Goldman Sachs has issued a research report indicating an upward revision of its net profit forecasts for COSCO SHIP ENGY (01138) for 2026 and 2027 by 11% and 12% respectively, reflecting expectations of higher freight rates. The firm has also increased its target price for the company's Hong Kong-listed shares by 48% to HK$16 and raised its target for the A-shares (600026.SH) by 10% to 18 yuan, while maintaining a "Buy" rating.

The investment bank believes international freight rates possess further room for appreciation, driven by the exit from the market or low utilization rates of shadow fleet and sanctioned vessels, which is expected to keep effective shipping capacity below market projections.

COSCO SHIP ENGY is anticipated to be a primary beneficiary of this upward cycle in freight rates, with an assumption that oil transportation for Venezuela will shift from the shadow fleet to mainstream carriers.

Analysis suggests that in an extreme scenario, a complete lifting of sanctions on Russian or Iranian oil could potentially accelerate the exit of shadow fleet capacity even further, as unsanctioned oil would no longer require transportation via these vessels.

Furthermore, a return of the shadow fleet to mainstream or compliant operations is considered unlikely, as these vessels are typically older, face increasing maintenance demands, and carry heightened regulatory risks, making them more suitable for scrapping.

According to data from Clarksons and S&P Global, shadow fleet and sanctioned vessels currently account for 18% and 16% of total tanker capacity, respectively, measured by deadweight tonnage.