According to reports, Shenwan Hongyuan has reiterated its "Buy" rating for CSSC SHIPPING (03877), citing a solid fleet structure and effective cost control as key strengths, along with a high dividend yield that creates a competitive moat. The company has adjusted its effective tax rate forecast for 2025-2027 to 15% due to changes in OECD tax policies, resulting in revised net profit estimates for 2025-2027 of HKD 2.0 billion, 2.2 billion, and 2.4 billion, respectively (previously estimated at 2.3 billion, 2.6 billion, and 2.8 billion), corresponding to P/E ratios of 5.8, 5.5, and 5.0 times.

The report cites the company’s interim report, noting that in the first half of 2025, it secured contracts for six newbuild vessels amounting to USD 308 million, where 100% were mid-to-high-end ship types, including four MR tankers and two methanol dual-fuel MR tankers. As of June 30, 2025, the company’s fleet comprised 143 vessels, with 121 in operation and 22 under construction. The average age of operating vessels is approximately 4.13 years, making the fleet competitive.

The average remaining lease term for contracts exceeding one year is 7.64 years, providing a longer duration that enhances performance stability. The company primarily operates ships constructed in China, which boosts its market competitiveness under the backdrop of port fee exemptions. Furthermore, as of the end of June 2025, the average financing cost for the company was controlled at 3.1%, representing a decrease of 40 basis points since the beginning of the year.

The group’s debt-to-asset ratio was reported at 65.2%, down 2.3% from the end of the previous year. Total interest-bearing debt amounted to approximately HKD 25.55 billion, down 7.4% since the end of 2024, which includes around USD 1.6 billion, CNY 9.06 billion, HKD 2.02 billion, and EUR 140 million in loans, showcasing diversified borrowing currencies that effectively reduce interest expenses arising from high U.S. Treasury yields.

The company declared an interim dividend of HKD 0.05 per share in mid-2025, surpassing last year’s interim dividend of HKD 0.03 per share. With a projected dividend payout ratio of 30% by the end of 2024, and assuming the same payout ratio remains through to the end of 2025, combined with the mid-year dividend, the indicative full-year dividend yield would be approximately 7.7%.