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.

Equity Bottom-Up

Santos Brasil Participacoes Sa. / Equity Bottom-Up

Incipient signs of recovery: There was a slight uptick in consolidated volumes of the three terminals operated by Santos Brasil in the first quarter of 2018. Tecon Imbituba and Tecon Vila do Conde registered sterling growth of 84.6% and 38.2% year on year, respectively. Volume growth at Santos Brasil’s flagship terminal Tecon Santos has remained anaemic since the loss of the ESA contract (which included carriers such as Cosco Shipping, Evergreen Marine Corp, Hapag-Lloyd AG and Hamburg Süd) to…

Incipient signs of recovery: There was a slight uptick in consolidated volumes of the three terminals operated by Santos Brasil in the first quarter of 2018. Tecon Imbituba and Tecon Vila do Conde registered sterling growth of 84.6% and 38.2% year on year, respectively. Volume growth at Santos Brasil’s flagship terminal Tecon Santos has remained anaemic since the loss of the ESA contract (which included carriers such as Cosco Shipping, Evergreen Marine Corp, Hapag-Lloyd AG and Hamburg Süd) to…

Santos Brasil: 1Q18 Update: Market Share on the Rise – Is It Enough to Push up the Stock Price?

Earnings revival on accounting gains: In 4Q17, Santos Brasil’s (STBP3 BZ) results reversed from a net loss position to record a USD 6.2m (BRL 20.4m) gain, helped by a one-off tax credit of USD 5.0m (BRL 16.5m). For the full year, net income stood at USD 0.8m (BRL 2.5m) compared with negative USD 6.0m (negative BRL 19.9m) in FY16. Operationally, the highlight was on the restructuring efforts that bore fruits, increasing the quarterly EBITDA margin of ports segment from 17.5% to 20.0%. The…

Earnings revival on accounting gains: In 4Q17, Santos Brasil’s (STBP3 BZ) results reversed from a net loss position to record a USD 6.2m (BRL 20.4m) gain, helped by a one-off tax credit of USD 5.0m (BRL 16.5m). For the full year, net income stood at USD 0.8m (BRL 2.5m) compared with negative USD 6.0m (negative BRL 19.9m) in FY16. Operationally, the highlight was on the restructuring efforts that bore fruits, increasing the quarterly EBITDA margin of ports segment from 17.5% to 20.0%. The…

Santos Brasil - FY17 Update - Share Price Stays Afloat, While Its Market Dominance Gets Chipped Away

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

Infrastructure Analyst - Ports & Terminals, Drewry Maritime Financial Research

Victor Wai, CFA

Infrastructure Analyst - Ports & Terminals

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

Dismal results: Moderating macroeconomic headwinds failed to revive Santos Brasil’s fortunes, with the latest 2Q17 earnings suggestive of another year in the red. Quarterly losses widened from BRL 5.7m to BRL 20.7m as the EBITDA dived 71.7% to BRL 4.3m. Had it not been for labour indemnity charges that reimbursed Santos Brasil BRL 9.3m, the largest terminal operator in Brazil would have been in the negative EBITDA territory of BRL 4.9m.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/031/998/original/Santos%201.jpg?1503296286" class="editor-image img-responsive" data-smartkarma-image-id="31998"></figure><div class="content-caption">Revenue and profitability under pressure</div>Volume slippage to a…

Dismal results: Moderating macroeconomic headwinds failed to revive Santos Brasil’s fortunes, with the latest 2Q17 earnings suggestive of another year in the red. Quarterly losses widened from BRL 5.7m to BRL 20.7m as the EBITDA dived 71.7% to BRL 4.3m. Had it not been for labour indemnity charges that reimbursed Santos Brasil BRL 9.3m, the largest terminal operator in Brazil would have been in the negative EBITDA territory of BRL 4.9m.Revenue and profitability under pressureVolume slippage to a…

Santos Brasil 2Q17 – Market Share Loss Amid Intense Competition

Brazil

Santos Brasil Participacoes S.A., through its subsidiaries, operates and manages container terminals in ports of Brazil. The Company provides logistics, transportation and distribution services integrated to port terminals.

Santos Brasil Participacoes Sa. (STBP11 BZ)

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Santos Brasil Participacoes Sa. (STBP11 BZ)

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

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Santos Brasil: 1Q18 Update: Market Share on the Rise – Is It Enough to Push up the Stock Price?

Incipient signs of recovery: There was a slight uptick in consolidated volumes of the three terminals operated by Santos Brasil in the first...

Drewry Maritime Financial Research

Santos Brasil - FY17 Update - Share Price Stays Afloat, While Its Market Dominance Gets Chipped Away

Earnings revival on accounting gains: In 4Q17, Santos Brasil’s (STBP3 BZ) results reversed from a net loss position to record a USD 6.2m (BRL...

Drewry Maritime Financial Research

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

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

Santos Brasil 2Q17 – Market Share Loss Amid Intense Competition

Dismal results: Moderating macroeconomic headwinds failed to revive Santos Brasil’s fortunes, with the latest 2Q17 earnings suggestive of another...

Drewry Maritime Financial Research