Analysis of COSCO SHIPPING Holdings' RMB 18.8 Billion Shipbuilding Investment: Strategic Layout and Return Outlook of LNG Dual-Fuel Fleet

Now I will conduct a comprehensive analysis of the return outlook and strategic value of COSCO SHIPPING Holdings’ approximately RMB 18.8 billion shipbuilding investment.

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COSCO SHIPPING Holdings announced two major shipbuilding orders on January 13, 2026 [1]:

Project	Quantity	Unit Price	Total Price	Delivery Time	Usage
18,000TEU LNG Dual-Fuel Vessels	12	RMB 1.399 Billion	RMB 16.788 Billion	2028-2029	East-West Main Trunk Routes
3,000TEU Wide-Body Conventional Fuel Vessels	6	RMB 330 Million	RMB 1.98 Billion	2028	International Regional Feeder Routes
Total	18 Vessels	-	Approximately RMB 18.768 Billion	-	-

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Based on the latest financial data [0], COSCO SHIPPING Holdings has a strong capacity to undertake the investment:

Indicator	Value	Evaluation
Market Capitalization	Approximately RMB 230 Billion	Investment accounts for ~8% of market capitalization
P/E Ratio	6.05x	Undervalued
P/B Ratio	0.99x	Below net asset value
ROE	16.14%	Strong profitability
Current Ratio	1.50	Sufficient liquidity
Net Profit Margin	16.78%	Healthy profit margin
Debt Risk	Low risk	Room for leverage expansion

[0]: Q3 2025 EPS was RMB 0.62, 43.32% higher than expected; revenue reached RMB 58.5 Billion, exceeding expectations by 13%.

Factor	Estimate
Single-Vessel Construction Cost	RMB 1.399 Billion (approx. USD 190 Million)
Expected Vessel Lifespan	25 Years
Annual Depreciation Cost	Approximately RMB 56 Million
Daily Operating Cost (including fuel)	Approximately USD 100,000 - 120,000
Annual Operating Days	Approximately 340 Days
Annual Container Slot Revenue Potential (based on 15,000TEU effective loading)	RMB 1.2 - 2.5 Billion, subject to freight rate fluctuations

• Economies of Scale:
  The per-container cost of 18,000TEU large vessels is significantly lower than that of small and medium-sized vessels
• Fuel Savings:
  LNG offers 15-25% cost savings compared to traditional fuels
• Carbon Compliance Advantages:
  Avoids high EU ETS carbon quota expenditures

Risk Type	Details	Mitigation Measures
Overcapacity	Peak new vessel delivery period in 2025-2029	Focus on fleet renewal rather than net capacity expansion
Freight Rate Volatility	Strong cyclicality of container shipping freight rates	Enhance volatility resistance through coordinated trunk-feeder network
Delivery Delays	Tight shipyard production capacity	Select Jiangnan Shipyard with high delivery certainty
LNG Price Volatility	Fluctuations in natural gas prices	Dual-fuel design retains fuel flexibility

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The global shipping industry is facing unprecedented environmental compliance pressure [2][3]:

Regulation	2025 Requirements	2026 Requirements	Future Trends
EU ETS	Covers 70% of emissions	Covers 100% of emissions	Methane emissions will be included starting 2026
FuelEU Maritime	2% reduction in carbon intensity	Continuous tightening	Achieve -80% by 2050

• In 2024, the shipping industry verified 89.8 million tonnes of CO₂ emissions under EU ETS [3]
• As of the statutory deadline, the quota delivery rate of shipping companies reached over 99%
• Carbon costs are transforming from “hidden costs” to quantifiable operating variables

The strategic position of LNG as a transitional fuel was validated by the market in 2025 [3]:

Advantage Dimension	Specific Performance
Emission Reduction Effect	Approximately 20-25% CO₂ reduction compared to traditional fuel oil, near-zero SOₓ emissions
Technological Maturity	The most complete supply chain and refueling infrastructure
Economics	More stable price and lower cost compared to methanol
Market Recognition	LNG-powered vessels accounted for 67% of alternative fuel orders in the first 11 months of 2025 [3]
Future Upgrade Path	Compatible with bio-LNG and synthetic methane to achieve carbon neutrality

