J.P. Morgan: Reiterates "Overweight" rating on COSCO SHIPPING Energy Transportation (01138), recommends buying on pullbacks.

J.P. Morgan released a research report maintaining a positive view on tanker shipping. COSCO SHIPPING Energy Transportation (01138) H-shares and A-shares have recently underperformed the broader market, and the bank reiterates its "Overweight" rating, recommending investors buy on dips. The bank noted three developments supporting its view. Saudi Arabia has sold approximately 60 million barrels of crude oil for delivery offshore Oman in September to October, equivalent to about 30 VLCC cargoes, providing significant shipping demand support for the transshipment system outside the Strait of Hormuz. Meanwhile, freight rates across routes remain elevated, with VLCC daily time charter equivalents on the Oman-to-China, West Africa-to-China, and US Gulf-to-China routes at approximately $860,000, $525,000, and $414,000 per day, respectively. The bank's base case assumes average VLCC daily time charter equivalents of $135,000 and $100,000 for 2026 and 2027, respectively, well below spot levels. Under the 2027 base case of $100,000 per day, COSCO SHIPPING Energy Transportation's H-share and A-share P/E ratios are approximately 11x and 14x, respectively; if the average daily time charter equivalent is $178,000, the multiples would decline to approximately 6x and 7x, indicating significant upside potential for earnings.