Cosco Shipping Energy Transportation (CSET) has forecast a sixfold rise in net profit in the first half of this year, as a result of strong tanker rates and continued expansion of its LNG fleet.
In an exchange filing, Shanghai- and Hong Kong-listed CSET said its net profits are expected to have grown to somewhere between CNY 2.81bn ($401m) and CNY 3.01bn in the period. That's a jump from CNY 470m reported in the same period of 2019.
CSET, ultimately controlled by state conglomerate China Cosco Shipping, recorded net profits of CNY 629m on revenues of CNY 4.07bn in the first quarter.
The company, which operates one of the world’s largest tanker fleets, suggested the first-half results were mainly due to strong VLCC earnings amid severe oversupply of oil healthy.
“The demand for oil transport and storage was high, and there has been heightened volatility in the international tanker freight rate,” CSET said.
“Recognising the market fluctuations, the Group has strengthened its research and judgment on the market, fully leveraged on its advantage of fleet size and optimised vessel arrangements so as to actively load cargoes at high charter rates to secure better earnings.”
In domestic tanker trade, CSET said that the coronavirus pandemic had limited impact and that market activity has returned to normal since the second quarter.
The company also said its revenue from LNG shipping business continued to increase but did not disclose exact figures.
CSET had stakes in 36 LNG carriers in operation as of 30 June, showing a gain of six carriers over the past year.
The company has an LNG orderbook of five vessels, including three 174,000-cbm units it jointly ordered with PetroChina from Hudong-Zhonghua Shipbuilding for $554m last month.
Most tanker companies enjoyed healthy earnings for the first half of this year, riding on buoyant spot and period charter rates for crude and product tankers.
Preliminary results showed China Merchants Energy Shipping, another Chinese tanker giant, achieved net profits between CNY 2.79bn and CNY 3.09bn in the six months.
Share price of CSET closed 5.84% higher at CNY 7.43 in Shanghai and 0.52% higher at HKD 3.86 in Hong Kong on Friday.
The company is expected to issue its full results for the first half of this year on 28 August.
