On May 28, COSCO Shipping Energy (01138.HK) fell 3.11% in regular trading, trading at HK$16.22/share, with trading volume of approximately HK$136 million, extending recent weakness.

On the news front, the Strait of Hormuz blockage lacks substantive breakthrough, with strait transit volumes remaining at low levels. The oil shipping market is in an overall oversupply condition, compounded by the current industry off-season. VLCC tonnage shows a surplus of ships relative to cargo, with aggregate cargo bookings for March through May declining 54% year-over-year.

Additionally, the company recently announced a RMB 1.018 billion capital increase to its subsidiary Hainan Hainen for the construction of VLCCs and Aframax crude oil tankers, and signed LR2 newbuilding lease contracts totaling approximately RMB 800 million. The capital expenditure expansion has raised market concerns over future cash flow and profitability, further pressuring the stock.

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