Pan-Asia Tactical Market Calls (Quant-Driven), MRM Research

Nico Rosti

Pan-Asia Tactical Market Calls (Quant-Driven)

MRM Research

Quantitative Research

Equity Derivatives

COSCO SHIPPING Energy Transportation / Equity Derivatives

COSCO SHIPPING Energy Transportation (1138 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> recently wrote that the rally in <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation (1138 HK)</a> stock price over the last couple of months may trigger a global index inclusion in May.</li>
<li>The stock stalled/sold off since the Iran war started, our model identified possible support levels for a tactical entry ahead of potential passive tracker buying on May 29.</li>
<li>Bullish momentum for this stock will be affected by geopolitical risk in the next few weeks, buying the 17-16 price zone is our target. Higher Close this week = SHORT.</li>
</ul>



Brian Freitas recently wrote that the rally in Cosco Shipping Energy Transportation (1138 HK) stock price over the last couple of months may trigger a global index inclusion in May.
The stock stalled/sold off since the Iran war started, our model identified possible support levels for a tactical entry ahead of potential passive tracker buying on May 29.
Bullish momentum for this stock will be affected by geopolitical risk in the next few weeks, buying the 17-16 price zone is our target. Higher Close this week = SHORT.


COSCO SHIPPING Energy (1138 HK) Tactical Outlook Ahead of Possible Global Index Inclusion In May

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

COSCO SHIPPING Energy Transportation / Index Rebalance

<ul>
<li>The rally in the stock price over the last couple of months could result in <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation (1138 HK)</a> being added to a global index in May.</li>
<li>
<a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)</a> has outperformed its peers but still trades cheaper on comparable valuation metrics.</li>
<li>The <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-transpor" target="_blank" data-smartkarma-citation="entities:29897:1" rel="noopener">COSCO SHIPPING Energy Transpor (600026 CH)</a> / <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation (1138 HK)</a> premium has jumped recently and could move lower in the short-term.</li>
</ul>


The rally in the stock price over the last couple of months could result in Cosco Shipping Energy Transportation (1138 HK) being added to a global index in May.

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) has outperformed its peers but still trades cheaper on comparable valuation metrics.
The COSCO SHIPPING Energy Transpor (600026 CH) / Cosco Shipping Energy Transportation (1138 HK) premium has jumped recently and could move lower in the short-term.


COSCO Shipping Energy (1138 HK): Global Index Inclusion & The A/H Premium

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

COSCO SHIPPING Energy Transportation / Equity Bottom-Up

<ul>
<li>The market consensus is too conservative for <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation Co. (1138 HK)</a>. A better-than-expected 3Q25 result is likely to prompt an earnings upgrade.   </li>
<li>Spot VLCC rate is 32.7% higher than 1H25 so far for 2H25, and average bunker price has declined 6.2% in 3Q25, both implying improved earnings prospects.</li>
<li>With an average ROE for FY25-27 at over 12%, its 1.05x P/B is not stretched. During FY20-23, the average ROE of 1.6% has supported a P/B ratio of 0.56x. </li>
</ul>


The market consensus is too conservative for Cosco Shipping Energy Transportation Co. (1138 HK). A better-than-expected 3Q25 result is likely to prompt an earnings upgrade.   
Spot VLCC rate is 32.7% higher than 1H25 so far for 2H25, and average bunker price has declined 6.2% in 3Q25, both implying improved earnings prospects.
With an average ROE for FY25-27 at over 12%, its 1.05x P/B is not stretched. During FY20-23, the average ROE of 1.6% has supported a P/B ratio of 0.56x. 


COSCO Shipping Energy (1138 HK): Preparing for Upside Surprise

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation (1138 HK)</a> will benefit from the oil supply worry as Israel and Iran are unlikely to reach a "real" peace agreement in the short term. </li>
<li>The worry, or actual, closure of Hormuz will raise VLCC rates by escalating reserve building, increasing demand for alternative routes, a higher risk premium, and panic chartering.</li>
<li>After yesterday's retreat, CSET trades on an undemanding 5.8x PER and 8.8% yield for FY25F. With over 12% ROE, its 0.73x P/B is cheap, below the average since 2023. </li>
</ul>



Cosco Shipping Energy Transportation (1138 HK) will benefit from the oil supply worry as Israel and Iran are unlikely to reach a "real" peace agreement in the short term. 
The worry, or actual, closure of Hormuz will raise VLCC rates by escalating reserve building, increasing demand for alternative routes, a higher risk premium, and panic chartering.
After yesterday's retreat, CSET trades on an undemanding 5.8x PER and 8.8% yield for FY25F. With over 12% ROE, its 0.73x P/B is cheap, below the average since 2023. 


