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.

Thematic (Sector/Industry)

Counter cyclical investment strategy to run its course, Downgrade to Neutral on multiple headwinds<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/009/137/original/t3.JPG?1465611344" class="editor-image img-responsive" data-smartkarma-image-id="9137"></figure> • Demand for tankers to grow, albeit at a slower pace: The sharp decline in crude prices in 2014-15 on account of supply glut in the crude oil market has turned the fortune of tanker operators. Demand for oil tankers picked up as crude demand surged on account of increased crude consumption and greater stockpiling activity for building Strategic Petroleum Reserves (SPRs) by China and India, as their…

Counter cyclical investment strategy to run its course, Downgrade to Neutral on multiple headwinds • Demand for tankers to grow, albeit at a slower pace: The sharp decline in crude prices in 2014-15 on account of supply glut in the crude oil market has turned the fortune of tanker operators. Demand for oil tankers picked up as crude demand surged on account of increased crude consumption and greater stockpiling activity for building Strategic Petroleum Reserves (SPRs) by China and India, as their…

Tanker Shipping Cycle - Counter Cyclical Investment Strategy to Run Its Course, Downgrade to Neutral

Underperformance continues as markets look past near-term earnings<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/009/135/original/t1.JPG?1465610335" class="editor-image img-responsive" data-smartkarma-image-id="9135"></figure> • The surge in the seaborne crude trade – a result of continued supply glut and low crude prices boosted the fortunes of tanker shipping companies in 2015; tanker operators reported a sharp growth in topline and registered multi-fold increase in earnings and profitability. The year gone by was one of the best for the industry since the GFC in 2008-09 as freight rates remained firm throughout the year; with occasional seasonal…

Underperformance continues as markets look past near-term earnings • The surge in the seaborne crude trade – a result of continued supply glut and low crude prices boosted the fortunes of tanker shipping companies in 2015; tanker operators reported a sharp growth in topline and registered multi-fold increase in earnings and profitability. The year gone by was one of the best for the industry since the GFC in 2008-09 as freight rates remained firm throughout the year; with occasional seasonal…

The rebound in crude oil and gas prices brought some solace to shareholders of gas shipping companies as stocks of LNG and LPG operators started trending up. Nonetheless, investors have been discreet while backing a company. Since the start of the year, Gaslog in the LNG shipping and StealthGas among the LPG ship operators have yielded handsome returns. We believe attractive valuation was one of the driving factor, which led investors to bottom fishing.<ul><li>LPG shipping – US ethylene plants to aid handysize vessels</li><li>LPG shipping – downside capped in coaster segment</li><li>LNG shipping remains subdued, but will improve from 2018</li><li>Chinese effect – gaining prominence in gas shipping, </li><li>China natural gas demand to show steady rise</li><li>China needs additional LNG to meet its growing natural gas demand</li><li>Chinese effect – New shipping capacity required for growing imports</li><li>Chinese LPG consumption is also expected to increase</li></ul>

The rebound in crude oil and gas prices brought some solace to shareholders of gas shipping companies as stocks of LNG and LPG operators started trending up. Nonetheless, investors have been discreet while backing a company. Since the start of the year, Gaslog in the LNG shipping and StealthGas among the LPG ship operators have yielded handsome returns. We believe attractive valuation was one of the driving factor, which led investors to bottom fishing.LPG shipping – US ethylene plants to aid handysize vesselsLPG shipping – downside capped in coaster segmentLNG shipping remains subdued, but will improve from 2018Chinese effect – gaining prominence in gas shipping, China natural gas demand to show steady riseChina needs additional LNG to meet its growing natural gas demandChinese effect – New shipping capacity required for growing importsChinese LPG consumption is also expected to increase

