JP Morgan raises COSCO Shipping Energy Transportation's target price to 24 Hong Kong dollars in one move, "Black Swan overlapping" boosting the profitability of ultra-large oil tankers.

JPMorgan Chase released a research report with the title "Black Swan Overlap", stating that the A-share rating of COSCO Shipping Energy Transportation (600026.SH) has been upgraded from "Neutral" to "Hold". The H-share rating of COSCO Shipping Energy Transportation (01138) remains at "Hold". They have also changed their valuation method from Price-to-Book ratio to Price-to-Earnings ratio, with target P/E ratios of 15 times for H-shares and 21 times for A-shares. The target price for H-shares has been raised from HK$12 to HK$24, while the target price for A-shares has been significantly increased from RMB 13 to RMB 28, due to three structural impacts (Iran, compliance capacity tightening, and market consolidation) reshaping the profitability of VLCCs (Very Large Crude Carriers) to a higher level. The report points out that Venezuelan crude oil has returned to compliant trade channels, tightening the effective mainstream oil tanker supply without increasing the global capacity. Secondly, the tension around the Strait of Hormuz and the Suez Canal escalated on February 28th, shifting the freight market from reflecting geopolitical "risk premium" to reflecting substantial "logistics disruption". Thirdly, Sinokor now controls over 150 VLCCs, equivalent to about 20% of global VLCC capacity, structurally reducing the liquidity of the spot market and exacerbating the demand shock on freight rates. Under the basic scenario, JPMorgan has raised the forecast of TD3C benchmark freight rates for the 2026 fiscal year from $90,000 per day to $115,000 per day. Even with cost forecast adjustments, JPMorgan still raised the net profit forecast for COSCO Shipping Energy Transportation for 2025 to 2027 by 3%, 18%, and 13% respectively. COSCO Shipping Energy Transportation H-shares and A-shares have risen by 114% and 94% respectively year-to-date, reflecting tightening compliance capacity supply and Middle East geopolitical risks, but JPMorgan believes that the sustainability of its profitability and the impact of capacity consolidation have not fully emerged yet.