Chinese Shipping Giant Soars After Forecasting 200x Profit Jump On Exploding Shipping Costs

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by Tyler Durden
Wednesday, Apr 07, 2021 - 07:00 PM

In the past few months, we have extensively discussed the surge in shipping costs (here, here, here and here) as a result of the triple whammy of frayed supply chains, covid and the uneven global reopening, which has sent prices for everything from toilet paper to the lumber used to build houses to record highs. But while inflation is the price we all have to pay - don't worry, the Fed vows it is transitory - there are those on the other end of the table who rejoice when shipping prices soar. One such company China's is Cosco Shipping Holdings, part of state-owned behemoth China Cosco Shipping, whose stock price today surged the most since 2008 in Hong Kong on blowout earnings and after the shipping company forecast first-quarter net profit at 15.41 billion yuan (US$2.36 billion), around 200 times the CNY76 million reported a year earlier, thanks to container rates sky-rocketing due to pandemic-induced supply shortages.

Cosco Shipping's Hong Kong-listed shares were last up 29% at HK$13.66 while its Shanghai-listed shares rose by the daily trading cap of 10% to CNY16.15.

Today's 30% spike is modest compared to the 6x surge in Cosco shares in the past year.

The good days for Cosco are unlikely to end anytime soon. While shipping rates have fallen 10% from year-to-date highs, they are still sharply higher than a year earlier, Jefferies said Andrew Lee adding that a supply bottleneck could drag on in the short-term following the Suez Canal blockage.