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<Research>CICC Upbeat on Leading Shippers COSCO SHIP HOLD/ SITC/ ZHONGGU LOGISTICS
Recommend 5 Positive 7 Negative 2 |
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If the Middle East war persists for a longer period, attention should be paid to potential efficiency declines and effective capacity losses, including adjustments in the Middle East/ Indian subcontinent routes to absorb capacity, CICC said in a research report. After a plunge in the traffic through Hormuz, numerous shippers stopped accepting cargo destined for the Persian Gulf. Potential alternatives include rerouting around the Cape of Good Hope in Africa and then through the Suez Canal to ports in the Red Sea (such as Jeddah Port in Saudi Arabia), followed by land transport into Gulf countries. Secondly, attention should be given to potential congestion at transshipment ports, as cargo originally destined for the Persian Gulf may be redirected to international transshipment ports due to route adjustments. Focus on congestion situations at ports like Singapore and Port Klang and the subsequent impact on capacity. Lastly, the land transportation system and even the navigation of ships themselves may be affected by fuel oil supply. CICC noted that if Middle East crude oil/ product oil trade continues to be interrupted, countries with high import dependency may see hikes in gasoline and diesel prices or supply constraints, affecting the land transportation system for trucks. CICC was upbeat about global leader COSCO SHIP HOLD (01919.HK), regional leader SITC (01308.HK), and ZHONGGU LOGISTICS (603565.SH), which benefited from container ship rental rates, in view of their strong balance sheets and dividend yields. AASTOCKS Financial News Website: www.aastocks.com |
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