Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Dalrymple Bay Infrastructure / Equity Capital Markets

Dalrymple Bay Infrastructure (DBI from hereon) aims to raise around US$500m in its Australian listing. It is owned by <a href="https://www.smartkarma.com/entities/brookfield-asset-manage-cl-a-0483cfb5-71a5-4931-af80-901e5f30aace" target="_blank" data-smartkarma-citation="entities:23741:1" rel="noopener">Brookfield Asset Management (BAM US)</a>. It holds a 99-lease for Dalrymple Bay Terminal (DBT), a coal export terminal. DBT was commissioned in 1983 and is located close to Bowen Basin, the world’s largest met coal export region, in Queensland.  The terminal is a common-user facility providing services to a large number of mining customers. Approximately 80% of the coal shipped through DBT in 2019 was metallurgical (met) coal. It is the largest met coal terminal, handling 15% of global met coal in 2019 and 30% of Queensland coal exports. While the current revenue for DBI is regulated and hence, fairly stable, it has been trying to change that so that it can set its own tariffs directly with clients. However, even if it manages to do that the upside might be limited.As per my calculations, if it doesn’t manage to succeed in doing so, its revenue could drop by an amount far exceeding the projected upside. This doesn’t make DBI appear particularly attractive.

Dalrymple Bay Infrastructure (DBI from hereon) aims to raise around US$500m in its Australian listing. It is owned by Brookfield Asset Management (BAM US). It holds a 99-lease for Dalrymple Bay Terminal (DBT), a coal export terminal. DBT was commissioned in 1983 and is located close to Bowen Basin, the world’s largest met coal export region, in Queensland.  The terminal is a common-user facility providing services to a large number of mining customers. Approximately 80% of the coal shipped through DBT in 2019 was metallurgical (met) coal. It is the largest met coal terminal, handling 15% of global met coal in 2019 and 30% of Queensland coal exports. While the current revenue for DBI is regulated and hence, fairly stable, it has been trying to change that so that it can set its own tariffs directly with clients. However, even if it manages to do that the upside might be limited.As per my calculations, if it doesn’t manage to succeed in doing so, its revenue could drop by an amount far exceeding the projected upside. This doesn’t make DBI appear particularly attractive.

Dalrymple Bay Infrastructure - Highly Curious Timing

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

Our research suggests average container rates rose by 6% in September, boosted by improved Transpacific volumes. While inbound to US demand appears strong through October, estimates from the Port of LA suggest early November will see a modest YoY decline in throughput. 
Bunker (ship fuel) prices remain below year-ago levels and carrier profitability in Q3 (and early Q4) likely remains high compared to 2019. Germany's <a href="https://www.smartkarma.com/entities/hapag-lloyd-ag" target="_blank" data-smartkarma-citation="entities:21649:1" rel="noopener">Hapag-Lloyd AG (HLAG GR)</a> lifted full-year guidance this week, reflecting confidence in near-term market conditions. 
After almost tripling earlier in 2020 on a combination of strong demand and limited capacity, it appears air cargo pricing for key Asian carriers has moderated compared versus peak levels in Q2. 
While current conditions appear buoyant, we believe the sharpest YoY improvements in profitability for container carriers (and air cargo) are probably already behind us.

Our research suggests average container rates rose by 6% in September, boosted by improved Transpacific volumes. While inbound to US demand appears strong through October, estimates from the Port of LA suggest early November will see a modest YoY decline in throughput. 
Bunker (ship fuel) prices remain below year-ago levels and carrier profitability in Q3 (and early Q4) likely remains high compared to 2019. Germany's Hapag-Lloyd AG (HLAG GR) lifted full-year guidance this week, reflecting confidence in near-term market conditions. 
After almost tripling earlier in 2020 on a combination of strong demand and limited capacity, it appears air cargo pricing for key Asian carriers has moderated compared versus peak levels in Q2. 
While current conditions appear buoyant, we believe the sharpest YoY improvements in profitability for container carriers (and air cargo) are probably already behind us. 

TRACKING TRAFFIC/Containers & Air Cargo: Box Rates Firm | LA Down in Nov? | Air Cargo Pricing Eases

August numbers show a spike in container volumes on key routes, but average achieved freight rates were still just so-so (but improving compared to Q2 2020).
Forward data from the Port of Los Angeles (PoLA) shows strength in rest of September and into the October peak season. Carriers are also benefitting from relatively low fuel prices. 
Conclusions: We still have not seen the strong bump in rates reported by the mainstream financial media, but container pricing is better than in Q2 and volumes have clearly firmed and fuel prices are reasonable -- all positives for the carriers. But the biggest gains -- in both carrier profitability and share prices -- are likely already behind us.

August numbers show a spike in container volumes on key routes, but average achieved freight rates were still just so-so (but improving compared to Q2 2020).
Forward data from the Port of Los Angeles (PoLA) shows strength in rest of September and into the October peak season. Carriers are also benefitting from relatively low fuel prices. 
Conclusions: We still have not seen the strong bump in rates reported by the mainstream financial media, but container pricing is better than in Q2 and volumes have clearly firmed and fuel prices are reasonable -- all positives for the carriers. But the biggest gains -- in both carrier profitability and share prices -- are likely already behind us. 

