Transport Sector, China and Asia-focused Research

Charles De Trenck

Thematic (Sector/Industry)

Note: wins and losses are listed at the end of the piece.Transport has been on a roll. A month ago we saw crazy buying any which way with weak names rising more than better names. US Rail has done ok though not stellar. US Airlines have done better. Especially after Warren Buffett portfolio managers did the unthinkable and bought <a href="https://www.smartkarma.com/entities/3663" target="_blank" data-smartkarma-citation="entities:3663:1">American Airlines Group Inc (AAL US)</a>, DAL US and UAL US (announced mid Nov). But US airlines is a whole other turnaround story. Not your run of the mill core transport…

Note: wins and losses are listed at the end of the piece.Transport has been on a roll. A month ago we saw crazy buying any which way with weak names rising more than better names. US Rail has done ok though not stellar. US Airlines have done better. Especially after Warren Buffett portfolio managers did the unthinkable and bought American Airlines Group Inc (AAL US), DAL US and UAL US (announced mid Nov). But US airlines is a whole other turnaround story. Not your run of the mill core transport…

The Rally in Transport Continues in Twists and Turns

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Results of listed terminal operators reveal a weakness in organic earnings as gearing increases. Stricter cost rationalisation and financial risk reduction will retain investment interest. Companies with growth plans command a significant market premium as profitability diminishes.

Results of listed terminal operators reveal a weakness in organic earnings as gearing increases. Stricter cost rationalisation and financial risk reduction will retain investment interest. Companies with growth plans command a significant market premium as profitability diminishes.

Global Port Operators - 3Q16 Profitability Trends Lower on Slackening Growth

Equity Bottom-Up

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

Maersk announced it would make a cash (A $4bn figure was initially thrown out, but this appears too high. Other estimates are Maersk would not likely have paid more than $2bn) offer for leading and family owned North-South carrier Hamburg Sud. These mergers continue to be positive for this poorly run industry. The move is positive for Maersk and for the global containerized transport industry and could see Maersk at about 19% of global capacity.See as well <a href="https://www.smartkarma.com/profiles/356" target="_blank" data-smartkarma-citation="accounts:356">Drewry Maritime Equity Research</a> and its…

Maersk announced it would make a cash (A $4bn figure was initially thrown out, but this appears too high. Other estimates are Maersk would not likely have paid more than $2bn) offer for leading and family owned North-South carrier Hamburg Sud. These mergers continue to be positive for this poorly run industry. The move is positive for Maersk and for the global containerized transport industry and could see Maersk at about 19% of global capacity.See as well Drewry Maritime Equity Research and its…

Implications of Maersk's Hamburg Sud Purchase

We have been negative on A.P. Møller - Mærsk A/S and container shipping for majority of the last few years, <a href="https://www.smartkarma.com/insights/a-p-moller-maersk-a-s-maerskb-dc-why-we-are-turning-sellers-of-apmm" target="_blank">https://www.smartkarma.com/insights/a-p-moller-maersk-a-s-maerskb-dc-why-we-are-turning-sellers-of-apmm</a> &amp; <a href="https://www.smartkarma.com/insights/a-p-moller-maersk-a-s-maerskb-dc-2q16-outlook-subdued-maintain-unattractive" target="_blank">https://www.smartkarma.com/insights/a-p-moller-maersk-a-s-maerskb-dc-2q16-outlook-subdued-maintain-unattractive</a>. The primary reason was underlying weakness in global trade and excessive global capacity. We see early signs of reversal in pricing and APMM being the most operationally leverage to a recovery is set to report strong earnings in 2017. We upgrade APMM to “Attractive” from “Unattractive” earlier and reverse our bearish stance purely on improving sector fundamentals as we look through the noise of rising trade protectionism. We expect Maersk Line to return to profitability in FY17. We put our TP at DKK 10,000 which is still conservative with further upside in store as we look for further evidence in our investment thesis to play out.

We have been negative on A.P. Møller - Mærsk A/S and container shipping for majority of the last few years, https://www.smartkarma.com/insights/a-p-moller-maersk-a-s-maerskb-dc-why-we-are-turning-sellers-of-apmm &amp; https://www.smartkarma.com/insights/a-p-moller-maersk-a-s-maerskb-dc-2q16-outlook-subdued-maintain-unattractive. The primary reason was underlying weakness in global trade and excessive global capacity. We see early signs of reversal in pricing and APMM being the most operationally leverage to a recovery is set to report strong earnings in 2017. We upgrade APMM to “Attractive” from “Unattractive” earlier and reverse our bearish stance purely on improving sector fundamentals as we look through the noise of rising trade protectionism. We expect Maersk Line to return to profitability in FY17. We put our TP at DKK 10,000 which is still conservative with further upside in store as we look for further evidence in our investment thesis to play out.

A.P. Møller - Mærsk A/S (MAERSKB DC) – Looking Through the Noise, Double Upgrade to "Attractive"

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Orient Overseas International / Equity Bottom-Up

In our comments on the global container shipping segment, we have until recently argued that players on the supply side -- liner operators and other container ship owners -- have not taken the painful steps needed to bring excess supply in line with weakened demand in the near-term, and that the benefits of consolidation weren't likely to be seen for at least another year or two. In the last few weeks, however, we have seen evidence that ship owners are finally biting the bullet and reducing…

In our comments on the global container shipping segment, we have until recently argued that players on the supply side -- liner operators and other container ship owners -- have not taken the painful steps needed to bring excess supply in line with weakened demand in the near-term, and that the benefits of consolidation weren't likely to be seen for at least another year or two. In the last few weeks, however, we have seen evidence that ship owners are finally biting the bullet and reducing…

Container Shipping: Demand Weak, But Supply Side Taking Needed Steps; Hanjin Sold; Focus On OOIL

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.

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AP Moller - Maersk A/S (MAERSKA DC)

The Rally in Transport Continues in Twists and Turns

Note: wins and losses are listed at the end of the piece.Transport has been on a roll. A month ago we saw crazy buying any which way with weak...

Charles De Trenck

Global Port Operators - 3Q16 Profitability Trends Lower on Slackening Growth

Results of listed terminal operators reveal a weakness in organic earnings as gearing increases. Stricter cost rationalisation and financial risk...

Drewry Maritime Financial Research

Implications of Maersk's Hamburg Sud Purchase

Maersk announced it would make a cash (A $4bn figure was initially thrown out, but this appears too high. Other estimates are Maersk would not...

Charles De Trenck

A.P. Møller - Mærsk A/S (MAERSKB DC) – Looking Through the Noise, Double Upgrade to "Attractive"

We have been negative on A.P. Møller - Mærsk A/S and container shipping for majority of the last few...

Drewry Maritime Financial Research

Container Shipping: Demand Weak, But Supply Side Taking Needed Steps; Hanjin Sold; Focus On OOIL

In our comments on the global container shipping segment, we have until recently argued that players on the supply side -- liner operators and...

Daniel Hellberg

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52-week Range

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