Why did the record third-quarter results not yet fully reflect freight rates since September?

  • China Merchants Energy Shipping's third-quarter net profit attributable to shareholders was 5.024 billion yuan, up 327.45% year on year and a quarterly record; attributable net profit for the first three quarters was 11.983 billion yuan, up 263.15% year on year.
  • GF Securities believes the tanker fleet's spot TCE, or equivalent charter revenue measured over operating time, rose in the third quarter from the first half, but mainly reflected voyages booked in 5–August. As a result, the high freight rates since September were not yet fully reflected in the quarter's results.
  • The company deployed most of its capacity outside the Strait of Hormuz and participated in markets including the Atlantic to capture periods of high freight rates.

Why did tanker freight rates rise rapidly?

  • Since September, refined product prices have risen and refinery crack spreads have widened. Refineries increased operating rates, driving demand for crude purchases; meanwhile, transshipments through the Strait of Hormuz reduced vessel turnaround efficiency.
  • Rising demand and the occupation of effective capacity together pushed up freight rates: the average VLCC rate from Oman to China in 9–October rose 328% from 5–August. Orient Securities noted that strait-crossing shuttle operations, ship-to-ship transfers and waiting to load and unload continued to occupy vessels; deliveries of new VLCCs were also constrained by shipbuilding lead times.

How will booked capacity affect subsequent profits?

  • As of the third-quarter report, the company's tanker fleet had booked about two-thirds of its fourth-quarter operating days and some 2027 operating days, at freight rates substantially above the levels actually achieved in 1–September.
  • Huatai Securities forecasts fourth-quarter tanker shipping net profit of 13.6 billion yuan, up 261.9% quarter on quarter. For 2027, it believes the low freight-rate base in the first three quarters of 2026 will support year-on-year growth in the full-year average rate and earnings.
  • GF Securities forecasts net profit attributable to shareholders of 23.4 billion, 28.8 billion and 19.3 billion yuan for 2026–2028, respectively, representing year-on-year growth of 288.4% and 23.1%, followed by a decline of 32.9%. Its forecast depicts a cyclical path of continued growth in 2027 and a profit decline in 2028.

What other businesses contribute beyond tankers?

  • Third-quarter net profit in the dry bulk segment rose 126.7% year on year; geopolitical risks and extreme weather reduced vessel turnaround efficiency and pushed up freight rates.
  • The container business benefited from export demand and a geopolitical risk premium, while the consolidation of Antong Holdings also increased profit; the roll-on/roll-off fleet expanded routes to carry vehicle exports, while LNG project vessels provided relatively stable returns through long-term contracts.