Transport Sector, China and Asia-focused Research

Charles De Trenck

Equity Bottom-Up

Pacific Basin Shipping / Equity Bottom-Up

Pacific Basin <a href="https://www.smartkarma.com/entities/929" target="_blank" data-smartkarma-citation="entities:929">Pacific Basin Shipping Ltd</a>  had a nice pop early in the week following heartening 2015 results which showed a respectable underlying loss of $28m against a $56m loss in 2014, and dry bulk losses of $34m, up from $39m in losses in 2014. 2H15 handy losses were substantially higher than 1H15 — however. … And the Supramax time charters (TCEs) in 2016YTD appear to be lower than levels attained in 2015…Cashflow was essentially flat in 2015 just below the $90m mark, while net gearing…

Pacific Basin Pacific Basin Shipping Ltd  had a nice pop early in the week following heartening 2015 results which showed a respectable underlying loss of $28m against a $56m loss in 2014, and dry bulk losses of $34m, up from $39m in losses in 2014. 2H15 handy losses were substantially higher than 1H15 — however. … And the Supramax time charters (TCEs) in 2016YTD appear to be lower than levels attained in 2015…Cashflow was essentially flat in 2015 just below the $90m mark, while net gearing…

Stock Popping Sounds at Pacific Basin…Nice but Still Early

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)

Reasonable port valuation supports M&amp;A activities<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/443/original/ports5.JPG?1454570524" class="editor-image img-responsive" data-smartkarma-image-id="5443"></figure>Note: Market-weighted EV/EBITDA ticked higher from FY14 level of 14.8x to 15.0x Source: Bloomberg, DMER<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/444/original/ports6.JPG?1454570793" class="editor-image img-responsive" data-smartkarma-image-id="5444"></figure> Source: Company, DMER• As the global trade growth moderates, we expect significant volatility to persist in the year ahead. Port companies with sturdy balance sheet will be favoured over growth companies. Debt servicing ratio is expected to trend lower on higher interest and faltering earnings. Therefore, we look for terminal operators with…

Reasonable port valuation supports M&amp;A activitiesNote: Market-weighted EV/EBITDA ticked higher from FY14 level of 14.8x to 15.0x Source: Bloomberg, DMER Source: Company, DMER• As the global trade growth moderates, we expect significant volatility to persist in the year ahead. Port companies with sturdy balance sheet will be favoured over growth companies. Debt servicing ratio is expected to trend lower on higher interest and faltering earnings. Therefore, we look for terminal operators with…

Global Port Operators - Reasonable Valuation Supports M&A Activities

Intensifying concerns about China as it registered its slowest growth since 1990 set the tone for a roller-coaster ride in 2016. The largest emerging country expanded 6.9%y/y in 2015, prompting the IMF to slash its global growth forecast for the third time in less than a year. Drewry Port Index fell 14% in the first three weeks of trading. The divergence between MSCI World and Drewry Port Index is the greatest since January 2015, pointing to a value buy for the port index compared with a year ago.

Intensifying concerns about China as it registered its slowest growth since 1990 set the tone for a roller-coaster ride in 2016. The largest emerging country expanded 6.9%y/y in 2015, prompting the IMF to slash its global growth forecast for the third time in less than a year. Drewry Port Index fell 14% in the first three weeks of trading. The divergence between MSCI World and Drewry Port Index is the greatest since January 2015, pointing to a value buy for the port index compared with a year ago.

Port Operators 2016 - Sieve Out Value Companies Amid Slowing Trade Growth

Ominous start to the year for container shipping with Drewry forecasting container shipping profitability to deteriorate in 2016. Ocean freight rates for cargo moving under contracts on the major East-West trade routes witnessing another reduction in the last quarter of 2015, according to Drewry’s Benchmarking Club, a closed user group of multinational retailers and manufacturers who closely monitor their contract freight rates. The Drewry Benchmarking Club Contract Rate Index, based on Trans…

Ominous start to the year for container shipping with Drewry forecasting container shipping profitability to deteriorate in 2016. Ocean freight rates for cargo moving under contracts on the major East-West trade routes witnessing another reduction in the last quarter of 2015, according to Drewry’s Benchmarking Club, a closed user group of multinational retailers and manufacturers who closely monitor their contract freight rates. The Drewry Benchmarking Club Contract Rate Index, based on Trans…

2016 - Washout Year for Container Shipping

Nordic American Tankers / Equity Bottom-Up

Last week was a great line in the sand for some of the names I mentioned. Accumulating risk and China related paid off. While continuing to keep an eye on cautious trades I would recommend seeking China related risk in derivatives of China and not China itself. We can get better corporate accountability and perhaps even better performance. FCX remains a great litmus test for China. Let&rsquo;s see how some of the recommended names did, and consider what can be done around this theme.

Last week was a great line in the sand for some of the names I mentioned. Accumulating risk and China related paid off. While continuing to keep an eye on cautious trades I would recommend seeking China related risk in derivatives of China and not China itself. We can get better corporate accountability and perhaps even better performance. FCX remains a great litmus test for China. Let&rsquo;s see how some of the recommended names did, and consider what can be done around this theme.

Hong Kong

Pacific Basin Shipping Limited, through its subsidiaries, provides marine transportation services and logistical support to its customers through the commercial operation of a large, modern, and uniformly-sized fleet of shallow-draft Handysize dry bulk carriers.

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Pacific Basin Shipping (2343 HK)

Stock Popping Sounds at Pacific Basin…Nice but Still Early

Pacific Basin Pacific Basin Shipping Ltd had a nice pop early in the week following heartening 2015 results which showed a respectable underlying...

Charles De Trenck

Global Port Operators - Reasonable Valuation Supports M&A Activities

Reasonable port valuation supports M&A activitiesNote: Market-weighted EV/EBITDA ticked higher from FY14 level of 14.8x to 15.0xSource:...

Drewry Maritime Financial Research

Port Operators 2016 - Sieve Out Value Companies Amid Slowing Trade Growth

Intensifying concerns about China as it registered its slowest growth since 1990 set the tone for a roller-coaster ride in 2016. The largest...

Drewry Maritime Financial Research

2016 - Washout Year for Container Shipping

Ominous start to the year for container shipping with Drewry forecasting container shipping profitability to deteriorate in 2016. Ocean freight...

Drewry Maritime Financial Research

Buying China Without the China in It

Last week was a great line in the sand for some of the names I mentioned. Accumulating risk and China related paid off. While continuing to keep an...

Charles De Trenck

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