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

Ask AI · How Do the US-Iran Conflict and the Risk of Imbalanced Supply and Demand Affect Shipping Rates and the Outlook?

Source|Times Business Research Institute

Author|Hao Wenran

Editor|Han Xun

On March 19, 2026, COSCO SHIPPING Holdings Co., Ltd. (601919.SH) released its 2025 annual report. For the full year, the company achieved operating revenue of RMB 219.5B, down 6.14% year over year; attributable net profit was RMB 30.87B, down sharply 37.13% year over year. Compared with the peak profit level of more than RMB 100 billion in 2022, this earnings report of “slightly lower revenue but much lower profit” already shows a clear gap, exhibiting obvious characteristics of a cyclical decline.

However, just as the annual report was released and around that time, the US-Iran conflict suddenly escalated. The Strait of Hormuz once saw an extreme situation of zero sailings. After the conflict, the SCFI index rose 28%. On March 3, A-share shipping stocks strengthened across the board; COSCO SHIPPING Holdings’ increase exceeded 9%, once again becoming a highly focused target for the market.

Between the up and the down, COSCO SHIPPING Holdings has arrived at a critical crossroads. In the short term, the surge in freight rates driven by geopolitical conflict is thickening the 2026 earnings outlook; in the medium term, the direction for the redeployment of its massive cash holdings of over RMB 150 billion will determine the company’s valuation characteristics; in the long term, the digital supply chain transformation is quietly reshaping the company’s DNA. With these three layers of logic intertwined, the company’s investment value is undergoing a reconstruction beneath the calm surface.

As the cycle ebbs, the value-stock attribute becomes prominent

COSCO SHIPPING Holdings in 2025 is undergoing a stress test after the cycle has ebbed. The company’s revenue declined 6.14% year over year, while attributable net profit fell as much as 37.13%. This “revenue slightly down, profit sharply down” scissors gap reveals the typical predicament of cyclical stocks during periods when freight rates are falling.

Its core reason lies in the sharp retreat of freight rates. In 2025, the Shanghai Export Containerized Freight Index (SCFI) and the China Export Containerized Freight Index (CCFI) both fell in their full-year averages by 37% and 23%, respectively, year over year.

At the same time, the company’s operating costs in its container shipping business rose 6.16% year over year to RMB 45.55B. Under the squeeze in both revenue and costs, the container shipping business’s gross margin fell sharply by 9.79 percentage points, dropping to 19.44%.

Multiple factors drove the rise in costs: increased rigid expenditures from fleet expansion, technical upgrade investments under environmental compliance pressure, and a surge in operating costs triggered by geopolitical politics, all jointly eroding profit space.

The decline in net operating cash flow also confirms the downturn in the main business from another angle. In 2025, the company’s net cash flow generated from operating activities was RMB 25.38B, down 34.29% year over year, matching the timing rhythm of the profit decline.

On the investment and financing side, net cash outflows from investing activities narrowed to RMB 51.74B, mainly because year over year spending on shipbuilding and port construction decreased; while net cash outflows from financing activities increased sharply to RMB 150.88B, mainly used for distributing dividends and repurchasing shares.

However, compared with the profit decline, COSCO SHIPPING Holdings’ capital structure has maintained good resilience. At the end of 2025, the company’s cash and cash equivalents balance was as high as RMB 2.48B, and its asset-liability ratio fell to 41.42%. Finance costs were RMB -7.94B, meaning that investment income such as interest income has already exceeded interest expense from liabilities.

It is worth noting that for the full year, COSCO SHIPPING Holdings generated investment income and net financial gains of RMB 5.46B, accounting for 25.73% of total profit. Among them, investment income was RMB 6.56B, up 13.71% year over year, forming an uncommon “money-making from financial management” financial structure among listed companies in A-shares.

Dividend and repurchase intensity are also significant. In 2025, the company’s total share repurchase amount, converted into RMB, was RMB 15.41B. Together with cash dividends of RMB 16.67B distributed throughout the year (accounting for 50% of attributable net profit), the total return to shareholders was nearly RMB 22 billion. Based on A-share share prices, the dividend yield reaches 7.6%, highlighting its value-stock nature.

