CICC: Maintains outperform industry rating on SITC (01308) with a target price of 36 Hong Kong dollars.

CICC released a research report stating that it maintains the profit forecast for SITC (01308) unchanged, maintains the outperform industry rating unchanged, the current stock price corresponds to a 7.8/9.4 times 2025/2026 P/E ratio, maintains the target price of 36 Hong Kong dollars per share unchanged, corresponding to a 10.0/11.9 times 2025/2026 P/E ratio, with a 27.0% upside potential from the current stock price. CICC's main points are as follows: Company Recent Developments The company announced 3Q25 operating data: the company achieved revenue of 796 million US dollars, down 1.7% year-on-year, down 11.9% quarter-on-quarter, achieved container transport volume of 920,179 TEUs, up 8.9% year-on-year, down 11.0% quarter-on-quarter, and achieved an average freight rate (excluding revenue from slot exchange fees) of 712 US dollars/TEU, down 12.0% year-on-year, down 5.7% quarter-on-quarter. The market and company freight rates weakened in the third quarter: Southeast Asia route freight rates fell significantly year-on-year, mainly due to a high base in the same period last year, while Japan route freight rates rose year-on-year. In 3Q25, CCF's Southeast Asia/Japan/South Korea route freight rate index fell by -30.6%/+20.5%/-8.6% year-on-year and by -11.7%/-2.3%/-4.8% quarter-on-quarter. Tight supply of small container ships in the Asian region expected to continue, attention to the resumption of navigation in the Red Sea According to Clarkson, the annual addition of small container ship supply in the next three years is only 1-2%, with the proportion of ships over 25 years old reaching 11.2%. The tight supply of small ships since the beginning of the year is mainly due to the need for small ships to serve as feeder lines after the Red Sea diversion and the increase in demand for feeder transportation for small ships after changes in the far-sea alliance. According to Alphaliner data, from the end of 2023 to October 2025 (before the Red Sea diversion), the capacity of small ships below 3,000 TEUs increased by 8.5%, with the additional capacity mainly distributed on routes in the Middle East and the Indian subcontinent, and European regions, for shipowners to use as feeder lines after the Red Sea diversion. In contrast, the capacity of small ships in the Asian region only increased by 2.2%. The current capacity of small ships remains tight, with the monthly rent for 1,700/2,750 TEU ship types increasing by 37.8%/16.4% year-on-year. Under the U.S. tariff policy, the trend of industrial transfer may accelerate, with the volume of goods in the Asian region expected to continue to increase Benefiting from the transfer of industrial chains, the year-on-year export and import growth between China and ASEAN countries from January to September 2025 was +9.6%. The bank believes that under the current U.S. tariff framework, the trend of industrial transfer from China to Southeast Asian countries may accelerate, further driving economic growth in Southeast Asian countries, and promoting stable growth of goods in the Asian region. Risk warning: Changes in geopolitical risks, global economic slowdown.