Transport Sector, China and Asia-focused Research

Charles De Trenck

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)

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

This report is part 2 of the Jeil Holdings IPO. Jeil Holdings is expected to complete its IPO in late June. Jeil Holdings is the Holdco for the biggest chicken producer &amp; dry bulk shipper in Korea.  <ul><li>Expected IPO offer price per share: 20,700 won (low)/ 22,700 won (high)</li><li>Number of Shares for IPO: 20.38 m shares (new shares)</li><li>IPO base deal size: US$377m (low);  US$519m (high)</li></ul>The following is how the bankers determined the IPO price range for Jeil Holdings: First, the value of its public affiliates, private affiliates, and brand value were added and net debt was subtracted, resulting in a value of 2.2 trillion won. After subtracting for holdco discount (20%), this resulted in a value of 1.8 trillion won. On a per share basis, this resulted in value per share of 25,300 won. After subtracting IPO discount rates of 10.3% to 18.2%, this suggested in IPO price range of 20,700 won to 22,700 won.

This report is part 2 of the Jeil Holdings IPO. Jeil Holdings is expected to complete its IPO in late June. Jeil Holdings is the Holdco for the biggest chicken producer &amp; dry bulk shipper in Korea.  Expected IPO offer price per share: 20,700 won (low)/ 22,700 won (high)Number of Shares for IPO: 20.38 m shares (new shares)IPO base deal size: US$377m (low);  US$519m (high)The following is how the bankers determined the IPO price range for Jeil Holdings: First, the value of its public affiliates, private affiliates, and brand value were added and net debt was subtracted, resulting in a value of 2.2 trillion won. After subtracting for holdco discount (20%), this resulted in a value of 1.8 trillion won. On a per share basis, this resulted in value per share of 25,300 won. After subtracting IPO discount rates of 10.3% to 18.2%, this suggested in IPO price range of 20,700 won to 22,700 won.

Jeil Holdings IPO (Part 2): Holdco for the Biggest Chicken Producer & Dry Bulk Shipper in Korea

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

Star Bulk Carriers (SBLK US) - Earnings Improvement already in the Price<ul><li>
Earnings benefit from lower opex: Star Bulk reported total revenue of USD 60m in 3Q16 – in line with our estimate of USD 59m, but down 13% over 3Q15. The revenue corresponds to the daily average TCE of USD 7,558pd in 3Q16, compared with USD 8,691pd in 3Q15. We believe 4Q earnings will benefit from the surge in Capesize rates that have risen to 19,000pd earlier this month, as is reflected in the Baltic Dry index, which has…</li></ul>

Star Bulk Carriers (SBLK US) - Earnings Improvement already in the Price
Earnings benefit from lower opex: Star Bulk reported total revenue of USD 60m in 3Q16 – in line with our estimate of USD 59m, but down 13% over 3Q15. The revenue corresponds to the daily average TCE of USD 7,558pd in 3Q16, compared with USD 8,691pd in 3Q15. We believe 4Q earnings will benefit from the surge in Capesize rates that have risen to 19,000pd earlier this month, as is reflected in the Baltic Dry index, which has…

Star Bulk Carriers (SBLK US) - Earnings Improvement Already in the Price

Pacific Basin Shipping / Equity Bottom-Up

Dry Bulk Shipping - The Overweight on Dry Bulk Is Paying off HandsomelyWe have earlier advocated that “ the normalisation process will lead to great opportunities even with incremental gains in the underlying markets as discount to Net Asset Values narrow. With the market bottoming out, we place our bets on the dry bulk names with high operating leverage and considerable exposure to the spot market. We expect the uptrend in freight rates to mirror in asset prices, which in turn, will have an…

Dry Bulk Shipping - The Overweight on Dry Bulk Is Paying off HandsomelyWe have earlier advocated that “ the normalisation process will lead to great opportunities even with incremental gains in the underlying markets as discount to Net Asset Values narrow. With the market bottoming out, we place our bets on the dry bulk names with high operating leverage and considerable exposure to the spot market. We expect the uptrend in freight rates to mirror in asset prices, which in turn, will have an…

DMER-Dry Bulk Shipping - The Overweight on Dry Bulk Is Paying off Handsomely

<blockquote>Investor sentiment has a larger effect on the stocks of companies that are difficult to value and arbitrage than on those that are not. Subsequent returns are determined by the level of sentiment at the start of the period. </blockquote><div>
Malcolm Baker, Johnathan Wang, and Jeffrey Wurgler, Journal of Investment Management, Vol. 6, No. 2 (Second Quarter 2008)
It is indeed very difficult to value a dry bulk company in the current environment, mean-reversion models to long term charter rates are broken, cost of…
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Investor sentiment has a larger effect on the stocks of companies that are difficult to value and arbitrage than on those that are not. Subsequent returns are determined by the level of sentiment at the start of the period. 
Malcolm Baker, Johnathan Wang, and Jeffrey Wurgler, Journal of Investment Management, Vol. 6, No. 2 (Second Quarter 2008)
It is indeed very difficult to value a dry bulk company in the current environment, mean-reversion models to long term charter rates are broken, cost of…


DMER-Dry Bulk Shipping - Under-Owned, Normalization, Leading to Investor Sentiment Turning Bullish ?

United States

Star Bulk Carriers Corp. is a holding company, which engages in the marine transportation of dry bulk vessels. It ships iron ore, coal, grain, bauxite, fertilizers, and steel products. The company was founded by Petros Alexandros Pappas on December 13, 2006 and is headquartered in Athens, Greece.

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Star Bulk Carriers (SBLK US)

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

Jeil Holdings IPO (Part 2): Holdco for the Biggest Chicken Producer & Dry Bulk Shipper in Korea

This report is part 2 of the Jeil Holdings IPO. Jeil Holdings is expected to complete its IPO in late June. Jeil Holdings is the Holdco for the...

Douglas Kim