COSCO SHIPPING Holdings In-Depth Analysis: The Triple Logic of US-Israel-Iran Conflict, Cycle Recession, and Value Reassessment

Image source: TuChong Creative

Source | Times Business Research Institute

Author | Hao Wenran

Editor | Han Xun

On March 19, 2026, COSCO SHIPPING Holdings (601919.SH) released its 2025 annual report. The company achieved an operating revenue of 219.5B yuan for the full year, a decrease of 6.14% year-on-year; net profit attributable to parent company shareholders was 30.87B yuan, a significant decline of 37.13% year-on-year. This “slight revenue decline, sharp profit drop” financial report is far from the peak profit level of over 100 billion yuan in 2022, showing clear signs of a cyclical downturn.

However, just before and after the release of the annual report, the conflict between the US, Israel, and Iran suddenly escalated. The Strait of Hormuz once experienced an extreme situation of zero navigation, and the SCFI index rose by 28% after the conflict. On March 3, the A-share shipping sector collectively strengthened, with COSCO SHIPPING Holdings rising over 9%, once again becoming a market focus.

Between a rise and a fall, COSCO SHIPPING Holdings reached a critical crossroads. In the short term, the surge in freight rates caused by geopolitical conflicts is boosting profit expectations for 2026; in the medium term, the reallocation of over 150 billion yuan in cash will determine the company’s valuation attributes; in the long term, digital supply chain transformation is quietly reshaping the company’s core. Under these three intertwined logics, the company’s investment value is undergoing a quiet but profound restructuring.

Cyclical decline highlights value stock attributes

In 2025, COSCO SHIPPING Holdings is undergoing a stress test after the cyclical downturn. The company’s revenue decreased by 6.14% year-on-year, while net profit attributable to parent shareholders fell by as much as 37.13%. This “slight revenue decline, large profit drop” gap reveals the typical difficulties faced by cyclical stocks during freight rate declines.

The core reason lies in the sharp fall in freight rates. In 2025, the Shanghai Containerized Freight Index (SCFI) and China Export Container Freight Index (CCFI) both averaged down by 37% and 23%, respectively, compared to the previous year.

Meanwhile, the company’s container shipping operating costs increased by 6.16% to 45.55B yuan. Under the dual pressure of revenue compression and cost increase, the gross profit margin of container shipping dropped sharply by 9.79 percentage points to 19.44%.

The rise in costs stems from multiple factors: increased fixed expenses due to fleet expansion, investments in technological upgrades driven by environmental compliance pressures, and surges in operating costs caused by geopolitical tensions—all eroding profit margins.

The decline in net operating cash flow also confirms the downward trend in core business. In 2025, the company’s net cash flow from operating activities was 25.38B yuan, a significant decrease of 34.29% year-on-year, consistent with the profit decline.

On the investment and financing side, COSCO SHIPPING Holdings’ net cash outflow from investing activities narrowed to 51.74B yuan, mainly due to reduced expenditures on shipbuilding and terminal construction; meanwhile, net cash outflow from financing activities surged to 150.88B yuan, mainly used for dividend distribution and share repurchases.

However, contrasting with the profit decline, the company’s financial structure remained resilient. At the end of 2025, cash and cash equivalents totaled 2.48B yuan, and the asset-liability ratio dropped to 41.42%. Financial expenses were -7.94B yuan, indicating that interest income and other investment returns had already exceeded debt interest expenses.

Notably, COSCO SHIPPING Holdings achieved investment income and financial net income of 5.46B yuan for the full year, accounting for 25.73% of total profit; among them, investment income was 6.56B yuan, up 13.71% year-on-year, forming a rare “financial management profit” structure among A-share listed companies.

Dividend and buyback efforts are also substantial. In 2025, the company’s total share repurchase amount was equivalent to 15.41B yuan; combined with cash dividends of 16.67B yuan (accounting for 50% of net profit attributable to parent), total shareholder returns approached 22 billion yuan. Based on A-share stock prices, the dividend yield reached 7.6%, highlighting its value stock attributes.

