Transport Sector, China and Asia-focused Research

Charles De Trenck

Equity Bottom-Up

Pacific Basin Shipping / Equity Bottom-Up

Pacific Basin has come back to a level I have waited a long time for. I was patient and had few doubts longer term, after shares had settled post an awful experiment at a rights issue in mid-16. Now that the BDI has traded above the 1,400 level and taken out the highs around 1,300 in Apr 2017, I would expect less consolidation than what we saw in mid-17 (ex usual caveats like N Korea). Ie, we should not expect shares to retrace to HK$1.4 from HK$1.9, as they did after the April pop. Short term…

Pacific Basin has come back to a level I have waited a long time for. I was patient and had few doubts longer term, after shares had settled post an awful experiment at a rights issue in mid-16. Now that the BDI has traded above the 1,400 level and taken out the highs around 1,300 in Apr 2017, I would expect less consolidation than what we saw in mid-17 (ex usual caveats like N Korea). Ie, we should not expect shares to retrace to HK$1.4 from HK$1.9, as they did after the April pop. Short term…

Thematic (Sector/Industry)

The simple stupid catalyst for change in performance this summer is the decline in the US dollar.Against the Euro the USD has essentially gone from 1.05 to 1.17 EUR to USD. The CAD I would argue has probably been more volatile, but with a core recent move from 1.37 to 1.25/1.26.  Over a year these two FX are a pedestrian 5% ahead of the USD, which completely understates the 10% move we got over the last couple of months. Recently, the USD got a little oversold short term, with some saying this…

The simple stupid catalyst for change in performance this summer is the decline in the US dollar.Against the Euro the USD has essentially gone from 1.05 to 1.17 EUR to USD. The CAD I would argue has probably been more volatile, but with a core recent move from 1.37 to 1.25/1.26.  Over a year these two FX are a pedestrian 5% ahead of the USD, which completely understates the 10% move we got over the last couple of months. Recently, the USD got a little oversold short term, with some saying this…

A Few FWIW Insights (FX … Stocks … Performance Drivers)

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.

Earnings recovery lags our expectations: The 1H17 results were aided by a strong recovery in freight rates as the company’s TCE revenue rose by 18% over 2H16 to USD 352m. Gross operating loss shrunk to just USD 0.5m from USD 18m in 2H16, even though it slightly lagged our profit estimate of USD 1.4m, owing to lower-than-expected TCE revenue. The adjusted net loss narrowed to USD 6.7m in 1H17 from USD 43.7m in 2H16, and is adjusted for: 1) An unrealised derivative loss of USD 2.6m related to…

Earnings recovery lags our expectations: The 1H17 results were aided by a strong recovery in freight rates as the company’s TCE revenue rose by 18% over 2H16 to USD 352m. Gross operating loss shrunk to just USD 0.5m from USD 18m in 2H16, even though it slightly lagged our profit estimate of USD 1.4m, owing to lower-than-expected TCE revenue. The adjusted net loss narrowed to USD 6.7m in 1H17 from USD 43.7m in 2H16, and is adjusted for: 1) An unrealised derivative loss of USD 2.6m related to…

DMFR – 1H17 Result Update – Pacific Basin – Slow Steam Ahead; Downgrade to Neutral

A sure sign that we are still in the tender underbelly of shipping markets for equities (and that shipping’s recovery is a long drawn out affair) is when a placement manages to contribute to tanking other shares, and shares of the target placement company get hit 15+% as soon as a whiff of placement hits the market.<a href="https://www.smartkarma.com/entities/929" target="_blank" data-smartkarma-citation="entities:929:1">Pacific Basin Shipping Ltd (2343 HK)</a> and its proposed<a href="http://www.pacificbasin.com/upload//e2343_Announcement_RightIssue(18Apr16).pdf" target="_blank">cash raising</a>in the form of warrants issue in April 2016 running through to Summer 2016  was particularly painful:  1) It was the…

A sure sign that we are still in the tender underbelly of shipping markets for equities (and that shipping’s recovery is a long drawn out affair) is when a placement manages to contribute to tanking other shares, and shares of the target placement company get hit 15+% as soon as a whiff of placement hits the market.Pacific Basin Shipping Ltd (2343 HK) and its proposedcash raisingin the form of warrants issue in April 2016 running through to Summer 2016  was particularly painful:  1) It was the…

Bulk's (Shipping's) Thin Market for Placements…Again/Still ...Today Being Diana Shipping's Turn

Pacific Basin (2343 HK)-1Q17 trading update: Daily earnings continue to move up, maintain attractive<ul><li>
PB continues to deploy vessels at premium rates: Pacific Basin (PB) reported average daily TCE earnings of USD 7,460 (up 26% vs average daily rates in 1Q16) and USD 8,030 (up 38% vs average daily rates in 1Q16) in 1Q17 for its Handysize and Supramax fleets respectively. The company continued to outperform the average market rates of USD 6,300pd and USD 7,760pd for Handysize and Supramax vessels…</li></ul>

Pacific Basin (2343 HK)-1Q17 trading update: Daily earnings continue to move up, maintain attractive
PB continues to deploy vessels at premium rates: Pacific Basin (PB) reported average daily TCE earnings of USD 7,460 (up 26% vs average daily rates in 1Q16) and USD 8,030 (up 38% vs average daily rates in 1Q16) in 1Q17 for its Handysize and Supramax fleets respectively. The company continued to outperform the average market rates of USD 6,300pd and USD 7,760pd for Handysize and Supramax vessels…

Pacific Basin (2343 HK)-1Q17 Trading Update: Daily Earnings Continue to Move Up, Maintain Attractive

Hong Kong

Chu Kong Shipping Enterprises (Group) Company Limited provides shipping and cargo handling services between Hong Kong and China.  The Company's services include freight forwarding, wharf cargo handling, cargo consolidation, warehouse storage, and trucking.  Chu Kong Shipping also provides container hauling services.

