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.

Credit

We are pleased to announce the launch of our credit research on the global maritime sector. Launching with a coverage of the listed bonds of the three major container shipping companies, A.P. Moller Maersk, CMA CGM and Hapag Lloyd AG the service offering will expand to cover other maritime sectors including port operators, dry bulk, tanker and gas shipping.A.P. Moller – Maersk - Credit Outlook: Stable | Bond Valuation: Neutral APMM’s bonds lie two notches above the investment grade ratings and this is also reflected in yields.USD Notes<ul><li>Overall, APMM’s USD notes are fairly priced and we don’t believe that quotes will deviate much from current levels taking also in mind the stable credit outlook of the issuer. Duration on average is 2.52 years and we consider interest rate risk high. The market sentiment at the moment, ahead of a gradual rise in interest and inflation rates sells longer duration issues and that is reflected in prices (yields) as well. We assign a Neutral valuation on the greenback denominated bonds.</li></ul>EUR Notes<ul><li>For the short-term we assign a Neutral valuation on all EUR notes except the 2017 indenture which is Unattractive in our view. We base our recommendation on the issuer’s stable credit outlook that is driven by APMM’s ample liquidity, a modest rebound on the container shipping industry in 1Q17 and better industry fundamentals in the oil business, which makes us believe that the worst is behind us.</li><li>In 2017 we have the French and German elections. We expect both of these events to have an impact on the markets but the extent of it remains to be seen.</li></ul>GBP Notes<ul><li>After Brexit and the devaluation of EUR, we had expected further losses but eventual losses were insignificant. We remain cautious on the GBP notes as well and assign a Neutral recommendation. The notes are Reg S only and are not for sale in the US.</li></ul>

We are pleased to announce the launch of our credit research on the global maritime sector. Launching with a coverage of the listed bonds of the three major container shipping companies, A.P. Moller Maersk, CMA CGM and Hapag Lloyd AG the service offering will expand to cover other maritime sectors including port operators, dry bulk, tanker and gas shipping.A.P. Moller – Maersk - Credit Outlook: Stable | Bond Valuation: Neutral APMM’s bonds lie two notches above the investment grade ratings and this is also reflected in yields.USD NotesOverall, APMM’s USD notes are fairly priced and we don’t believe that quotes will deviate much from current levels taking also in mind the stable credit outlook of the issuer. Duration on average is 2.52 years and we consider interest rate risk high. The market sentiment at the moment, ahead of a gradual rise in interest and inflation rates sells longer duration issues and that is reflected in prices (yields) as well. We assign a Neutral valuation on the greenback denominated bonds.EUR NotesFor the short-term we assign a Neutral valuation on all EUR notes except the 2017 indenture which is Unattractive in our view. We base our recommendation on the issuer’s stable credit outlook that is driven by APMM’s ample liquidity, a modest rebound on the container shipping industry in 1Q17 and better industry fundamentals in the oil business, which makes us believe that the worst is behind us.In 2017 we have the French and German elections. We expect both of these events to have an impact on the markets but the extent of it remains to be seen.GBP NotesAfter Brexit and the devaluation of EUR, we had expected further losses but eventual losses were insignificant. We remain cautious on the GBP notes as well and assign a Neutral recommendation. The notes are Reg S only and are not for sale in the US.

Shanghai Electric Group Company (601727 CH)

China Railway Construction Corp (1186 HK)

China Communications Construction (1800 HK)

A.P. Moller - Maersk – Credit Outlook: Stable | Bond Valuation: Neutral

AP Moeller - Maersk A/S

A.P. Moller - Maersk – Credit Outlook: Stable | Bond Valuation: Neutral