Shares in Cosco Shipping Energy Transportation (CSET) plunged in the first trading day since one of its major subsidiaries was put on Washington’s sanctions list.
On Monday, the shares closed down 21.1% at HKD 3.47 ($0.44) on the Hong Kong Stock Exchange, having collapsed by 23% during intra-day trading. CSET’s Shanghai-listed shares fell by the daily limit of 10% to CNY 6.72 ($0.94).
CSET is one of the world’s largest shipping companies by market capitalisation. The collapse on Monday wiped out nearly $760m in shareholders’ value in Hong Kong.
Shares of the company had been temporarily suspended since 26 September as CSET sought to “verify rumours circulating” that some of its subsidiaries were subject to US sanctions,” according to an exchange filing.
Cosco Shipping Tanker (Dalian) Co, one of CSET’s main shipowning entities, is one of the Chinese companies listed by the US Office of Foreign Assets Control as a banned entity for allegedly violating Iran-related sanctions.
“The company is comprehensively organising its various businesses, assessing the relevant impact, and conducting various response work,” CSET said of the impact of sanctions on its business.
“The company has been committed to being a leader in the global energy transportation industry with strong international competitiveness, brand influence and customer satisfaction.
“Regardless of any changes to the external operational environment, the company will continue to adhere to applicable laws and regulations in the conduct of its business operations, and strive to protect the interests of its shareholders and investors.”
Analysts at China International Capital Corp cut their target price for CSET shares in Hong Kong by 25% and by 17% in Shanghai.
“Following the announcement of the sanctions, some clients of CSET have switched to other tanker owners,” they said in a note.
“Given the direct impact on investor risk appetites, we cut our target price.”
Based on Huatai Research's estimates, Cosco Dalian contributed 39% of CSET’s net profit in the first half of this year.