While actively rewarding shareholders, COSCO SHIPPING Holdings is also ramping up capacity expansion. By the end of 2025, the company’s construction-in-progress projects were valued at 820k yuan, down 35.97% year-on-year, mainly because “the completion of in-progress terminal projects and shipbuilding projects has been transferred to ‘fixed assets’.” This conversion suggests that new ship deliveries are expected to accelerate.

As of the end of 2025, COSCO SHIPPING Holdings held 54 new ship orders, with a total capacity exceeding 820k TEUs. In terms of green transformation, the first domestic 16,000 TEU methanol dual-fuel container ship, “COSCO Shipping Yangpu,” was successfully named at the beginning of 2025. In January 2026, the company invested an additional 18.77B yuan to order 12 18,000 TEU LNG dual-fuel ships and 6 3,000 TEU container ships.

Times Business Research Institute believes that the future valuation logic of COSCO SHIPPING Holdings depends on the use of its 150 billion yuan cash reserve. If “continuous buybacks + high dividends” are maintained, the company could be viewed as a “bond-like” asset, attracting long-term investors seeking stable returns; if it expands capacity and increases investments in green fuels and digitalization, it is evolving toward a “global supply chain infrastructure platform,” with potential growth space. The capital expenditure plans and buyback intensity in 2026 will be key indicators to observe the company’s strategic choices.

Supply chain revenue defies the trend and grows, digital platform transformation shows results

While traditional shipping business faces pressure, another growth curve of COSCO SHIPPING Holdings is quietly emerging.

In 2025, the company achieved supply chain revenue of 44.89B yuan outside of shipping, a year-on-year increase of 9.64%. This is an important strategic signal of the company’s evolution from a “shipping company” to a “digital supply chain platform.”

During the reporting period, the company issued over 800k blockchain electronic bills of lading, implemented 12 customized industry solutions (covering automotive, home appliances, cross-border e-commerce, and other vertical fields), and is constructing 42 methanol dual-fuel ships. These digital developments reflect the company’s deep logic of embedding digitalization and green transformation into customer supply chains.

Specifically, the scale effect of digital supply chains has become evident. The company’s self-built GSBN blockchain platform’s electronic bill of lading issuance has improved customs clearance efficiency by 70% compared to paper processes; the smart freight rate management platform and blockchain electronic bills of lading are now used in over 90 countries and regions.

Currently, the 800k yuan in supply chain revenue accounts for about 20% of total revenue, forming a considerable scale. The 9.64% growth rate is particularly impressive against the backdrop of overall revenue contraction. If in 2026 the proportion of supply chain revenue can exceed 30% and maintain double-digit growth, COSCO SHIPPING Holdings may add a “digital supply chain” label to its existing “shipping port” assets, with key metrics being the gross profit margin of supply chain business and customer stickiness.

“Double-edged sword” of US-Israel-Iran conflict

On February 28, 2026, the US-Israel-Iran conflict erupted, and tensions in the Strait of Hormuz intensified. On March 14, the strait approached “zero navigation.” As a global energy bottleneck, the Strait of Hormuz accounts for about 20% of global oil transportation and 30% of maritime oil trade. Its blockade quickly impacted the shipping market: on March 2, the VLCC route from the Middle East to China (TD3C) saw a daily TCE increase of 94% to $420k/day.

For container shipping, represented by COSCO SHIPPING Holdings, the direct impact is relatively limited—container volume passing through the Strait of Hormuz accounts for only 2.8% of global volume. But the indirect effects are significant: the Persian Gulf routes are mostly stalled, some shipping companies are resuming new booking services in the Middle East, but using multimodal transport modes that avoid the Strait; freight rates on Europe and trans-Pacific routes continue to rise due to risk premiums and increased costs, with the SCFI Europe and Trans-Pacific routes rising by 20% cumulatively in March.