COSCO Shipping Energy (1138 HK): A Viable Play on the Israel-Iran Conflict

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy (1138 HK)</a> has a significant 91.5% rally YTD. However, the market seems to have assumed that the current elevated VLCC rate is sustainable, and we doubt it.</li>
<li>Despite the attack on Iran and the paralysis of the Strait of Hormuz, history has taught us that such an outrageous rate level will normalise within a couple of months.  </li>
<li>Its 2x P/B is 4SD higher than the average since FY22. To justify it, the FY26 net profit needs to be 4.4x above the consensus - this is not possible. </li>
</ul>



Cosco Shipping Energy (1138 HK) has a significant 91.5% rally YTD. However, the market seems to have assumed that the current elevated VLCC rate is sustainable, and we doubt it.
Despite the attack on Iran and the paralysis of the Strait of Hormuz, history has taught us that such an outrageous rate level will normalise within a couple of months.  
Its 2x P/B is 4SD higher than the average since FY22. To justify it, the FY26 net profit needs to be 4.4x above the consensus - this is not possible. 


COSCO Shipping Energy (1138 HK): Is It Too Stretched?

China

COSCO SHIPPING Energy Transportation is a specialized company primarily engaged in the global shipment of energy, including crude oil, refined oil products, liquefied natural gas (LNG), and liquefied petroleum gas (LPG). It also provides vessel chartering and shipping agency services. The company is headquartered in Shanghai, China, and was established in 2016.

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COSCO SHIPPING Energy Transportation (1138 HK)

COSCO SHIPPING Energy (1138 HK) Tactical Outlook Ahead of Possible Global Index Inclusion In May

Cosco Shipping (1138 HK) stands to gain significant tailwinds upon confirmation of the Strait of Hormuz reopening. This note outlines key technical...

Nico Rosti

COSCO Shipping Energy (1138 HK): Global Index Inclusion & The A/H Premium

Following a jump in the stock price, COSCO Shipping Energy could be added to a global index in May. The positioning and passive buying could lead...

Brian Freitas

COSCO Shipping Energy (1138 HK): Preparing for Upside Surprise

CSET surged by 41.7% YTD, and is trading at 1.45x P/B. Although this is the highest level since 2021, its ROE will increase to 13.3% in FY26 and...

Osbert Tang, CFA

COSCO Shipping Energy (1138 HK): A Viable Play on the Israel-Iran Conflict

CSET is poised to benefit from oil supply worries amid Israel-Iran tensions. A closure of Hormuz will raise rates by increasing alternative route...

Osbert Tang, CFA

COSCO Shipping Energy (1138 HK): Is It Too Stretched?

CSET's impressive YTD rally may be unsustainable as the market assumes elevated VLCC rates will continue, but history suggests otherwise. Its P/B...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

COSCO SHIPPING Energy (1138 HK) Tactical Outlook Ahead of Possible Global Index Inclusion In May

Cosco Shipping (1138 HK) stands to gain significant tailwinds upon confirmation of the Strait of Hormuz reopening. This note outlines key technical...

Nico Rosti

COSCO Shipping Energy (1138 HK): Global Index Inclusion & The A/H Premium

Following a jump in the stock price, COSCO Shipping Energy could be added to a global index in May. The positioning and passive buying could lead...

Brian Freitas

COSCO Shipping Energy (1138 HK): Preparing for Upside Surprise

CSET surged by 41.7% YTD, and is trading at 1.45x P/B. Although this is the highest level since 2021, its ROE will increase to 13.3% in FY26 and...

Osbert Tang, CFA

COSCO Shipping Energy (1138 HK): A Viable Play on the Israel-Iran Conflict

​CSET is poised to benefit from oil supply worries amid Israel-Iran tensions. A closure of Hormuz will raise rates by increasing alternative route...

Osbert Tang, CFA

COSCO Shipping Energy (1138 HK): Is It Too Stretched?

​CSET's impressive YTD rally may be unsustainable as the market assumes elevated VLCC rates will continue, but history suggests otherwise. Its P/B...

Osbert Tang, CFA

CSET is poised to benefit from oil supply worries amid Israel-Iran tensions. A closure of Hormuz will raise rates by increasing alternative route...

CSET's impressive YTD rally may be unsustainable as the market assumes elevated VLCC rates will continue, but history suggests otherwise. Its P/B...