CMSC: The prosperity of branch line collection and transportation is supported, and there are still stage investment opportunities in oil transportation.

CMSC released a research report stating that in the first half of 2025, the shipping stocks were affected by tariffs and geopolitical conflicts, with significant fluctuations, but overall showing an upward trend. The Shanghai Shipping Index rose 1.9% from the beginning of the year to the present, outperforming the Shanghai and Shenzhen 300 Index by 4.1 percentage points. In the second half of 2025, the container shipping market is relatively good, with phase investment opportunities still available in the tanker market; medium to long-term focus is advised on COSCO Shipping Holdings (601919.SH) and Cosco Shipping Specialized Carriers (600428.SH). In the second half of 2025, priority can be given to regional container shipping markets, benefiting from increased regional maritime trade volume, with freight rates still relatively high; it is expected that the performance of regional container shipping companies in the first half of the year will show a significant growth trend. CMSC's main points are as follows: In the first half of 2025, shipping stocks were affected by tariffs and geopolitical conflicts, leading to noticeable fluctuations, but overall showing an upward trend. In strong cyclical industries, there is a clear positive correlation between high-frequency freight rates and stock prices. In terms of container shipping, periodic rush shipments have increased freight rate elasticity, with CCFI still at high levels; in the first half of the year, oil shipping benefited from increased production by oil-producing countries and increased US sanctions, with freight rates showing signs of recovery, but due to the high base last year, BDTI freight rates on average decreased year-on-year; in the first half of the year, dry bulk shipping was relatively weak, with high coal and iron ore inventories, and a decrease in the average BDI. In terms of industry performance, the Shanghai Shipping Index rose 1.9% from the beginning of the year to the present, while the Shanghai and Shenzhen 300 Index fell by 2.2%, with the shipping sector leading by 4.1 percentage points. In terms of price movements, since the beginning of 2025, container shipping-related targets have shown the highest increase. Container shipping: Delivery of capacity continues, with demand heavily impacted by tariffs and geopolitical conflicts. In the first half of 2025, freight rates fluctuated significantly due to repeated adjustments in tariff policies, but overall the outlook remains good. Currently, trade policies between China and the US are trending towards normalization. Demand and supply forecast: it is expected that the demand growth rates in ton-miles will be 2.6%/-2.9% for 2025 and 2026 respectively (assuming that the Red Sea remains non-navigable in 2025 and gradually becomes navigable in 2026); capacity growth rates will be 6.7%/4.1%, respectively. Price outlook: in the second half of 2025, based on the assumption that the Sino-US route will be repaired and that the Red Sea will still be bypassed, dry bulk freight rates will fall back from their high levels (weakening of rush shipment logic) and return to normal seasonal variations. There is less pressure on the delivery of medium-sized ships, and the outlook for the Asian and emerging international markets may be better than that for main routes. Oil Shipping: Heavily influenced by geopolitical conflicts, the supply-demand situation for VLCCs remains positive in 2025. In the first half of 2025, freight rates fluctuated significantly due to conflicts in the Middle East and increased US sanctions on Iran. Following an escalation of conflicts in June, oil tanker rates spiked and then fell back. Demand and supply forecast: the macroeconomic outlook is uncertain, but Asian countries support oil demand, with expected demand growth rates for oil ton-miles at 0.5%/-1.3% in 2025 and 2026, respectively, and capacity growth rates at 2.1%/4%, respectively. However, VLCC capacity growth is limited, with growth rates of 0%/2.5% in 2025 and 2026, respectively. In terms of freight rates, the supply-demand relationship for VLCCs in 2025 is positive, with large ship market rates having room to increase during peak seasons. Dry Bulk Shipping: In 2025, the outlook compared to the previous year has declined, with a focus on improving iron ore trade ton-miles in 2026. Due to high inventories of bulk commodities, transportation volumes have slowed down, with the central freight rates in the first half of 2025 under pressure and trending downwards. Demand and supply forecast: looking ahead to 2025-2026, due to weakening demand and high domestic inventories, the growth rate in bulk commodity trade will slow down; however, supported by the development of new energy and ShenZhen New Industries Biomedical Engineering, the volume of small bulk metal and bauxite trading may still be supported. Overall, it is anticipated that the demand growth rates for dry bulk ton-miles in 2025-2026 will be -0.8%/0.9%, and capacity growth rates will be 3.1%/3.2%, respectively. However, Capesize capacity growth is limited, with growth rates of 1.4%/1.9% in 2025 and 2026, respectively. In terms of freight rates, it is forecasted that there may be a slight recovery in the third quarter of 2025 compared to peak season, but overall the outlook is weaker than last year; in 2026, with the increase in long-haul cargo volume and the relaxation of Sino-US trade relations, freight rates are expected to recover somewhat. Investment options: In the second half of 2025, priority could be given to regional container shipping markets, benefiting from increased regional maritime trade volume and relatively high freight rates; it is expected that the performance of regional container shipping companies in the first half of the year will show a significant growth trend. Companies to watch include TS LINES, SITC, and Shanghai Zhonggu Logistics. Furthermore, attention can still be given to opportunities in the oil tanker sector with relatively low valuations, and during peak seasons (or escalation of regional conflicts) there may be significant elasticity; companies to look into include COSCO Shipping Energy Transportation and Nanjing Tanker Corporation (with prospects for increased dividends). In the medium to long term, it is advisable to focus on COSCO Shipping Holdings (with stable cash flow and good corporate governance) and Cosco Shipping Specialized Carriers (with rapid expansion in the next 2 years and performance following volume growth). Risk factors: Economic downturn, major natural disasters, lower-than-expected production in major oil-producing countries, geopolitical risks, worsening Sino-US trade relations, etc.