Morgan Stanley: COSCO Shipping Holdings (01919) is expected to normalize its profit margin and profit growth in the coming quarters. Target price is 8.5 Hong Kong dollars.

Morgan Stanley released a research report stating that COSCO Shipping Holdings' net profit for the first quarter of the fiscal year 2025, according to Chinese accounting standards, increased by 73.07% year-on-year to 11.6 billion RMB, compared to approximately 11 billion RMB in the fourth quarter of the fiscal year 2024. The performance in the first quarter of the fiscal year 2025 exceeded the bank's and the market's respective predictions by 42% and 47%. Morgan Stanley stated that it remains cautious on the container shipping sector, as ongoing global trade tensions may pose risks on the demand side, and under high supply pressure, it may accelerate the downward cycle. The bank expects that the profit margin and profit growth of COSCO Shipping Holdings will normalize in the coming quarters, and has set a target price of 8.5 Hong Kong dollars for the stock, with a "reduce" rating.