In a report released today, Paul Yong from DBS maintained a Buy rating on CSSC (Hong Kong) Shipping Company Limited (3LL – Research Report), with a price target of HK$2.50.
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Paul Yong has given his Buy rating due to a combination of factors that highlight CSSC (Hong Kong) Shipping Company Limited’s strong financial performance and strategic advantages. The company reported an 11% year-over-year increase in net profit for FY24, aligning with revenue growth, and a 12% increase in dividend per share, resulting in a 7% dividend yield. This financial strength is complemented by CSSC’s deep understanding of the shipping market, with 75% of its vessels under long-term contracts ensuring earnings stability.
Furthermore, CSSC’s ability to generate flexible returns from its fleet, which includes significant exposure to short-term and spot freight rates, contributed to a 17% year-over-year profit growth in 1H24. Despite challenges in China’s ship leasing market, CSSC is expected to achieve a 9% earnings CAGR over FY24-26F, driven by new leasing contracts and the construction of large, high-value vessels. The company’s re-entry into the HK Stock Connect and potential recovery in tanker freight rates are additional catalysts for share price growth, leading to a target price increase to HKD 2.5, implying a potential upside of 50%.
According to TipRanks, Yong is a 3-star analyst with an average return of 6.3% and a 51.52% success rate.