Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

We're closing out our Long <a href="https://www.smartkarma.com/entities/15428" target="_blank" data-smartkarma-citation="entities:15428:1">Evergreen Marine Corp Ltd (2603 TT)</a> / Short <a href="https://www.smartkarma.com/entities/20645" target="_blank" data-smartkarma-citation="entities:20645:1">Eva Airways Corp (2618 TT)</a> pair trade idea as Evergreen has surpassed our target price of NS$16.00 per share. We first proposed the Long Evergreen / Short EVA pair idea in our December 2016 note <a href="https://www.smartkarma.com/insights/the-trump-call-may-see-taiwan-airlines-hurt-short-eva-against-long-position-in-evergreen-marine" target="_blank" data-smartkarma-citation="insights:7446">‘The Trump Call’ May See Taiwan Airlines Hurt; Short EVA Against Long Position in Evergreen Marine</a>. At that time we expected Evergreen to significantly outperform its airline affiliate EVA, which we believed would suffer the brunt of…

We're closing out our Long Evergreen Marine Corp Ltd (2603 TT) / Short Eva Airways Corp (2618 TT) pair trade idea as Evergreen has surpassed our target price of NS$16.00 per share. We first proposed the Long Evergreen / Short EVA pair idea in our December 2016 note ‘The Trump Call’ May See Taiwan Airlines Hurt; Short EVA Against Long Position in Evergreen Marine. At that time we expected Evergreen to significantly outperform its airline affiliate EVA, which we believed would suffer the brunt of…

Closing Evergreen / EVA Airways Long-Short Pair Trade Idea After Evergreen Exceeds Our Target Price

On Friday <a href="https://www.smartkarma.com/entities/15428" target="_blank" data-smartkarma-citation="entities:15428:1">Evergreen Marine Corp Ltd (2603 TT)</a> reported February consolidated sales of NT$10.3 bn, up 5.4% Y/Y despite the shorter month (28 days vs. 29 in 2016's 'Leap Year'). In the first two months of 2017, Evergreen's consolidated sales are up 15.8% Y/Y, driven primarily by higher average container freight rates. Even modest, single-digit Y/Y sales growth in March should be sufficient to eliminate the large gross loss Evergreen reported in Q1 2016 (-9% gross margin). Rival <a href="https://www.smartkarma.com/entities/8502" target="_blank" data-smartkarma-citation="entities:8502:1">Yang Ming Marine</a>…

On Friday Evergreen Marine Corp Ltd (2603 TT) reported February consolidated sales of NT$10.3 bn, up 5.4% Y/Y despite the shorter month (28 days vs. 29 in 2016's 'Leap Year'). In the first two months of 2017, Evergreen's consolidated sales are up 15.8% Y/Y, driven primarily by higher average container freight rates. Even modest, single-digit Y/Y sales growth in March should be sufficient to eliminate the large gross loss Evergreen reported in Q1 2016 (-9% gross margin). Rival Yang Ming Marine…

Evergreen Marine Revenue Up 15.8% YTD, Enough to Generate Sharp Q1 2017 Turnaround

Orient Overseas International / Equity Bottom-Up

A series of announced mergers and acquisitions in the global container shipping industry will soon pare the industry down to six large global carriers, plus a handful of smaller global and regional carriers, and a very large number of mostly insignificant regional and niche carriers. Clearly, the sector’s long-overdue consolidation has gained momentum over the last six months, and despite a recent jump in spot rates, we believe the recent wave of deals will soon force a response from the remaining 'leftover' carriers, who must either act to quickly gain neede scale through financial combinations or find ways to reduce exposure to chronic overcapacity in long-haul container shipping segments.In this note we look at the strategic responses available to five different small- to mid-sized Asian container carriers, four of which are listed in Hong Kong and Taiwan. We lay out the criteria we use to evaluate potential transactions within the sector, and profile these five carriers -- their histories, strengths, and needs. Based on these criteria and our understanding of these five carriers’ needs, we then suggest a few potential combinations that seem to make the most strategic and financial sense.

A series of announced mergers and acquisitions in the global container shipping industry will soon pare the industry down to six large global carriers, plus a handful of smaller global and regional carriers, and a very large number of mostly insignificant regional and niche carriers. Clearly, the sector’s long-overdue consolidation has gained momentum over the last six months, and despite a recent jump in spot rates, we believe the recent wave of deals will soon force a response from the remaining 'leftover' carriers, who must either act to quickly gain neede scale through financial combinations or find ways to reduce exposure to chronic overcapacity in long-haul container shipping segments.In this note we look at the strategic responses available to five different small- to mid-sized Asian container carriers, four of which are listed in Hong Kong and Taiwan. We lay out the criteria we use to evaluate potential transactions within the sector, and profile these five carriers -- their histories, strengths, and needs. Based on these criteria and our understanding of these five carriers’ needs, we then suggest a few potential combinations that seem to make the most strategic and financial sense.

Surging Momentum of Consolidation Will Soon Force Response from Asia's 'Leftover' Container Carriers

Transport Sector, China and Asia-focused Research

Charles De Trenck

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

Maersk announced it would make a cash (A $4bn figure was initially thrown out, but this appears too high. Other estimates are Maersk would not likely have paid more than $2bn) offer for leading and family owned North-South carrier Hamburg Sud. These mergers continue to be positive for this poorly run industry. The move is positive for Maersk and for the global containerized transport industry and could see Maersk at about 19% of global capacity.See as well <a href="https://www.smartkarma.com/profiles/356" target="_blank" data-smartkarma-citation="accounts:356">Drewry Maritime Equity Research</a> and its…

Maersk announced it would make a cash (A $4bn figure was initially thrown out, but this appears too high. Other estimates are Maersk would not likely have paid more than $2bn) offer for leading and family owned North-South carrier Hamburg Sud. These mergers continue to be positive for this poorly run industry. The move is positive for Maersk and for the global containerized transport industry and could see Maersk at about 19% of global capacity.See as well Drewry Maritime Equity Research and its…

Implications of Maersk's Hamburg Sud Purchase

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)

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

Taiwan

Wan Hai Lines Ltd. provides marine transportation and shipping agent services. The Company also purchases, sells, and leases vessels and containers as well as operates container freight stations.

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Wan Hai Lines (2615 TT)

Closing Evergreen / EVA Airways Long-Short Pair Trade Idea After Evergreen Exceeds Our Target Price

We're closing out our Long Evergreen Marine Corp Ltd (2603 TT) / Short Eva Airways Corp (2618 TT) pair trade idea as Evergreen has surpassed our...

Daniel Hellberg

Evergreen Marine Revenue Up 15.8% YTD, Enough to Generate Sharp Q1 2017 Turnaround

On Friday Evergreen Marine Corp Ltd (2603 TT) reported February consolidated sales of NT$10.3 bn, up 5.4% Y/Y despite the shorter month (28 days...

Daniel Hellberg

Surging Momentum of Consolidation Will Soon Force Response from Asia's 'Leftover' Container Carriers

A series of announced mergers and acquisitions in the global container shipping industry will soon pare the industry down to six large global...

Daniel Hellberg

Implications of Maersk's Hamburg Sud Purchase

Maersk announced it would make a cash (A $4bn figure was initially thrown out, but this appears too high. Other estimates are Maersk would not...

Charles De Trenck

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

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