Gas Shipping - Gaining Traction Amid Recovery in Oil Prices

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

Over the next 24 months, a range of heavy equipment makers in agricultural, construction, mining, and trucking equipment will begin offering telematics as standard equipment in their products. This is a little-discussed $15 billion market that encompasses practically all technologies for sending, receiving, and storing data via telecommunications devices.As this theme continues to play out, we see a few attractive investment opportunities to own excellent franchises with solid exposure to telematics, attractive moats, and reasonable valuationsAnalyst: Kwame Webb

Over the next 24 months, a range of heavy equipment makers in agricultural, construction, mining, and trucking equipment will begin offering telematics as standard equipment in their products. This is a little-discussed $15 billion market that encompasses practically all technologies for sending, receiving, and storing data via telecommunications devices.As this theme continues to play out, we see a few attractive investment opportunities to own excellent franchises with solid exposure to telematics, attractive moats, and reasonable valuationsAnalyst: Kwame Webb

Telematics in Heavy Equipment: Significant Potential to Strengthen Moats, but Many OEMs Are Passing

Mixed monetary stance adopted by the central banks; dry bulk shipping stage a comeback• China’s thrust is on credit expansion, but growth remains sluggish• Investors’ interest reignited in dry bulk stocks amid the rally in Baltic indices• Gas shipping stocks getting back on investors’ radar; Gaslog emerges as the top performer• Amid container industry realignment, price performance a mixed bag• Correction in tanker stock valuations inevitable as freight rates to soften further • Well-ingrained dampeners surprise with growth for ports

Mixed monetary stance adopted by the central banks; dry bulk shipping stage a comeback• China’s thrust is on credit expansion, but growth remains sluggish• Investors’ interest reignited in dry bulk stocks amid the rally in Baltic indices• Gas shipping stocks getting back on investors’ radar; Gaslog emerges as the top performer• Amid container industry realignment, price performance a mixed bag• Correction in tanker stock valuations inevitable as freight rates to soften further • Well-ingrained dampeners surprise with growth for ports

United States

Caterpillar Inc. designs, manufactures and markets construction, mining and forestry machinery. The Company also manufactures engines  and other related parts for its equipment, and offers financing and insurance. Caterpillar distributes its products through a worldwide organization of dealers.

Graco Inc. supplies technology for the management of fluids in both industrial and commercial applications.  The Company designs, manufactures, and markets systems to move, measure, control, dispense, and apply fluid materials.  Graco's products are used for applying paints and coatings, high-pressure cleaning of equipment, and lubricating and maintaining vehicles and other equipment.

Nordson Corporation designs, manufactures, and markets systems that apply adhesives, sealants, and coatings to consumer and industrial products during manufacturing operations.  The Company's products include customized electronic controls for the precise application and curing of materials to meet customers' requirements.  Nordson operates around the world.

Illinois Tool Works Inc. designs and manufactures fasteners and components, equipment and consumable systems, and a variety of specialty products and equipment.  The Company's products include industrial fluids and adhesives, tooling for specialty applications, welding products, and quality measurement equipment and systems.  Illinois Tool Works operates worldwide.

Parker-Hannifin Corporation manufactures motion control products, including fluid power systems, electromechanical controls, and related components.  The Company also produces fluid purification, fluid flow, process instrumentation, air conditioning, refrigeration, and electromagnetic shielding and thermal management products.

IDEX Corporation designs, manufactures, and markets a variety of pump products, dispensing equipment, and other engineered products.  The Company's products include industrial pumps, lubrication systems, banding and clamping devices, and rescue tools.  IDEX markets its products to customers in the United States and overseas.

Xylem, Inc. is a designer, manufacturer, equipment and service provider for water and wastewater applications addressing the full-cycle of water from collection, distribution, and use to the return of water to the environment. The Company's products include water and wastewater pumps, treatment and testing equipment, industrial pumps, valves, heat exchangers, and dispensing equipment.

Wabtec Corporation, doing business as Westinghouse Air Brake Technologies Corporation, provides technology products and services for the rail industry on a worldwide basis. The Company manufactures a range of products for locomotives, freight cars, and passenger transit vehicles. Wabtec also builds new locomotives and provides aftermarket services.

