Morgan Stanley: Maintains COSCO SHIPPING Energy Transportation (01138) target price at HK$26, reiterates "Overweight" rating.

Morgan Stanley released a research report reiterating its "Overweight" rating on COSCO SHIPPING Energy Transportation (01138), maintaining the target price at HK$26. The bank expects that, benefiting from higher freight rates and improved utilization, COSCO SHIPPING Energy Transportation's earnings in the third quarter of this year will improve quarter-on-quarter. Management believes that the current sharp rise in VLCC freight rates mainly reflects a significant tightening of effective capacity, in contrast to increasing cargo demand. Recently, the daily charter rate for three-year VLCC time charter contracts in the market reached US$100,000, which management believes provides a stronger medium-term pricing signal. Company management expects that most of the sharply risen freight rates in September will be reflected in fourth-quarter results, and that disruptions in the Strait of Hormuz may last longer than expected, supporting a continued bull market in tanker shipping. COSCO SHIPPING Energy Transportation holds orders for 6 VLCCs and has 6 bareboat-chartered VLCCs scheduled for delivery in 2027 to 2028. Despite high spot freight rates, management remains cautious about fleet expansion through chartering.