US Banks JP Morgan and Morgan Stanley Issue Divergent Forecasts for COSCO Shipholding and OOIL Amidst Market Uncertainty. The initial target price for Hong Kong-listed COSCO is valued at HKD 12, furthermore, for OOIL (parent company of OOCL) HKD 180, according to Alphaliner.
Recently, two prominent US banks, JP Morgan and Morgan Stanley, have adjusted their share price targets for Hong Kong-listed COSCO Shipholding and its subsidiary OOIL. However, the two financial institutions have presented contrasting perspectives on the future prospects of these carriers.
JP Morgan, revised its target price for COSCO to HKD 11 and OOIL to HKD 143, maintaining an optimistic “overweight” rating on both companies. The bank forecasts that the industry’s de-stocking processes may have been excessively pessimistic, suggesting that COSCO and OOIL could potentially outperform other companies in the shipping industry. Moreover, JP Morgan highlighted positive signs in both US and Chinese export data, indicating a glimmer of hope amidst market challenges. The bank also noted that industry share valuations already incorporate numerous negative factors, making the current market conditions favorable for investors. Notably, container yields for fiscal 2023 were reported to be around 8%, representing an attractive level for potential investors.
In contrast, Morgan Stanley took a more cautious stance by lowering its target price for COSCO to HKD 5.60 and OOIL’s to HKD 83.10. The bank assigned an “underweight” rating to both firms, signaling expectations of underperformance compared to sector benchmarks. Morgan Stanley cited future dividend exclusions and lower earnings estimates as the primary factors behind the adjustment. Additionally, the bank expressed concerns over weak trade demand, suggesting that recent fare increases on US routes may not be sustainable. Moreover, Morgan Stanley anticipated a significant surplus of vessel supply in the future, exceeding the growth in demand.
As of Monday night’s closing on the Hong Kong Stock Exchange, COSCO’s shares were valued at HKD 7.13, while OOIL’s shares stood at HKD 104.40.
These differing forecasts from JP Morgan and Morgan Stanley reflect the ongoing uncertainty in the market and the complex factors influencing the maritime industry. Investors and industry observers will closely monitor the performance of COSCO Shipholding and OOIL, as they navigate through these challenging times and strive to position themselves competitively in the global shipping landscape.
Source: Alphaliner
