Transport Sector, China and Asia-focused Research

Charles De Trenck

Event-Driven

Orient Overseas International / Event-Driven

Concerns this week resurfaced regarding the <a href="https://www.smartkarma.com/entities/286" target="_blank" data-smartkarma-citation="entities:286:1">COSCO SHIPPING Holdings Co., Ltd (H) (1919 HK)</a> acquisition of <a href="https://www.smartkarma.com/entities/801" target="_blank" data-smartkarma-citation="entities:801:1">Orient Overseas International Ltd (316 HK)</a>. Most likely they are  mild concerns at this point. However, shareholders who did not sell above the relatively rich trading price of HK$70-74 (against 2017 book NAV of HK$58 ex adjustments for off B/S items) should maintain a close watch on politics and if the US could move to slap restrictions on the acquisition of Pier E (and the older F) at the …

Concerns this week resurfaced regarding the COSCO SHIPPING Holdings Co., Ltd (H) (1919 HK) acquisition of Orient Overseas International Ltd (316 HK). Most likely they are  mild concerns at this point. However, shareholders who did not sell above the relatively rich trading price of HK$70-74 (against 2017 book NAV of HK$58 ex adjustments for off B/S items) should maintain a close watch on politics and if the US could move to slap restrictions on the acquisition of Pier E (and the older F) at the …

OOIL Drifts Below HK$70 on Inklings of Concerns Over Trump Approvals for Long Beach - COSCO Deal

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)

<ul><li>Global throughput strengthened in 2017, with Drewry Maritime Research revising upwards the year-on-year growth from 5.5% to 6.0%. While the pace is likely to moderate, Drewry expects a flow of 775m teu in 2018, representing 4.3% over the projected volume in 2017. Modest port capacity addition is expected to lift utilisation above 70% by 2021.</li><li>The valuation premium of the Drewry Port Index to the MSCI Emerging Markets Index was about 15%-20% for a substantial period in 2017, continuing to trade in the range, while growth investors re-examine the earnings momentum of ports.</li><li>Our high conviction long pick is GLPR on a resurgent Russian economy that benefits the largest port operator directly. On the flip side, our high-conviction short is Santos Brasil. Notwithstanding the macroeconomic upturn, the intense port competition and the piling pressure to expand amid overcapacity are likely to strain Santos Brasil’s balance sheet in FY18e.</li></ul>

Global throughput strengthened in 2017, with Drewry Maritime Research revising upwards the year-on-year growth from 5.5% to 6.0%. While the pace is likely to moderate, Drewry expects a flow of 775m teu in 2018, representing 4.3% over the projected volume in 2017. Modest port capacity addition is expected to lift utilisation above 70% by 2021.The valuation premium of the Drewry Port Index to the MSCI Emerging Markets Index was about 15%-20% for a substantial period in 2017, continuing to trade in the range, while growth investors re-examine the earnings momentum of ports.Our high conviction long pick is GLPR on a resurgent Russian economy that benefits the largest port operator directly. On the flip side, our high-conviction short is Santos Brasil. Notwithstanding the macroeconomic upturn, the intense port competition and the piling pressure to expand amid overcapacity are likely to strain Santos Brasil’s balance sheet in FY18e.

Ports Outlook - Modest Earnings Growth in 2018

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

MSCI Emerging Markets Index / Technical Analysis

Highlighted themes and actionable charts: Reiterating BRIC overweight. This country grouping continues to outperform broad EM, and we believe BRIC will be a primary source of outperformance relative to the MSCI EM Index moving forward.  Today’s report includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations within EM.

Highlighted themes and actionable charts: Reiterating BRIC overweight. This country grouping continues to outperform broad EM, and we believe BRIC will be a primary source of outperformance relative to the MSCI EM Index moving forward.  Today’s report includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations within EM.

EM Equity Strategy: Indonesia Perking Up; Overweight BRIC, Tech, and Health Care

Infrastructure Analyst - Ports & Terminals, Drewry Maritime Financial Research

Victor Wai, CFA

Infrastructure Analyst - Ports & Terminals

Equity Bottom-Up

Santos Brasil Participacoes Sa. / Equity Bottom-Up

Depressed earnings: Santos Brasil (STBP3 BZ Equity) is in a perilous condition, swinging to profitability only with the aid of tax refunds. Investors longing for a sale of its slumping Tecon Santos terminal, which underpins the more than 50% increase in share price over the past 3 months, are likely to be disappointed, as the company has decided to bankroll its flagship terminal by selling ancillary, but promising, assets.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/039/424/original/SB_1.JPG?1511942947" class="editor-image img-responsive" data-smartkarma-image-id="39424"></figure><div class="content-caption">Earnings deteriorate, investors don't seem to care</div>Expensive concession…

Depressed earnings: Santos Brasil (STBP3 BZ Equity) is in a perilous condition, swinging to profitability only with the aid of tax refunds. Investors longing for a sale of its slumping Tecon Santos terminal, which underpins the more than 50% increase in share price over the past 3 months, are likely to be disappointed, as the company has decided to bankroll its flagship terminal by selling ancillary, but promising, assets.Earnings deteriorate, investors don't seem to careExpensive concession…

Santos Brasil: Valuation Decouples from Fundamentals

Today’s report provides a top-down synopsis of the technical condition of emerging markets across the globe, and includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations.

Today’s report provides a top-down synopsis of the technical condition of emerging markets across the globe, and includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations.

Emerging Markets: Technical Strategy & Reccommendations

United Arab Emirates

DP World Ltd is a global operator of container and marine terminals. The Company operates marine terminals across six continents, and generates its core revenues from handling cargo containers. DP World was founded in 1972, and operates out of its global headquarters in Dubai, United Arab Emirates.

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DP World (DPW DU)

OOIL Drifts Below HK$70 on Inklings of Concerns Over Trump Approvals for Long Beach - COSCO Deal

Concerns this week resurfaced regarding the COSCO SHIPPING Holdings Co., Ltd (H) (1919 HK) acquisition of Orient Overseas International Ltd (316...

Charles De Trenck

Ports Outlook - Modest Earnings Growth in 2018

Global throughput strengthened in 2017, with Drewry Maritime Research revising upwards the year-on-year growth from 5.5% to 6.0%. While the pace...

Drewry Maritime Financial Research

EM Equity Strategy: Indonesia Perking Up; Overweight BRIC, Tech, and Health Care

Highlighted themes and actionable charts: Reiterating BRIC overweight. This country grouping continues to outperform broad EM, and we believe BRIC...

Vermilion Research

Santos Brasil: Valuation Decouples from Fundamentals

Depressed earnings: Santos Brasil (STBP3 BZ Equity) is in a perilous condition, swinging to profitability only with the aid of tax refunds....

Drewry Maritime Financial Research

Emerging Markets: Technical Strategy & Reccommendations

Today’s report provides a top-down synopsis of the technical condition of emerging markets across the globe, and includes a wide variety of...

Vermilion Research

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