Jefferies Research lowered its target price for COSCO Shipping Holdings (01919) to HK$2.3 from HK$4 and downgraded its rating to "underperform" from "buy".
The research house said COSCO's earnings are under pressure due to (1) weaker Asia Europe spot rates, (2) transpacific spot rates to be below contract prices by end-Sept, and (3) domestic China route remaining loss-making (1H loss was RMB260mn).
Jefferies increased its 2019 net profit forecast by 5.6% as this includes RMB1.1bn pre-tax exceptional gain from OOIL's (00316) disposal of Long Beach Container Terminal (LBCT). For 2020 and 2021, it lowered its net profit estimates to RMB158mn and RMB504mn from RMB1.4bn and RMB758mn to reflect lower freight rates.
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