While actively rewarding shareholders, COSCO SHIPPING Holdings is also stepping up fleet expansion. At the end of 2025, the company’s construction in progress was RMB 820k, down 35.97% year over year. The company said this was mainly because “relevant projects of construction-in-progress terminals and ships were completed and transferred from this project to be reported as ‘fixed assets.’” The conversion to fixed assets implies that new vessel deliveries are likely to accelerate.

As of the end of 2025, COSCO SHIPPING Holdings held newbuild orders for 54 ships, with total capacity exceeding 820k TEUs. For green transformation, at the beginning of 2025, the first domestic 16,000 TEU methanol dual-fuel container vessel, “COSCO SHIPPING Yangpu,” was successfully named. In January 2026, the company invested another RMB 18.77B to place orders for 12 LNG dual-fuel vessels of 18,000 TEU and 6 container ships of 3,000 TEU.

Times Business Research Institute believes that the valuation logic for COSCO SHIPPING Holdings in the future depends on the use of its cash of RMB 150 billion. If “continuous share repurchases + high dividends,” the company could be benchmarked to “bond-like” assets, attracting long-term capital seeking stable returns; if the company expands fleet capacity and increases investment in green fuels and digitalization, it would evolve toward a “global supply chain infrastructure platform,” with the potential to unlock growth space. The direction of capital expenditures in 2026 and the scale of share repurchases will become the core observation points for assessing the company’s strategic choices.

Supply-chain revenue grows against the trend, digital platform transformation shows results

While the traditional shipping business faces pressure, another growth curve for COSCO SHIPPING Holdings is quietly taking shape.

In 2025, COSCO SHIPPING Holdings achieved supply-chain revenue other than ocean shipping of RMB 44.89B, up 9.64% year over year. This is an important strategic signal of the company’s evolution from a “shipping company” into a “digital supply chain platform.”

During the reporting period, the company issued more than 800k blockchain electronic bills of lading cumulatively, implemented 12 customized industry solutions (covering vertical sectors such as automobiles, home appliances, and cross-border e-commerce), and 42 methanol dual-fuel powered vessels were under construction. These figures reflect the company’s deep logic of embedding into customers’ industry chains through digitalization and greening.

More specifically, the scale effect of the digital supply chain has already become apparent. The company’s self-built GSBN blockchain platform issues electronic bills of lading, improving customs clearance efficiency by 70% after replacing paper processes; the smart freight-rate management platform and the blockchain electronic bills of lading application have covered more than 90 countries and regions.

At present, supply-chain revenue of RMB 800k accounts for about 20% of total revenue and has formed a sizable scale. In the context of total revenue contraction, the 9.64% growth rate is particularly striking. If the supply-chain revenue share in 2026 can break above 30% and maintain double-digit growth, COSCO SHIPPING Holdings may add a “digital supply chain” label on top of “shipping and ports.” Its key metrics would be the gross margin level of supply-chain business and customer stickiness.

The US-Iran conflict: a “two-edged sword”

On February 28, 2026, the US-Iran conflict broke out, and the Strait of Hormuz fell into heightened tension. On March 14, the strait once came close to “zero sailings.” As the global energy chokepoint, the Strait of Hormuz handles about 20% of the world’s oil transportation volume and 30% of seaborne oil trade volume. Its disruption quickly transmitted to the shipping market: on March 2, the TCE on the TD3C route from the Middle East to China for VLCC jumped 94% day over day to USD 420k per day.

For container transport represented by COSCO SHIPPING Holdings, the direct impact is relatively limited—container cargo passing through the Strait of Hormuz accounts for only 2.8% of global cargo volume. But the indirect impact cannot be ignored: the Persian Gulf routes are essentially at a standstill; some shipping companies have begun restoring new booking business in the Middle East, but they adopt multimodal transport modes, and vessels will not pass through the Strait of Hormuz for the time being. On European routes and overland routes, freight rates continued to rise due to risk premiums and cost push; by March, the cumulative increase in SCFI rates for European and overland routes reached 20%.

Multiple institutions interpreted the event as a positive in their latest research reports. Huachuang Securities raised its 2026 earnings forecast for COSCO SHIPPING Holdings by 23% to RMB 26.4 billion; Huatai Securities adjusted even more, raising its 2026 net profit forecast by 85% to RMB 28.87 billion. The impact mechanism can be summarized as: route diversions via the Cape of Good Hope or a switch to sea-to-land transport modes → effective fleet capacity contraction by about → freight-rate spike → incremental income more than offsets incremental fuel/insurance premium costs → net profit improves.

