Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>After the market close on 21 August, it was reported that Harim Group, Dongwon Group, LX Group, and Hapag-Lloyd have been short-listed as preliminary bidders for HMM.</li>
<li>KDB and KOBC are selling 38.9% stake in HMM on a fully diluted basis. The local media have mentioned that the potential sales price could be about 5-6 trillion won.</li>
<li>We continue to have a Negative view of HMM. e expect additional 20-30%+ downside risk over the next 6-12 months.</li>
</ul>


After the market close on 21 August, it was reported that Harim Group, Dongwon Group, LX Group, and Hapag-Lloyd have been short-listed as preliminary bidders for HMM.
KDB and KOBC are selling 38.9% stake in HMM on a fully diluted basis. The local media have mentioned that the potential sales price could be about 5-6 trillion won.
We continue to have a Negative view of HMM. e expect additional 20-30%+ downside risk over the next 6-12 months.


Privatization of HMM: Hapag-Lloyd, Harim, Dongwon, and LX Groups [Short-Listed Bidding Candidates]

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

AP Moeller - Maersk A/S / Equity Bottom-Up

<ul>
<li>Our monthly index suggests that container rates have bottomed, with easier comps in H2</li>
<li>Lower fuel has been a tailwind for carriers for several months, but that could change</li>
<li>We still think the worst has passed for carriers, a few of which have performed well in '23</li>
</ul>


Our monthly index suggests that container rates have bottomed, with easier comps in H2
Lower fuel has been a tailwind for carriers for several months, but that could change
We still think the worst has passed for carriers, a few of which have performed well in '23


Monthly Container Shipping Tracker | Rates Bottoming | Fuel Tailwind Easing? | (August 2023)

<ul>
<li>
Yes, carrier margins and returns in Q2/H1 plunged dramatically compared to 2022</li>
<li>
Yes, carrier margins and returns in Q2/H1 were quite good by historical standards</li>
<li>In this insight we provide context to help readers evaluate carrier performance in 2023</li>
</ul>



Yes, carrier margins and returns in Q2/H1 plunged dramatically compared to 2022

Yes, carrier margins and returns in Q2/H1 were quite good by historical standards
In this insight we provide context to help readers evaluate carrier performance in 2023


Evergreen Marine: 'H1 Earnings Plunged Dramatically Y/Y' | Also, 'H1 Earnings Were Pretty Damn Good'

<ul>
<li>On Friday container giant <a href="https://www.smartkarma.com/entities/ap-moeller-maersk-a-s" target="_blank" data-smartkarma-citation="entities:22428:1" rel="noopener">AP Moeller - Maersk A/S (MAERSKB DC)</a> raised FY23 guidance, lifting the bottom of its EBITDA range &amp; increasing target FCF from US$2bn+ to US$3bn+</li>
<li>Despite beating Q2 expectations and raising FY guidance, management warned that the "normalization" of container shipping conditions is taking longer than anticipated</li>
<li>Maersk's shares traded down on the news, but the company's statements confirm our thesis: market conditions in 2023 are not nearly as bad as expected (Maersk's TTM ROIC 34%!)</li>
</ul>


On Friday container giant AP Moeller - Maersk A/S (MAERSKB DC) raised FY23 guidance, lifting the bottom of its EBITDA range &amp; increasing target FCF from US$2bn+ to US$3bn+
Despite beating Q2 expectations and raising FY guidance, management warned that the "normalization" of container shipping conditions is taking longer than anticipated
Maersk's shares traded down on the news, but the company's statements confirm our thesis: market conditions in 2023 are not nearly as bad as expected (Maersk's TTM ROIC 34%!)