Dover Corporation manufactures industrial products and manufacturing equipments. The Company's products includes printing, identification, marking and coding systems, waste handling, industrial equipments, refrigeration systems, display cases, industrial pumps, fuel dispensers, nozzles, piping, and electronic tank gauge equipments. Dover serves customers worldwide.

Snap-on Incorporated develops, manufactures, and distributes tool and equipment solutions worldwide.  The Company's products include hand and power tools, diagnostics and shop equipment, tool storage products, diagnostics software, and other solutions for the automotive service industry.  Customers include professional service technicians and motor service shop owners, among others.

CRRC Corporation Limited manufactures rolling stock products. The Company produces locomotives, passenger carriages, freight wagons, vehicles key components, and other products. CRRC also provides vehicle repairing, investment management, and other services.

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

China CSSC Holdings Ltd. offers shipbuilding, ship components, ship repairing and diesel engines manufacturing. The Company distributes its products within the domestic market and to overseas markets.

China Shipbuilding Industry Company Limited designs, manufactures, sells and leases ship parts.  The Company's products include engines and parts, auxiliay engines and transportation equipment.

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders.  The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

Weichai Power Co., Ltd. specializes in the research and development, manufacturing and sales of diesel engines. The company's products are applicable to markets such as, heavy-duty vehicles, coaches, construction machines, vessels and power generator.

KUBOTA CORPORATION manufactures industrial machinery, farm machinery, and fluid piping systems.  The Company's products include ductile iron pipes, engines, tractors, combine harvesters, reaper binders, rice planters, and excavators.  Kubota also produces forged iron products, housing equipment, and environmental control plants.

Mitsubishi Heavy Industries, Ltd. is a comprehensive heavy machinery maker. The Company manufactures machinery, ships, turbines and engines, prime movers, aircrafts, and machine parts for military and commercial use.  Mitsubishi Heavy Industries also researches and develops nuclear power plants.

Hengli Petrochemical Co.,Ltd. manufactures chemical fibers. The Company researches, produces, and sells polyester filament and chips for consumer and industry products. Hengli Petrochemical markets it products worldwide.

Hengli Petrochemical Co.,Ltd. A (600346 CH)

Shenzhen Inovance Technology Co., Ltd. develops, manufactures and sells automate control products.  The Company's products include low frequency converter, servo drive, and programmable logic controller (PLC).

Shenzhen Inovance Technology Co., (300124 CH)

Deere & Company manufactures and distributes a range of agricultural, construction and forestry, and commercial and consumer equipment.  The Company supplies replacement parts for its own products and for those of other manufacturers. Deere also provides product and parts financing services. Deere and Company extends its services and products worldwide.

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Deere & Co (DE US)

Tanker Shipping Cycle - Counter Cyclical Investment Strategy to Run Its Course, Downgrade to Neutral

Counter cyclical investment strategy to run its course, Downgrade to Neutral on multiple headwinds • Demand for tankers to grow, albeit at a slower...

Drewry Maritime Financial Research

Tanker Shipping - Stocks Going Nowhere?

Underperformance continues as markets look past near-term earnings • The surge in the seaborne crude trade – a result of continued supply glut and...

Drewry Maritime Financial Research

Gas Shipping - Gaining Traction Amid Recovery in Oil Prices

The rebound in crude oil and gas prices brought some solace to shareholders of gas shipping companies as stocks of LNG and LPG operators started...

Drewry Maritime Financial Research

Telematics in Heavy Equipment: Significant Potential to Strengthen Moats, but Many OEMs Are Passing

Over the next 24 months, a range of heavy equipment makers in agricultural, construction, mining, and trucking equipment will begin offering...

Morningstar, Inc.

DMER Equity Insights - May 2016

Mixed monetary stance adopted by the central banks; dry bulk shipping stage a comeback• China’s thrust is on credit expansion, but growth remains...

Drewry Maritime Financial Research

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