Chu Kong Shipping Enterprises(Grp) (560 HK)

Dafeng Port Heshun Technology Co Ltd provides integrated logistics for freight services. The Company focuses on land and ocean freight services, air freight forwarding services, and operation equipment rental services. Gamme Logistics offers its services primarily between Hong Kong and the Pearl River Delta region.

Kerry Logistics Network Limited provides logistics services in Asia and internationally. The Company offers integrated logistics services, as well as leases warehousing space in Hong Kong and provides international freight forwarding services.

Jinhui Holdings Company Limited, through its subsidiaries, operates ship chartering and ship leasing businesses. The Company also provides trading services and invests in properties.

Shenzhen International Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides investment, construction, and operation of logistic infrastructure facilities, as well as offers value-added logistic services. Shenzhen International serves customers worldwide.

COSCO Shipping Ports Limited, through its subsidiaries, provides shipping container leasing services worldwide.  The Company also operates container terminals and provides container handling, storage, transportation and management services, as well as depot handling and stevedoring services.

Yuexiu Transport Infrastructure Ltd., through its subsidiaries, invests in, develops, operates, and manages toll highways, expressways, and bridges in China.

Yuexiu Transport Infrastructure (1052 HK)

COSCO SHIPPING International (Hong Kong) Co., Ltd. provides shipping related services. The Company offers shipping, logistics, shipbuilding and ship repair services, ship trading agency services, marine insurance brokerage services, marine equipment and spare parts, coating products, and marine fuel and other related shipping products. COSCO International serves clients around the world.

Transport International Holdings Ltd, through its subsidiaries, operates both franchised and non-franchised public buses in Hong Kong. The Company also provides media sales services.

Transport International Holdings Ltd (62 HK)

Tianjin Port Development Holdings Limited operates container terminals in China.  The company provides container handling operations, stacking and warehousing services and non-containerized cargo services.

Cosco Shipping Development Co., Ltd is a container shipping company based in China.  The Company owns, charters, and operates container vessels for the provision of international and domestic container marine transportation services.

Shipping Corporation of India Limited owns, operates and manages a fleet of bulk carriers, international container service, liquid/dry bulk service, tankers, passenger vessels and offshore supply vessels. The Company's fleet transports primarily crude oil.

U-Ming Marine Transport Corporation operates in the tramp shipping business. The Company mainly ships bulk raw materials such as iron ore, coal, grains, and cement.

Pan Ocean Co., Ltd. is a Korean shipping company that engages in marine transportation business. The Company provides bulk cargo carrier, pure car and truck carrier, container and tanker services.

Wisdom Marine Lines Company Ltd. transports freight by ship.  The Company operates bulk carriers, loggers, tweendeckers, multipurpose ships, roll-on and roll-offs, and container ships.

Hainan Strait Shipping Co., Ltd. offers domestic coastal passenger and cargo marine transportation services.

Cosco Shipping Specialised Carriers Co. provides marine and coastal freight transportation services.  The Company also operates in wholesale and retail trading, acts as a shipping agency, as well as provides loading and unloading, storage, and labor services.

Cosco Shipping Specialised Carriers  (600428 CH)

D/S Norden A/S is an international shipping company.  The Company operates a fleet of modern bulk vessels and tankers consisting of company owned vessels and long-term and short-term chartered cargo ships.  D/S Norden transports commodities such as coal, fertilizer, grain, sugar, and steels, as well as crude oil and other liquids.  The Company operates worldwide.

Clarkson PLC provides integrated shipping services, The Company provides shipbroking, ship management, financial services, fund management and property services.  Clarkson operates throughout the world.

Wilh. Wilhelmsen Holding ASA provides shipping services.  The Company offers global car and ro-ro customers sea transportation and integrated logistic solutions from factory to dealer through its operating companies.

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)

Pacific Basin Hits HK$2 ... What Now?

Pacific Basin has come back to a level I have waited a long time for. I was patient and had few doubts longer term, after shares had settled post...

Charles De Trenck

A Few FWIW Insights (FX … Stocks … Performance Drivers)

The simple stupid catalyst for change in performance this summer is the decline in the US dollar.Against the Euro the USD has essentially gone from...

Charles De Trenck

DMFR – 1H17 Result Update – Pacific Basin – Slow Steam Ahead; Downgrade to Neutral

Earnings recovery lags our expectations: The 1H17 results were aided by a strong recovery in freight rates as the company’s TCE revenue rose by 18%...

Drewry Maritime Financial Research

Bulk's (Shipping's) Thin Market for Placements…Again/Still ...Today Being Diana Shipping's Turn

A sure sign that we are still in the tender underbelly of shipping markets for equities (and that shipping’s recovery is a long drawn out affair)...

Charles De Trenck

Pacific Basin (2343 HK)-1Q17 Trading Update: Daily Earnings Continue to Move Up, Maintain Attractive

Pacific Basin (2343 HK)-1Q17 trading update: Daily earnings continue to move up, maintain attractive PB continues to deploy vessels at premium...

Drewry Maritime Financial Research

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