying 10.2x 2026e and 9.4x 2027e P/E. We maintain an OUTPERFORM rating and raise our TP 25% to Rmb4.63/sh, corresponding to 11x 2026e and 10.1x 2027e P/E and implying 7.67% upside.

Risks

Falling global demand for oil products; geopolitical risks; sharp i ncrease in new vessel orders.