Merchants Nanyou vs. COSCO Shipping Special: The Offensive and Defensive Strategies of Shipping Titans

Question: Which is more suited to cyclical fluctuations—CNOOC Shipping (招商南油) or COSCO SHIPPING Specialized Carriers (中远海特)?

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Recently, the Middle East situation has escalated again. The U.S. plans to form a convoy protection alliance to respond to Iran’s blockade of the Strait of Hormuz, a critical global oil chokepoint. With the strait’s passage blocked, global oil tankers will be forced to reroute around the Cape of Good Hope, increasing voyage distances, which will directly lead to capacity shortages and soaring freight rates. This geopolitical butterfly effect has shifted market focus to two leading players in the shipping sector—$CNOOC Shipping (SH601975)$ and $COSCO SHIPPING Specialized Carriers (SH600428)$.

Source: CCTV News Official Website

In the first three quarters of 2025, CNOOC Shipping’s revenue was 4.268 billion yuan, down year-over-year, with net profit after non-recurring gains and losses at 935 million yuan, a significant decline; meanwhile, COSCO SHIPPING Specialized Carriers’ revenue reached 16.611 billion yuan, defying the trend with growth, and net profit after non-recurring gains and losses was 1.34 billion yuan, a year-over-year increase. Although CNOOC Shipping’s current profitability efficiency remains impressive, COSCO SHIPPING Specialized Carriers’ growth momentum is even more vigorous, reflecting their fundamentally different strategies for navigating cyclical fluctuations.

1. CNOOC Shipping focuses on liquid bulk, COSCO SHS on specialized vessels

Although both are in shipping, their strategic logic differs greatly.

CNOOC Shipping is a typical vertical deep cultivator, with its four core businesses—refined oil, crude oil, chemicals, and ethylene transportation—contributing over 90% of revenue. Refined oil transportation accounts for 57.92%, crude oil 28.82%. Its focused approach allows it to master the niche market. The company’s gross profit margin for oil transportation has long been above 32%, with crude oil reaching as high as 37.73%, far exceeding industry averages. It’s like a savvy specialty shop owner, leveraging both domestic and foreign trade, maintaining high-profile clients like ExxonMobil and Sinopec, and establishing high barriers in Northeast Asia and east of the Suez Canal. Foreign operations now account for 64.12% of revenue, with higher gross margins than domestic.

Source: Tonghuashun iFinD—CNOOC Shipping (left), COSCO SHS (right). Note: Data based on latest segment proportions from periodic reports.

COSCO SHS resembles a diversified department store giant, with a fleet covering pulp ships, car carriers, semi-submersibles, heavy-lift vessels, and more specialized ships. Pulp ships contribute 25.02%, multipurpose ships 19.29%, car carriers 17.20%. No single business dominates, and this diversified layout provides strong risk resistance. Especially as China’s auto exports grew by 10.4% YoY, its car carrier gross margin surged to 33.51%, becoming a new profit engine. Although its overall gross margin is 21.49%, less stellar than CNOOC Shipping, its export transportation gross margin reaches 26.89%, twice that of import business. Scale effects and full-chain service capabilities form a unique moat.

Source: COSCO SHIPPING Specialized Carriers 2025 interim report

In short, CNOOC Shipping handles standardized large-volume liquid bulk transport, competing on cost control and operational efficiency; COSCO SHS specializes in customized heavy cargo shipping, competing on technical solutions and resource integration. They rarely compete directly, more often dominating their respective niches.

2. CNOOC Shipping is highly efficient in profit, COSCO SHS shows strong growth

Profitability-wise, CNOOC Shipping demonstrates remarkable efficiency, with a net profit margin of 22.41%, more than double COSCO SHS’s 10.61%. This is thanks to its extremely low financial costs and mature management model. However, its revenue declined 14.77% YoY, and net profit after non-recurring items fell sharply by 32.66%, mainly due to the high plateau of international refined oil freight rates. The daily earnings of MR-type vessels dropped 37.18% YoY, dragging down overall performance. Although the company’s period expenses ratio fell to 1.35%, and financial costs even turned negative at -0.98%, meaning interest income covers borrowing costs, this cost-saving cannot fully offset the impact of falling freight rates. The high gross margin hides high volatility risks.

Source: CNOOC Shipping Q3 2025 report

COSCO SHS, on the other hand, has a smooth upward trajectory. Its net profit margin is modest, but revenue is four times that of CNOOC Shipping, maintaining a rapid 37.92% growth rate, with net profit after non-recurring gains and losses increasing 32.19%. More importantly, this growth stems from structural optimization of cargo sources and market share expansion, not just freight rate fluctuations. The company successfully reduced management expense ratio from 7.28% to 5.09%, significantly improving operational efficiency. Its high gross margin in export transportation indicates strong pricing power in high-end freight markets, turning industry growth into tangible profits.

Cash flow data further illustrates this difference: CNOOC Shipping’s operating cash flow net was 1.506 billion yuan, still higher than net profit but down 27.70% YoY, reflecting a short-term weakening of core profitability; COSCO SHS’s cash flow surged 82.68% to 4.262 billion yuan, showing robust cash-generating and expansion capacity.

CNOOC Shipping seems to be relying on past high-margin profits, maintaining a decent position through accumulated advantages; COSCO SHS is planting new trees—though individual trees may not produce much now, the forest is expanding rapidly, as evidenced by 28 new ships added in the first half.

Source: COSCO SHIPPING Specialized Carriers 2025 interim report

3. CNOOC Shipping is cash king, COSCO SHS leverages debt for expansion

Asset and liability structures reveal their operational strategies.

CNOOC Shipping is extremely conservative. Its debt-to-asset ratio is only 11.74%, down sharply from 32.95% in 2020; it holds a large cash reserve, with cash and equivalents accounting for 37.10% of total assets, and no short-term debt. Its current ratio and quick ratio both exceed 5.7 and 5.3, respectively. This means no debt repayment pressure, and even interest income alone can cover operating costs. Such extreme safety margins ensure resilience in downturns but also lead to large idle cash, prompting market questions about capital utilization efficiency.

Source: Haohai Investment Research

COSCO SHS adopts a more aggressive approach, with a debt-to-asset ratio of 57.92%, slightly above industry average but stable overall, indicating moderate leverage to support its large shipbuilding plans. Leasing liabilities account for 21.38%, reflecting its strategy of rapid capacity expansion through operational leasing. Although its quick ratio is 0.93, slightly below safety levels, this indicates a tight short-term liquidity position, but also confidence from management in future growth. Borrowing to buy ships to seize geopolitical and manufacturing export opportunities—if successful—means current debt could generate excess profits.

In terms of asset structure, aside from cash, CNOOC Shipping’s fixed assets account for 46.08%; COSCO SHS’s fixed assets and right-of-use assets total 61.67%, typical of a heavy asset expansion model. CNOOC Shipping is waiting for the next cycle to explode or returning value via high dividends; COSCO SHS is betting on a bigger future, aiming to build an insurmountable moat through scale.

Ultimately, both strategies have their merits—whether they suit current market rhythm and investor preferences depends. CNOOC Shipping’s low debt enhances cyclical resilience, while COSCO SHS’s high leverage amplifies upside gains during boom periods.

In summary, if evaluating current profitability quality and safety margins, CNOOC Shipping is undoubtedly better; but if prioritizing future growth potential and strategic positioning, COSCO SHIPPING Specialized Carriers clearly leads. The former is a defensive cash cow, the latter an offensive growth pioneer.

Note: This article does not constitute investment advice. Stock market risks are inherent; invest cautiously. No buying or selling without risk.