Many institutions interpret this event as a positive. Huachuang Securities raised COSCO SHIPPING Holdings’ 2026 profit forecast by 23% to 26.4 billion yuan; Huatai Securities adjusted its forecast even more, raising the 2026 net profit estimate by 85% to 28.87 billion yuan. The mechanism is summarized as: rerouting routes via the Cape of Good Hope or shifting to land transportation → effective capacity contraction (~10%) → freight rate surge → revenue increase surpassing fuel/insurance cost increases → net profit growth.

However, Times Business Research Institute believes this geopolitical catalyst is not purely positive, and the actual outcome depends on complex factors such as supply-demand changes, costs, and the duration of the conflict.

First, the conflict-driven rise in oil prices will pressure shipping costs and suppress demand, constraining freight rates on both ends.

Although rerouting via the Cape of Good Hope extends voyage length by 40% and reduces effective capacity by about 10%, the demand-side pressures are offsetting the supply-side benefits. First, oil prices exceeding $100 push up industrial product prices, suppressing terminal consumption and manufacturing output; second, the early replenishment of inventories from late 2025 to early 2026 has already exhausted short-term demand; third, demand on trans-Pacific routes remains weak, with SCFI indices starting to decline from March 20.

Goldman Sachs explicitly issued a “Sell” rating after the March 25 COSCO SHIPPING Holdings roadshow, with a target price of HKD 10.60 in Hong Kong and RMB 13.50 in A-shares. Its core judgment is: excluding the impact of the Hormuz Strait disruption, industry demand growth in 2026 is expected to slow to 3-4%, while supply growth is 4-5%, with net capacity increase only narrowing by 1 percentage point; once the conflict is resolved and the Red Sea reopens, about 10% of effective capacity will be released instantly, potentially leading to severe cash consumption for the company.

Second, the duration of the US-Israel-Iran conflict is highly uncertain.

According to market platform Polymarket’s forecast data on March 24, the probability of a ceasefire before June 30 is about 66%, and the probability of reaching an agreement before April 30 has risen to 51%, compared to 30-40% in mid-March.

This means the freight premium and its duration caused by geopolitical tensions are highly variable. If the conflict is resolved earlier in the year, the supply-demand logic in shipping will quickly reverse, the currently passive capacity contraction will be released, vessel turnaround efficiency will recover, and freight rates will likely fall from high levels.

Meanwhile, according to data from the well-known shipping consultancy Alphaliner, global new ship supply is expected to grow by 3.8% in 2026, with further acceleration to 8.5% in 2027. The combination of these factors could lead to renewed overcapacity.

On the cost side, after the conflict is resolved, oil prices are likely to fall back, easing fuel cost pressures for shipping companies. But given that freight rate elasticity exceeds oil price elasticity, this benefit may not fully offset the profit impact of falling freight rates. The company will still face industry supply-demand deterioration in the medium term.

Core view: Cycles are the surface, value is the core, geopolitical disturbances are hard to change the long-term logic

COSCO SHIPPING Holdings is in a complex quadrant where “cyclical retreat” and “geopolitical premium” intertwine. The 2025 financial report reveals the industry’s return to normalcy after the cycle, with profits shrinking sharply due to declining freight rates and rigid costs. However, its 150 billion yuan cash reserve and over 7% dividend yield provide a solid value foundation, giving it a bond-like defensive attribute.

In the short term, the capacity contraction caused by the US-Israel-Iran conflict seems to boost freight rates and could enhance profit expectations for 2026; but the geopolitical dividend is essentially pulse-like. Once the conflict subsides, the industry will face structural issues of overcapacity and demand slowdown again.

Strategically, the long-term logic of COSCO SHIPPING Holdings depends on how it reallocates its 150 billion yuan cash reserve. With current high dividend yields, the company has value stock attributes; if it successfully expands digitalization and green fuel investments, transforming from a “single shipping operator” into a “global digital supply chain platform,” it could achieve a valuation reconfiguration from cyclical to growth/infrastructure attributes. Beyond freight rate fluctuations, cash flow distribution strategies and supply chain revenue resilience are key to determining its future valuation center.

(Full text 3532 words)

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