COSCO Shipping Energy 2Q26 performance broadly in line, with lower short-term revenue drag from tankers trapped in the Gulf

Overview

This report is Goldman Sachs’ commentary on COSCO Shipping Energy 2Q26 preliminary results. The company reported 1H26 net profit of about Rmb4.5bn and recurring net profit of about Rmb4.4bn, with estimated 2Q26 net profit of about Rmb2.3bn and recurring net profit of about Rmb2.4bn. Overall, results were broadly in line with Goldman expectations and slightly above the range mentioned in investor communications. The report explains why the company’s 2Q26 outperformance versus peers was relatively weaker and reiterates a constructive view on the tanker freight cycle and the valuation of the company’s A/H shares.

Core views

Goldman believes COSCO Shipping Energy’s short-term results were hurt by seven tankers trapped in the Persian Gulf, including three VLCCs, three LR2s and one Panamax, which could not operate normally after the closure of the Strait of Hormuz from February 28, 2026 and could not collect laytime compensation from customers for idleness losses. As these tankers left the Gulf after the Strait of Hormuz briefly reopened in June, the company is expected to catch up with peers starting in 3Q26. Goldman continues to be bullish on tanker supply-demand dynamics: constrained new capacity, fleet aging, and speed constraints from environmental requirements on the supply side; on the demand side, detouring after sanctions on Russian crude and refined products, global refinery mismatches, and Dubai/WTI spread impacts provide structural support for long-haul transport demand.

Analysis framework

The report combines a framework of performance decomposition, freight-rate lagged recognition, peer comparison, and valuation. On the performance side, it estimates 2Q26 from 1H26 preliminary data and compares it with China Merchants Energy Shipping Co Ltd; on the freight side it references VLCC TCE on US Gulf-China and West Africa-China routes as well as BCTI TCE, and factors in about one-month lagged revenue recognition; on valuation it derives A-share FY26E target P/B from sustainable ROE and then applies an H/A discount to arrive at H-share value.

Methodology notes

• Valuation MethodP/B Valuation Method

  Derive target P/B from sustainable ROE

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

• Industry freight rate analysisTCE freight framework

  VLCC TCE and BCTI TCE

  The report uses VLCC TCE on US Gulf-China and West Africa-China routes, as well as BCTI TCE for product tankers, to gauge tanker market sentiment, and applies an approximately one-month revenue-recognition lag adjustment.

• Company comparisonPeer profit comparison

  Quarter-on-quarter growth comparison with CMES in 2Q26

  Goldman compared COSCO Shipping Energy’s 2Q26 net profit QoQ growth of 7% with CMES’s roughly 50% QoQ growth, attributing the difference mainly to COSCO having some vessels trapped in the Gulf.

Asset mapping & comparison

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

• COSCO Shipping Energy (1138.HK)

  Core covered Hong Kong-listed security

  Strengths

  Target price HK$30.00, current price HK$13.08, upside 129.4%; benefits from VLCC long-haul exposure, tanker upcycle, and earnings catch-up after stranded vessels are released.

  Weaknesses

  2Q26: some tankers trapped in the Gulf reduced revenue contribution; product tankers underperformed peers due to the suspension of China’s refined-product exports from March 11, 2026.

  Comparison

  2Q26 net profit growth of 7% quarter-over-quarter was below CMES’s roughly 50% quarter-over-quarter growth, where no tankers were trapped in the Gulf.

  Risks

  OPEC production cuts, faster-than-expected capacity deliveries, and weaker macro conditions reducing oil demand.

• COSCO Shipping Energy (600026.SS)

  Same company A-share covered security

  Strengths

  Target price Rmb33.00, current price Rmb15.77, upside 109.3%; valuation is derived from FY26E target P/B of 3.1x.

  Weaknesses

  Both A and H shares are affected by company operations and the tanker cycle; short-term performance still depends on freight rates and recovery from geopolitical events.

  Comparison

  The H-share target P/B applies a 20% H/A discount to the A-share base.

  Risks

  Company-level tanker freight, demand, supply, and geopolitical risks.

• China Merchants Energy Shipping Co Ltd (601872.SS)

  Peer comparison, marked Not Covered in the report

  Strengths

  2Q26 net profit growth was about 50% QoQ, with no vessels trapped in the Gulf.

  Weaknesses

  The report does not provide full investment rating or target price for this company.

  Comparison

  As a peer reference, CMES’s 2Q26 QoQ growth is materially higher than that of COSCO Shipping Energy.

  Risks

  As a tanker shipping participant, it faces freight and demand volatility.

Key data

• 1H26 reported net profitabout Rmb4.5bnPreliminary 1H26 results disclosed after market close.
• 1H26 recurring net profitabout Rmb4.4bnUsed to estimate 2Q26 recurring earnings.
• 2Q26 net profitabout Rmb2.3bn, QoQ +7%Overall broadly in line with Goldman expectations.
• 2Q26 recurring net profitabout Rmb2.4bn, QoQ +15%Slightly above the investor-communication range.
• Number of stranded tankers in the Gulf7 vessels, including 3 VLCCs, 3 LR2s and 1 PanamaxAffected after the Strait of Hormuz closure on February 28, 2026; they have sailed out after the temporary reopening in June.
• 2Q26 industry VLCC TCE estimateabout US$125k/day, QoQ +31%Revenue recognition lag adjustment of about one month is considered.
• 2Q26 industry BCTI TCE estimateabout US$57k/day, QoQ +113%Indicator for product tanker market.
• 2026 full-year VLCC freight base caseabout US$150k/dayAbove the current stock-price implied about US$90k/day.
• 12-month target price1138.HK: HK$30.00; 600026.SS: Rmb33.00Goldman maintained unchanged target prices.
• Current price and upside1138.HK: HK$13.08, upside 129.4%; 600026.SS: Rmb15.77, upside 109.3%From the price and target table on the report cover page.
• 2026E revenueRmb38,856.4mnGoldman forecast.
• 2026E EBITDARmb21,506.2mnGoldman forecast.
• 2026E EPSRmb2.52Goldman forecast.
• 2026E ROE26.7%Goldman forecast.

Impact & implications

The report’s core investment implication is that 2Q26 results do not alter the company’s medium-term logic of being in a tanker upcycle; the Gulf event is more of a short-term disruption. If the Strait of Hormuz reopens for normal operation and generates restocking demand, VLCC freight rates may continue to support earnings. As one of the largest listed tanker fleets globally and with a relatively high long-haul VLCC exposure, the company could benefit from structural long-distance crude transport demand and constrained supply conditions.

Risks

• OPEC production cuts could reduce crude transport demand.
• Capacity deliveries above expectations could weaken tanker supply-demand tightness.
• A weaker macro backdrop could lead to oil demand lower than expected.
• If the Strait of Hormuz does not return to stable and normal operations, it may continue to disrupt vessel deployment and revenue recognition.
• China’s refined-product export restrictions may continue to pressure the company’s product tanker performance.
• The shipping industry is highly cyclical, and third-party shipping data and forecasts carry estimation errors.

What to watch

• Whether the Strait of Hormuz is formally reopened and the stability of subsequent passage.
• Whether profits in 3Q26 catch up with peers after stranded Gulf tankers resume operations.
• Whether VLCC TCE reaches or remains near Goldman’s 2026 full-year base case of about US$150k/day.
• Whether restocking demand is released after the Strait reopens.
• Changes in China’s refined-product export policy and their impact on product tanker TCE.
• Constraints on the supply side from new vessel deliveries, scrapping of older ships, environmental rules, and speed changes.