• Evergreen Marine: Ordered 5 24,000TEU + 14 14,000TEU LNG dual-fuel vessels
• ONE: Ordered 8 16,000TEU LNG dual-fuel vessels (with 4 optional vessels)
• HMM: Ordered 12 14,000TEU + 8 13,400TEU LNG dual-fuel vessels

COSCO SHIPPING Holdings’ investment achieves a “dual-curve” strategic layout [1]:

┌─────────────────────────────────────────────────────────┐
│                Low-Carbon Compliance Curve              │
│  ┌─────────┐    ┌─────────┐    ┌─────────┐            │
│  │ EU ETS  │ → │FuelEU   │ → │ IMO Net-Zero │          │
│  │ Carbon  │    │Carbon   │    │ Framework │          │
│  │ Quotas  │    │Intensity│    │           │          │
│  └────┬────┘    └────┬────┘    └────┬────┘            │
│       ↓              ↓              ↓                  │
│   ┌──────────────────────────────────────┐            │
│   │  LNG Dual-Fuel Fleet → Leading Edge  │            │
│   │  in Compliance Costs                 │            │
│   └──────────────────────────────────────┘            │
└─────────────────────────────────────────────────────────┘

┌─────────────────────────────────────────────────────────┐
│                Cost Efficiency Curve                    │
│  ┌─────────┐    ┌─────────┐    ┌─────────┐            │
│  │18000TEU │ + │3000TEU  │ = │ Trunk-Feeder│           │
│  │ Large   │    │Feeder   │    │ Coordinated│           │
│  │ Vessels │    │Vessels  │    │ Network   │           │
│  └────┬────┘    └────┬────┘    └────┬────┘            │
│       ↓              ↓              ↓                  │
│   ┌──────────────────────────────────────┐            │
│   │  Economies of Scale + Network Economies│           │
│   │  → Comprehensive Cost Advantage       │            │
│   └──────────────────────────────────────┘            │
└─────────────────────────────────────────────────────────┘

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Factor	Impact
First-Mover Advantage in Compliance	Under the EU ETS and FuelEU Maritime frameworks, the green fleet can be converted into contract negotiation advantages and customer preference
Cost Structure Optimization	Large-scale vessel deployment + replacement of old vessels with new ones significantly reduce per-container costs
Enhanced Network Resilience	Synchronized investment in trunk and feeder routes improves the stability of the entire network’s services
Improved Asset Quality	Fleet renewal rather than net capacity expansion reduces the average age of the fleet
Definite Delivery Window	Delivery in 2028-2029 avoids the current most crowded delivery period

Factor	Impact
Methane Emission Leakage Issue	EU ETS will include methane emissions starting 2026, requiring enhanced operational management
Overcapacity Cycle	Global peak new vessel delivery may suppress freight rates
Technical Route Risks	Long-term competition from alternative routes such as ammonia fuel and methanol is uncertain
Geopolitical Risks	Trade wars and other factors may affect route layout

COSCO SHIPPING Holdings’ approximately RMB 18.8 billion investment has a sound strategic logic:

• The company has robust financials (low debt risk, sufficient liquidity) and the capacity to undertake the investment [0]
• Positioned as “fleet renewal and upgrade” rather than “pure expansion”, avoiding the risk of cyclical overcapacity
• The LNG dual-fuel route is currently the most operable decarbonization solution

The LNG dual-fuel layout can establish obvious advantages during the 2025-2035 carbon compliance transition period, but attention should be paid to:

• This is a “transitional advantage” rather than an “ultimate advantage”; eventual upgrade to zero-carbon fuels is required
• Methane leakage control will be a key variable determining whether LNG fleets can realize compliance benefits
• Close attention should be paid to the progress of the IMO net-zero framework and global unified carbon pricing

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[0] Jinling API Data

[1] Xinde Maritime - “12 18,000TEU + 6 3,000TEU Vessels: COSCO SHIPPING Holdings Announces Two Heavyweight Orders” (https://finance.sina.com.cn/roll/2026-01-13/doc-inhheqff7263150.shtml)

[2] Shipping Circle - “EU ETS is Here, FuelEU Maritime is Not Far Away” (http://ship.sh/column_article.php?id=4253)

[3] China Energy Conservation Association Carbon Neutrality Professional Committee - “From Blueprint to Reality: Review of Top 10 Green Shipping Achievements in 2025” (http://www.chinaden.cn/news_nr.asp?id=48832)