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

<ul>
<li>After peaking in H122, container rates have tumbled back to pre-Covid levels in Q123</li>
<li>We believe core profitability has also declined to pre-Covid levels for some carriers</li>
<li>
<a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a> no longer looks expensive, trading at 70-75% of replacement  cost.</li>
</ul>


After peaking in H122, container rates have tumbled back to pre-Covid levels in Q123
We believe core profitability has also declined to pre-Covid levels for some carriers

Evergreen Marine Corp (2603 TT) no longer looks expensive, trading at 70-75% of replacement  cost.


TRACKING TRAFFIC / Container Shipping: End of the Rollercoaster Ride

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>KLine is the cheapest of the three Japan majors in terms of forward consensus PER. And forward EPS ratios are improving as the company buys back shares. </li>
<li>The CEO mentioned in December the possibility of additional shareholder return this fiscal year based on cashflow. </li>
<li>In this insight, we look at what he knew then, and what he might know now, and the chances for an additional buyback (and how it might work).</li>
</ul>


KLine is the cheapest of the three Japan majors in terms of forward consensus PER. And forward EPS ratios are improving as the company buys back shares. 
The CEO mentioned in December the possibility of additional shareholder return this fiscal year based on cashflow. 
In this insight, we look at what he knew then, and what he might know now, and the chances for an additional buyback (and how it might work).


KLINE (9107) - Chances for an Additional Buyback At Q3 Earnings?

<ul>
<li>Strong but slightly disappointing Q2 earnings from <a href="https://www.smartkarma.com/entities/kawasaki-kisen-kaisha-ltd" target="_blank" data-smartkarma-citation="entities:3548:1" rel="noopener">Kawasaki Kisen Kaisha (9107 JP)</a>, and full-year forecasts are higher, but not as high as consensus. </li>
<li>The company has announced a buyback, to be executed on ToSTNeT-3. Effissimo and Mizuho Bank will participate. Other crossholders could too. </li>
<li>Strategy depends on whether you think they will. If they do not, post-buyback float drops sharply.</li>
</ul>


Strong but slightly disappointing Q2 earnings from Kawasaki Kisen Kaisha (9107 JP), and full-year forecasts are higher, but not as high as consensus. 
The company has announced a buyback, to be executed on ToSTNeT-3. Effissimo and Mizuho Bank will participate. Other crossholders could too. 
Strategy depends on whether you think they will. If they do not, post-buyback float drops sharply.


KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)

HK/China Equity Long-Short

Osbert Tang, CFA

Orient Overseas International / Equity Bottom-Up

<ul>
<li>While <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a> will welcome its inclusion in Hang Seng Index, there is risk that it will follow the pattern that new inclusions performed badly post entry.</li>
<li>Globally, many container shipping stocks have retreated from their peaks in Mar this year, but OOIL is still hovering around its peak level, making is susceptible to a correction.</li>
<li>Challenging factors include softening sequential momentum, peaking out of spot rates, weaker demand picture, increase in supply pressure and declining earnings trend are weighing on the industry and the company.</li>
</ul>


While Orient Overseas International (316 HK) will welcome its inclusion in Hang Seng Index, there is risk that it will follow the pattern that new inclusions performed badly post entry.
Globally, many container shipping stocks have retreated from their peaks in Mar this year, but OOIL is still hovering around its peak level, making is susceptible to a correction.
Challenging factors include softening sequential momentum, peaking out of spot rates, weaker demand picture, increase in supply pressure and declining earnings trend are weighing on the industry and the company.


Orient Overseas Intl (316 HK): Cursed by Index Inclusion?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Global equity indexes have staged impressive rallies from oversold levels, and certain hard-hit areas in Europe (STOXX600 Technology, Industrial Goods &amp; Services, and Chemicals Sectors) display bullish short-term price reversals.</li>
<li>We view this as a <em>potential</em> signal that the lows may have been established for this correction, but we need to see more upside follow-through.</li>
<li>Regardless, we want to stick with Sectors and stocks that have remained technically attractive throughout this pullback, <em>not</em> on areas that are just now spiking from oversold levels within downtrends.</li>
</ul>


Global equity indexes have staged impressive rallies from oversold levels, and certain hard-hit areas in Europe (STOXX600 Technology, Industrial Goods &amp; Services, and Chemicals Sectors) display bullish short-term price reversals.
We view this as a potential signal that the lows may have been established for this correction, but we need to see more upside follow-through.
Regardless, we want to stick with Sectors and stocks that have remained technically attractive throughout this pullback, not on areas that are just now spiking from oversold levels within downtrends.


Value Remains Leadership; Actionable Ideas: Energy, Financials, Industrials, and Materials

Denmark

A.P. Moller - Maersk A/S operates as an integrated transport and logistics company. The Company offers container vessels, supply ships, special vessels, terminals, tug boat activities and reefer container box manufacturing. A.P. Moller-Maersk serves clients worldwide.

D/S Norden A/S is an international shipping company.  The Company operates a fleet of modern bulk vessels and tankers consisting of company owned vessels and long-term and short-term chartered cargo ships.  D/S Norden transports commodities such as coal, fertilizer, grain, sugar, and steels, as well as crude oil and other liquids.  The Company operates worldwide.

DFDS A/S provides passenger and freight shipping services, and offers shipping related logistics solutions.  The Company focuses on two business divisions: DFDS Tor Line operates roro liner traffic in the North Sea, and DFDS Seaways runs overnight cruise ferries between cities in Northern Europe.  DFDS sells to customers with large shipping requirements and to car traveling tourists.

