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)

Liechtenstein Transportation / Thematic (Sector/Industry)

<p>As global port throughput suffered in 2018 the impact of the trade war began to show on manufacturing and trade activity in China, Germany and much of Europe. Drewry has revised downwards its year-on-year growth in global container port traffic from 3.9% to 3.0% for 2019. Risks to the global economy remain deeply entrenched in trade conflicts. Subdued throughput expansion is yielding weak revenue growth for most of the companies in our coverage. However, the container revenue yields stayed flat because of the obvious lack of volume growth amid pressure from mightier shipping alliances. On the earnings front, we maintain a positive outlook for ICTSI, <a href="https://www.smartkarma.com/entities/dp-world" target="_blank" data-smartkarma-citation="entities:22734:1" rel="noopener">DP World (DPW DU)</a>, and <a href="https://www.smartkarma.com/entities/westports-holdings-bhd" target="_blank" data-smartkarma-citation="entities:3954:1" rel="noopener">Westports Holdings (WPRTS MK)</a>. However, we are not as positive about <a href="https://www.smartkarma.com/entities/china-merchants-port-holdings-company-ltd" target="_blank" data-smartkarma-citation="entities:15155:1" rel="noopener">China Merchants Port (144 HK)</a>, <a href="https://www.smartkarma.com/entities/hutchison-port-hldg-trust" target="_blank" data-smartkarma-citation="entities:10512:1" rel="noopener">Hutchison Port Hldg Trust (HPHT SP)</a>, <a href="https://www.smartkarma.com/entities/santos-brasil-participacoes-s-a" target="_blank" data-smartkarma-citation="entities:22919:1" rel="noopener">Santos Brasil Participacoes Sa. (STBP11 BZ)</a>, and <a href="https://www.smartkarma.com/entities/global-ports-investments-plc" target="_blank" data-smartkarma-citation="entities:24086:1" rel="noopener">Global Ports Investments (GLPR LI)</a> earnings. Meanwhile, mounting debt that fed expansion is becoming a liability despite a more relaxed interest rate path forward. The market-weighted <a href="https://www.smartkarma.com/companies/drewry-maritime-financial-research" target="_blank" data-smartkarma-citation="companies:180" rel="noopener">Drewry Maritime Financial Research</a> Port Index (DPI), which comprises 11 port companies under our coverage, tracked the downward momentum of the global economy with a loss of 24.9% in 2018. It trails the MSCI Emerging Markets Index which shed 17% in the same period. Hence the price gap between the two indices narrowed to around 8%, one of the closest gaps in the indices since we started tracking them in 2012. The glum market sentiments against the backdrop of the trade war depressed the valuations of the port sector. We argue that valuations have not found the floor yet and the volatile market has exacerbated the variety in their levels.</p>

As global port throughput suffered in 2018 the impact of the trade war began to show on manufacturing and trade activity in China, Germany and much of Europe. Drewry has revised downwards its year-on-year growth in global container port traffic from 3.9% to 3.0% for 2019. Risks to the global economy remain deeply entrenched in trade conflicts. Subdued throughput expansion is yielding weak revenue growth for most of the companies in our coverage. However, the container revenue yields stayed flat because of the obvious lack of volume growth amid pressure from mightier shipping alliances. On the earnings front, we maintain a positive outlook for ICTSI, DP World (DPW DU), and Westports Holdings (WPRTS MK). However, we are not as positive about China Merchants Port (144 HK), Hutchison Port Hldg Trust (HPHT SP), Santos Brasil Participacoes Sa. (STBP11 BZ), and Global Ports Investments (GLPR LI) earnings. Meanwhile, mounting debt that fed expansion is becoming a liability despite a more relaxed interest rate path forward. The market-weighted Drewry Maritime Financial Research Port Index (DPI), which comprises 11 port companies under our coverage, tracked the downward momentum of the global economy with a loss of 24.9% in 2018. It trails the MSCI Emerging Markets Index which shed 17% in the same period. Hence the price gap between the two indices narrowed to around 8%, one of the closest gaps in the indices since we started tracking them in 2012. The glum market sentiments against the backdrop of the trade war depressed the valuations of the port sector. We argue that valuations have not found the floor yet and the volatile market has exacerbated the variety in their levels.

Santos Brasil Participacoes Sa. (STBP11 BZ)

Port Valuations Plunged into Overvalued Territory Spelled by Trade War Doom