2Q26 results broadly in line with expectations, with Persian Gulf-stranded tankers weighing on revenue contribution

Overview

This report is Goldman Sachs' commentary on COSCO Shipping Energy's preliminary 2Q26 performance. The company reported 1H26 net profit of about RMB 4.5 billion and recurring net profit of about RMB 4.4 billion, with implied 2Q26 net profit of about RMB 2.3 billion and recurring net profit of about RMB 2.4 billion. Overall, results were broadly in line with Goldman Sachs' expectations and slightly above the range mentioned during investor communication. The report also notes that in 2Q26, quarter-on-quarter profit growth lagged peers such as China Merchants Energy Shipping, mainly because seven tankers were stranded in the Persian Gulf since February 28, 2026, with no compensation for idled time through demurrage, causing a significant drop in revenue contribution.

Core views

Goldman's key judgment is that the drag in 2Q26 mainly stems from temporary operational disruption caused by the Strait of Hormuz closure, rather than a deterioration in the company's long-term competitiveness. As all stranded tankers are expected to leave after the temporary reopening of the Strait in June, the company is seen as likely to catch up with peers from 3Q26. Goldman continues to be constructive on the tanker upturn cycle, citing factors such as limited new tonnage, fleet aging, and stricter environmental requirements constraining effective supply, as well as longer-route demand from Russian oil/products re-routing after sanctions, global refinery imbalances, and widening Dubai/WTI differentials.

Analysis framework

The report combines performance decomposition, peer comparison, industry TCE rate estimation, and a valuation target price framework. On earnings, it infers 2Q26 net profit and recurring net profit from preliminary 1H26 performance. On industry analysis, it references VLCC TCE on routes such as US Gulf-China and West Africa-China and accounts for about one month of revenue recognition lag. On valuation, it applies a P/B approach, deriving a FY26E target P/B for A-shares from sustainable ROE, then applying the H/A discount to derive an H-share target P/B.

Methodology notes

• Valuation methodologyPB valuation

  Deriving target P/B based on sustainable ROE

  Goldman Sachs derived a theoretical A-share FY26E target P/B of 3.1x based on estimated sustainable ROE, then applied a 20% H/A discount for H-shares, resulting in a H-share target P/B of 2.5x.

• Industry rate analysisTCE analysis

  VLCC and refined products tanker TCE

  The report estimated 2Q26 industry VLCC TCE at around US$125k/day based on routes such as US Gulf-China and West Africa-China, and factored in about one month of revenue-recognition lag; refined products tanker BCTI TCE was estimated at around US$57k/day.

• Goldman internal frameworkGS Factor Profile

  Growth, financial return, valuation multiples, and composite factor profile

  This framework compares a stock's growth, financial returns, and valuation multiples with market and sector peers to provide investment context.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• COSCO Shipping Energy H-share 1138.HK

  Core coverage target

  Strengths

  One of the largest tanker fleets among globally listed companies, with high VLCC exposure, benefiting from long-haul demand and supply constraints.

  Weaknesses

  In 2Q26, seven tankers stranded in the Persian Gulf reduced revenue contribution versus peers; refined products routes were affected by China's suspension of refined products exports.

  Comparison

  Compared with China Merchants Energy Shipping, 2Q26 net profit quarter-on-quarter growth was lower, mainly because China Merchants did not have tankers stranded in the Persian Gulf.

  Risks

  OPEC production cuts, excess vessel deliveries, and macro weakness could weaken oil product demand.

• COSCO Shipping Energy A-share 600026.SS

  A-share mapping of the same company

  Strengths

  Shares the same fundamentals as the H-share, with a target price of RMB33.00, corresponding to Goldman’s Buy rating.

  Weaknesses

  Returns are affected by valuation dispersion between H/A shares.

  Comparison

  The report starts from a target FY26E P/B of 3.1x for A-shares, then applies a 20% discount for H-shares.

  Risks

  Changes in A-share market sentiment, tanker rates, and earnings outlook could affect valuation.

• China Merchants Energy Shipping 601872.SS

  Peer comparator, report marks as Not Covered

  Strengths

  2Q26 net profit grew around 50% quarter-on-quarter, and no tankers were stranded in the Persian Gulf.

  Weaknesses

  The report does not provide full coverage rating and target price.

  Comparison

  COSCO Shipping Energy 2Q26 net profit was +7% quarter-on-quarter, below China Merchants, mainly due to ships stranded in the Persian Gulf.

  Risks

  Likewise exposed to tanker cycle, oil demand, and tonnage-supply risks.

Key data

• 1H26 reported net profitabout RMB 4.5 billionPreliminary 1H26 performance released by the company after market close.
• 1H26 recurring net profitabout RMB 4.4 billionGoldman used this to infer second-quarter recurring profitability.
• 2Q26 net profitabout RMB 2.3 billion, Q/Q +7%Broadly in line with Goldman expectations.
• 2Q26 recurring net profitabout RMB 2.4 billion, Q/Q +15%Slightly above the range mentioned in investor communication.
• Stranded tankers in the Persian Gulf7 vessels, including 3 VLCCs, 3 LR2s, and 1 PanamaxStranded after the Strait of Hormuz closure on February 28, 2026, with low revenue contribution in 2Q26.
• 2Q26 industry VLCC TCE estimateabout US$125k/day, Q/Q +31%A revenue-recognition lag of about one month is considered.
• 2Q26 industry BCTI TCE estimateabout US$57k/day, Q/Q +113%Refined products tanker rates rebounded sharply.
• 2026 full-year VLCC average rate base caseabout US$150k/dayGoldman forecast, above the current market price-embedded level of around US$90k/day.
• 12-month target priceH-share HK$30.00; A-share RMB33.00Target price remains unchanged.

Impact & implications

The report's implication for COSCO Shipping Energy is constructive: short-term profit was disrupted by the Persian Gulf event, but profitability elasticity is expected to recover as stranded vessels exit. If the Strait of Hormuz officially reopens and rebuilding inventories lifts demand, tanker rates could remain a core driver of the stock valuation. On valuation, Goldman’s target prices still imply a large upside to current levels, reflecting an optimistic view on both the tanker cycle and the company’s VLCC exposure.

Risks

• OPEC production cuts may reduce oil transport demand.
• Tonnage deliveries above expectations may weaken the tanker supply-constrained thesis.
• Weaker macro conditions may dampen oil demand and consumption.
• Repeated shipping disruptions in the Strait of Hormuz and Persian Gulf could continue to affect fleet utilization and revenue recognition.
• Changes in China's refined products export policy may impact the company's refined products tanker performance.

What to watch

• Whether the Strait of Hormuz officially reopens and the subsequent strength of replenishment demand.
• Whether VLCC TCE and BCTI TCE remain sustainable, especially whether the company catches up with peers after 3Q26.
• The actual speed of revenue recovery after stranded tankers leave.
• Whether full-year 2026 VLCC average rates move closer to Goldman’s base case estimate of around US$150k/day.
• Changes in OPEC production policy, global refinery imbalance, Dubai/WTI spread, and routing demand shifts after Russia-sanctioned trade re-routing.