TRACKING TRAFFIC: Containers & Air Cargo: August Volumes Jump | New PoLA Data Firm Through October

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

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/152/406/original/BANNER-CARGO.png?1597348509" class="editor-image img-responsive" data-smartkarma-image-id="152406"></figure>
July container volumes in key markets showed a strong improvement compared to momentum in the first half of the year. Rates appeared to firm, but only compared to weak May-June numbers.
Q2 earnings results from <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> and <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> showed a dramatic YoY improvement in core shipping profitability, driven almost wholly by a reduction in fuel costs. These gains are likely to moderate in H2.
Container names Maersk and Evergreen are representative of the industry and their shares have recovered 75% and 67% since the trough in March this year. Both shares have surpassed 100% of stated book value, and we now believe further significant gains will be harder to come by.


July container volumes in key markets showed a strong improvement compared to momentum in the first half of the year. Rates appeared to firm, but only compared to weak May-June numbers.
Q2 earnings results from AP Moeller - Maersk A/S (MAERSKB DC) and Evergreen Marine Corp (2603 TT) showed a dramatic YoY improvement in core shipping profitability, driven almost wholly by a reduction in fuel costs. These gains are likely to moderate in H2.
Container names Maersk and Evergreen are representative of the industry and their shares have recovered 75% and 67% since the trough in March this year. Both shares have surpassed 100% of stated book value, and we now believe further significant gains will be harder to come by. 

TRACKING TRAFFIC/Containers & Air Cargo: July Volume & Rates Better | Q2 Profits Soar on Costs

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/665/original/BANNER-CARGO.png?1595022259" class="editor-image img-responsive" data-smartkarma-image-id="146665"></figure>
Contrary to recent media reports, there is no evidence in the June numbers of an alleged spike in container rates in the Pacific. In fact, our monthly index suggests average rates achieved by carriers declined again in June. 
Having said that, it does appear that container shipping activity in China and on the North American West Coast is beginning to normalize. Both areas showed improved activity in June. 
Elsewhere, Asian air cargo pricing is beginning to moderate, too, but yields for some carriers are still almost double what they were a year ago. However, strong air cargo results won't do much to offset disastrous passenger operations for many carriers. 
Conclusion: Cargo flows across the Pacific have begun to normalize after the severe disruptions caused by Covid19. But we do not envision a 'snap-back' demand scenario in which ocean and air carriers suddenly begin earning outsized returns.


Contrary to recent media reports, there is no evidence in the June numbers of an alleged spike in container rates in the Pacific. In fact, our monthly index suggests average rates achieved by carriers declined again in June. 
Having said that, it does appear that container shipping activity in China and on the North American West Coast is beginning to normalize. Both areas showed improved activity in June. 
Elsewhere, Asian air cargo pricing is beginning to moderate, too, but yields for some carriers are still almost double what they were a year ago. However, strong air cargo results won't do much to offset disastrous passenger operations for many carriers. 
Conclusion: Cargo flows across the Pacific have begun to normalize after the severe disruptions caused by Covid19. But we do not envision a 'snap-back' demand scenario in which ocean and air carriers suddenly begin earning outsized returns. 

TRACKING TRAFFIC/Containers & Air Cargo: No, Virginia, Container Rates Are NOT Spiking!

Singapore

Hutchison Port Holdings Trust is a port investor, developer and operator. The Company is also involved in transportation related services and logistics operations, including container storage and repair, container tracking, general and bulk cargo tranfer, warehousing, marine shuttle services and other related services.

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Hutchison Port Holdings Trust (HPHT SP)

Dalrymple Bay Infrastructure - Highly Curious Timing

Dalrymple Bay Infrastructure aims to raise around US$500m in its Australian IPO. DBI is owned by Brookfield Asset Management.

Sumeet Singh

TRACKING TRAFFIC/Containers & Air Cargo: Box Rates Firm | LA Down in Nov? | Air Cargo Pricing Eases

Container volumes and pricing firmed in September, and fuel prices remain relatively low, but trading conditions are unlikely to improve much from...

Tracking Traffic

TRACKING TRAFFIC: Containers & Air Cargo: August Volumes Jump | New PoLA Data Firm Through October

August numbers show better volumes, rates just so-so (but improving) Forward data from P

Tracking Traffic

TRACKING TRAFFIC/Containers & Air Cargo: July Volume & Rates Better | Q2 Profits Soar on Costs

July container volumes in key markets showed a strong improvement compared to momentum in the first half of the year. Rates appeared to firm, but...

Tracking Traffic

TRACKING TRAFFIC/Containers & Air Cargo: No, Virginia, Container Rates Are NOT Spiking!

Contrary to recent media reports, there is no evidence in the June numbers of an alleged spike in container rates in the Pacific. In fact, our...

Tracking Traffic

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