Maersk Q2: Raised FY23 Guidance | Beat on Earnings, Too | Takeaway: Conditions Not Disastrous

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Keisei Electric Railway Co / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric (9009 JP)</a>'s valuation has deviated from <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>'s since the proposed expansion of Tokyo Disney Sea, Fantasy Springs. That bifurcation should now reverse. </li>
<li>Don't expect a serious fight in <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec (6594 JP)</a>'s hostile for <a href="https://www.smartkarma.com/entities/takisawa-machine-tool-co-ltd" target="_blank" data-smartkarma-citation="entities:7344:1" rel="noopener">Takisawa Machine Tool (6121 JP)</a>.  Fanuc could counter. It is possible others could step up but we wouldn't know. </li>
<li>On the back of the news to spin off and list some logistics ops, <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> is probably a buy on weakness vs Stub Ops Peers. </li>
</ul>



Keisei Electric (9009 JP)'s valuation has deviated from Oriental Land (4661 JP)'s since the proposed expansion of Tokyo Disney Sea, Fantasy Springs. That bifurcation should now reverse. 
Don't expect a serious fight in Nidec (6594 JP)'s hostile for Takisawa Machine Tool (6121 JP).  Fanuc could counter. It is possible others could step up but we wouldn't know. 
On the back of the news to spin off and list some logistics ops, Shenzhen International (152 HK) is probably a buy on weakness vs Stub Ops Peers. 


Last Week in Event SPACE: Takisawa Machine Tools, Kesei Electric/​Oriental, Shenzhen Int’l/E'Way, HMM

South Korea

HMM Co., Ltd. provides marine transportation services.  The Company commands different types of vessels including full container vessels, oil tankers, car carriers, LNG carriers, bulk carriers, and tramps.

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HMM Co., Ltd. (011200 KS)

Privatization of HMM: Hapag-Lloyd, Harim, Dongwon, and LX Groups [Short-Listed Bidding Candidates]

Kim Jae-cheol, the honorary chairman of Dongwon Group, expressed his determination to acquire HMM today, saying, “I think the acquisition of HMM is...

Douglas Kim

Monthly Container Shipping Tracker | Rates Bottoming | Fuel Tailwind Easing? | (August 2023)

Our analysis shows pricing momentum for carriers remains depressed, but stable. In other words, conditions are not deteriorating. But fuel prices...

Tracking Traffic

Evergreen Marine: 'H1 Earnings Plunged Dramatically Y/Y' | Also, 'H1 Earnings Were Pretty Damn Good'

Evergreen, Maersk, and ZIM have all reported H1 results. Yes, margins and returns were a fraction of what they were in 2021-22, but H123 earnings...

Tracking Traffic

Maersk Q2: Raised FY23 Guidance | Beat on Earnings, Too | Takeaway: Conditions Not Disastrous

Maersk Q2 results beat expectations handily. More importantly, the company raised FY23 guidance for EBITDA and FCF, though management also...

Tracking Traffic

Last Week in Event SPACE: Takisawa Machine Tools, Kesei Electric/Oriental, Shenzhen Int’l/E'Way, HMM

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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52-week Range

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Privatization of HMM: Hapag-Lloyd, Harim, Dongwon, and LX Groups [Short-Listed Bidding Candidates]

Kim Jae-cheol, the honorary chairman of Dongwon Group, expressed his determination to acquire HMM today, saying, “I think the acquisition of HMM is...

Douglas Kim

Monthly Container Shipping Tracker | Rates Bottoming | Fuel Tailwind Easing? | (August 2023)

Our analysis shows pricing momentum for carriers remains depressed, but stable. In other words, conditions are not deteriorating. But fuel prices...

Tracking Traffic

Evergreen Marine: 'H1 Earnings Plunged Dramatically Y/Y' | Also, 'H1 Earnings Were Pretty Damn Good'

Evergreen, Maersk, and ZIM have all reported H1 results. Yes, margins and returns were a fraction of what they were in 2021-22, but H123 earnings...

Tracking Traffic

Maersk Q2: Raised FY23 Guidance | Beat on Earnings, Too | Takeaway: Conditions Not Disastrous

Maersk Q2 results beat expectations handily. More importantly, the company raised FY23 guidance for EBITDA and FCF, though management also...

Tracking Traffic

Last Week in Event SPACE: Takisawa Machine Tools, Kesei Electric/​Oriental, Shenzhen Int’l/E'Way, HMM

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Last Week in Event SPACE: Takisawa Machine Tools, Kesei Electric/Oriental, Shenzhen Int’l/E'Way, HMM