DSV A/S is the parent company for a group of companies that offer transport and logistics.   The Group provides truck, ship, and plane transport services, as well as warehousing and logistic services.  DSV operates in Europe, North America, and the Far East.

DSV A/S provides transport and logistics services. The Company offers road, marine, and air transport services, as well as warehousing, purchase order management, and other logistic solutions. DSV serves customers worldwide.

Kobenhavns Lufthavne A/S (Copenhagen Airports A/S - CPH) owns and operates Kastrup, the international airport in Copenhagen, and Roskilde airport.  The Company provides traffic management, maintenance, and security services, as well as manages the Airport Shopping Center and airport projects.  Kobenhavns Lufthavne also has investments in airports in Mexico, England, and China.

Vestas Wind Systems A/S develops, manufactures, and markets wind turbines that generate electricity. The Company installs and maintenance turbines. Vestas Wind Systems serves customers worldwide.

Rockwool International A/S develops and produces stone wool, a fiber made from melted volcanic rock, and stone-wool-based products such as insulation and fire protection and noise and vibration control products.  The Company's products line also includes acoustic ceilings, facade panels, and horticultural substrates.  Rockwool produces in several countries and sells worldwide.

ISS A/S provides cleaning, office support, property, catering, and integrated facility services. The Company offers security, facility management, change management, space management, and consulting services.

COSCO SHIPPING Holdings Co., Ltd offers marine freight transportation services.  The Company offers container shipping, dry bulk shipping, logistics services, freight forwarding, and terminal and container leasing services internationally.  COSCO SHIPPING Holdings Co., Ltd operates container ships and terminals, and manufactures shipping containers.

Orient Overseas International Ltd, through its subsidiaries, owns and leases ships, operates terminals, and provides freight forwarding and container transportation services.  The Company also develops and invests in properties, leases equipment, and invests in securities.

Kawasaki Kisen Kaisha, Ltd. operates marine cargo and passenger transportation around the world.  The Company provides ocean liner, bulk carrier, car carrier, unscheduled specialized carrier, and energy transportation services. The Company also offers insurance, warehousing, and land transportation services.  Items transported include automobile, grain, petroleum, coal, iron ore, and wood chip.

Nippon Yusen Kabushiki Kaisha mainly provides marine transportation services and transportation management solution from international hub ports to both domestic and international ports. The Company operates container transportation, tramp and specialized carriers, and logistics and cruise lines. Nippon Yusen offers scheduled and unscheduled transportation services around the world.

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.

Evergreen Marine Corp. (Taiwan) Ltd. transports freight by ships. The Company operates container ships to move freight throughout the world. Evergreen Marine has interests in terminals, airline operations and motor freight transportation, as well as container manufacturing.

Mitsui O.S.K. Lines, Ltd. provides marine transportation, warehousing, and cargo handling services.  The Company operates container ship, specialized carrier, oil tankers, and ferry.  Items transported include coal, iron ore, grain, logs, aluminum, cement, industrial salt, copper ore, wood chips, paper products, chemical products, gasoline and other petroleum products, LPG, and other cargoes.

Kuehne + Nagel International AG transports freight worldwide.  The Company operates sea, land, and rail freight transportation businesses and warehousing and distribution facilities.  Kuehne + Nagel also provides related special services.

COSCO SHIPPING Energy Transportation Co., Ltd. offers marine shipping services. The Company provides refined oil transportation, crude oil transportation, and other services. COSCO SHIPPING Energy Transportation also ships iron ores, dry bulks, coal, and other products.

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)

Cosco Shipping Energy Transportation Co. Ltd. (H)

Kirby Corporation operates a fleet of inland tank barges.  The Company transports industrial chemicals, refined petroleum products, black oil products, and agricultural chemicals.  Kirby also overhauls and services diesel engines employed in marine, power generation, and rail applications.

A.P. Moeller-Maersk A/S is a conglomerate with diversified holdings. The Company operates a fleet including container vessels, tankers, supply ships, special vessels, APM terminials, and oil drilling rigs.  A.P. Moeller-Maersk also operates industrial business and explores for and produces oil and gas. The Company is active worldwide.

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AP Moeller - Maersk A/S (MAERSKB DC)

TRACKING TRAFFIC / Container Shipping: End of the Rollercoaster Ride

For container rates and profitability, it's been a wild rollercoaster ride over the past three years. But now shares of pure play Evergreen Marine...

Tracking Traffic

KLINE (9107) - Chances for an Additional Buyback At Q3 Earnings?

KLine (9107) will report earnings on 3 Feb at lunchtime. By that time, Q3 results for ONE should be known and the existing ¥100bn buyback should be...

Travis Lundy

KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)

KLine has ridden shipping rates' rise. Rates are falling. EPS falls will be slower, but will come. Today, a 12.4% buyback announced. Stock is <1x...

Travis Lundy

Orient Overseas Intl (316 HK): Cursed by Index Inclusion?

While news of HSI inclusion is positive, OOIL is now open to the pattern of post-entry weakness. It is facing more challenges and outperformance...

Osbert Tang, CFA

Value Remains Leadership; Actionable Ideas: Energy, Financials, Industrials, and Materials

We are sticking with Sectors and stocks that have remained technically sound throughout this correction, not on areas that are just now spiking...

Vermilion Research

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