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, May 12th, <a href="https://www.smartkarma.com/entities/15428" target="_blank" data-smartkarma-citation="entities:15428:1">Evergreen Marine Corp Ltd (2603 TT)</a> reported unaudited Q1 2017 earnings results, which showed a dramatic year-over-year improvement but also sequential improvement compared to Q4 2016. The following table summarizes Evergreen's results in Q1 2017, Q1 2016, and Q4 2016.  <table class="table table-striped"><tbody>
<tr>
<td>Q1 2017</td>
<td>Q1 2016</td>
<td>Q4 2016</td>
</tr>
<tr>
<td>Revenue, NT$ mn</td>
<td>33,839</td>
<td>28,604</td>
<td>34,195</td>
</tr>
<tr>
<td>Gross margin, %</td>
<td>6.23%</td>
<td>-9.34%</td>
<td>2.17%</td>
</tr>
<tr>
<td>Operating margin, %</td>
<td>1.94%</td>
<td>-14.37%</td>
<td>-2.11%</td>
</tr>
<tr>
<td>Net profit (loss), NT$ mn</td>
<td>169</td>
<td>(4,588)</td>
<td>(1,107)</td>
</tr>
</tbody></table>Source: Evergreen MarineLast quarter's gross…

On Friday, May 12th, Evergreen Marine Corp Ltd (2603 TT) reported unaudited Q1 2017 earnings results, which showed a dramatic year-over-year improvement but also sequential improvement compared to Q4 2016. The following table summarizes Evergreen's results in Q1 2017, Q1 2016, and Q4 2016.  

Q1 2017
Q1 2016
Q4 2016


Revenue, NT$ mn
33,839
28,604
34,195


Gross margin, %
6.23%
-9.34%
2.17%


Operating margin, %
1.94%
-14.37%
-2.11%


Net profit (loss), NT$ mn
169
(4,588)
(1,107)

Source: Evergreen MarineLast quarter's gross…

Evergreen Marine Q1 Earnings Show a Strong Recovery; Struggling Yang Ming Continues to Lag

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.

Yang Ming Marine Transport / Equity Bottom-Up

<ul><li>
Capital reduction. In a notification to the Taiwanese stock exchange today (link - <a href="http://www.twse.com.tw/en/trading/exchange/TWTAVU/TWTAVU.php" target="_blank">http://www.twse.com.tw/en/trading/exchange/TWTAVU/TWTAVU.php</a>), Yang Ming Marine (YMM) announced suspension of its stock trading until 4 May 2017 during which it is set to reduce its equity capital to the tune of ~53%. This action will decrease its number of shares to 1.4bn from 3.0bn. The announcement is a follow-up of the company’s extraordinary special shareholders' meeting on 22 December 2016, which resolved to…</li></ul>


Capital reduction. In a notification to the Taiwanese stock exchange today (link - http://www.twse.com.tw/en/trading/exchange/TWTAVU/TWTAVU.php), Yang Ming Marine (YMM) announced suspension of its stock trading until 4 May 2017 during which it is set to reduce its equity capital to the tune of ~53%. This action will decrease its number of shares to 1.4bn from 3.0bn. The announcement is a follow-up of the company’s extraordinary special shareholders' meeting on 22 December 2016, which resolved to…

Yang Ming Marine (2609 TT, Unattractive) – Shares Suspended Until May 4th Amid Capital Reduction

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

Institutional investors have long shied away from owning <a href="https://www.smartkarma.com/entities/15428" target="_blank" data-smartkarma-citation="entities:15428:1">Evergreen Marine Corp Ltd (2603 TT)</a> for two reasons unrelated to the container shipping sector's chronically weak earnings:<ol><li>Concerns about potential conflicts of interest between the Listco and its founding family</li><li>A Group structure that is perceived to be opaque or at least unnecessarily complex</li></ol>In this note we strive to show that investor concerns about potential conflicts and a lack of transparency are misplaced. We believe the interests of the Listco (Evergreen Marine Corp., or EMC) and its founding family are closely aligned, and EMC's earnings results seem to bear this out. Furthermore, a bit of digging shows that the basic Group structure is in fact quite uncomplicated, and the improvement in Taiwan's reporting standards over the years means that investors can obtain a clear picture of the EMC's financial status every quarter.We believe EMC is unjustifiably cheap relative to some of its closest Asian peers. At its current price, EMC presents an attractive way to play a recovery in the rapidly consolidating container shipping industry. We have set a target price of NT$16 per share and recommend investors buy EMC on dips.

Institutional investors have long shied away from owning Evergreen Marine Corp Ltd (2603 TT) for two reasons unrelated to the container shipping sector's chronically weak earnings:Concerns about potential conflicts of interest between the Listco and its founding familyA Group structure that is perceived to be opaque or at least unnecessarily complexIn this note we strive to show that investor concerns about potential conflicts and a lack of transparency are misplaced. We believe the interests of the Listco (Evergreen Marine Corp., or EMC) and its founding family are closely aligned, and EMC's earnings results seem to bear this out. Furthermore, a bit of digging shows that the basic Group structure is in fact quite uncomplicated, and the improvement in Taiwan's reporting standards over the years means that investors can obtain a clear picture of the EMC's financial status every quarter.We believe EMC is unjustifiably cheap relative to some of its closest Asian peers. At its current price, EMC presents an attractive way to play a recovery in the rapidly consolidating container shipping industry. We have set a target price of NT$16 per share and recommend investors buy EMC on dips. 

Evergreen Marine: Not Really So Complex After All, & Cheap on EV/Capacity

Taiwan

Yang Ming Marine Transport provides transportation services and handles domestic and foreign maritime services on cargos.  The Company also operates warehouse, wharf, tug, barge, and container freight station services as well as repairs, leases, and sells containers and chassis.

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Yang Ming Marine Transport (2609 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 Q1 Earnings Show a Strong Recovery; Struggling Yang Ming Continues to Lag

On Friday, May 12th, Evergreen Marine Corp Ltd (2603 TT) reported unaudited Q1 2017 earnings results, which showed a dramatic year-over-year...

Daniel Hellberg

Yang Ming Marine (2609 TT, Unattractive) – Shares Suspended Until May 4th Amid Capital Reduction

Capital reduction. In a notification to the Taiwanese stock exchange today (link - http://www.twse.com.tw/en/trading/exchange/TWTAVU/TWTAVU.php),...

Drewry Maritime Financial Research

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

Evergreen Marine: Not Really So Complex After All, & Cheap on EV/Capacity

Institutional investors have long shied away from owning Evergreen Marine Corp Ltd (2603 TT) for two reasons unrelated to the container shipping...

Daniel Hellberg

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