However, Times Business Research Institute believes this geopolitical catalyst is not one-way positive; its actual outcome is affected by complex factors including supply-demand changes, cost-side effects, and the duration of the conflict.

First, higher oil prices caused by the conflict will put cost pressure on shipping companies, while also dampening demand, leaving both ends of freight rates constrained.

Re-routing via the Cape of Good Hope extends the voyage by 40% and contracts effective fleet capacity by about 10%, but three layers of pressure on the demand side are offsetting the supply-side benefits. First, oil prices surpassing USD 100 boost prices of industrial goods, suppressing terminal consumption and manufacturing output. Second, preemptive inventory replenishment from late 2025 to early 2026 has already drawn down near-term demand. Finally, demand on trans-Pacific routes remains weak; starting March 20, SCFI rates on the US line have already begun to fall.

After the March 25 roadshow for COSCO SHIPPING Holdings, Goldman Sachs explicitly issued a “sell” rating, with an H-share target price of HKD 10.60 and an A-share target price of RMB 13.50. Its core judgment is: after excluding the impact of the Hormuz Strait disruption, the industry demand growth rate in 2026 is expected to slow to 3%–4%, supply growth is 4%–5%, and the net fleet capacity supply increase would narrow by only about 1 percentage point; but once the conflict is resolved, the resumption of Red Sea routes could instantly release about 10% of effective capacity, potentially putting the company in a situation of severe cash consumption.

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

According to prediction data from the market platform Polymarket as of March 24, the probability of a ceasefire being reached by June 30 is about 66%, while the probability of reaching an agreement by April 30 has risen to 51%, having hovered in the 30%–40% range in mid-March previously.

This means both the magnitude of freight-rate premiums and the length of time they persist have significant variability. If the conflict is resolved by mid-year or even earlier, the supply-demand logic in the shipping market will quickly reverse: the capacity that is currently passively contracted will be released again, vessel turnaround efficiency will return to normal, and freight rates are bound to fall from their high levels.

Meanwhile, according to data from the well-known shipping consultancy Alphaliner, global new vessel supply in 2026 is expected to grow by 3.8%, and the growth rate in 2027 will further rebound to 8.5%. With both factors combined, the risk of fleet overcapacity may reemerge.

On the cost side, after the conflict is resolved, oil prices would likely fall in tandem, easing fuel-cost pressure for shipping companies. However, given that freight-rate elasticity is higher than oil-price elasticity, this benefit may not be enough to offset the profit impact from freight-rate declines. In the medium term, the company still needs to face pressure from worsening industry supply and demand.

Key takeaway: cycles show on the surface, value is underneath; geopolitical disruptions are unlikely to change the long-term logic

COSCO SHIPPING Holdings sits in a complex quadrant where “cyclical ebb” and “geopolitical premium” intertwine. The 2025 financial results reveal performance pressure as the shipping industry returns to normal; profits have retreated sharply as freight rates fall and cost rigidity squeezes margins. However, the company’s RMB 150 billion cash reserves and dividend yield of over 7% provide a solid value foundation, giving it a defensive attribute similar to bond-like assets.

In the short term, the passive contraction of fleet capacity caused by the US-Iran conflict lifts freight rates, seemingly able to thicken the 2026 earnings outlook; but geopolitical dividends are essentially pulse-like. Once the conflict ends, the industry will once again confront the structural contradiction of fleet overcapacity and demand slowdown.

From a strategic perspective, COSCO SHIPPING Holdings’ long-term logic depends on how its massive cash of RMB 150 billion is redeployed. With the current high dividend, the company has value-stock attributes. If it can also, through digital transformation and green power deployment, successfully evolve from a “single shipping carrier” into a “global digital supply chain platform,” the company would achieve a valuation reconstruction from cyclical attributes toward growth/infrastructure attributes. Beyond freight-rate volatility, the cash-flow allocation strategy and the growth resilience of supply-chain revenue are the key factors that determine the center of gravity of its future value.

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