Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

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

<ul>
<li>Container carrier Maersk delivered strong Q2 results, mainly due to improved unit pricing</li>
<li>Company revised FY26 EBITDA guidance upward for the second time in just six weeks</li>
<li>We underestimated carriers' ability to quickly, successfully pass along big fuel cost increase</li>
</ul>


Container carrier Maersk delivered strong Q2 results, mainly due to improved unit pricing
Company revised FY26 EBITDA guidance upward for the second time in just six weeks
We underestimated carriers' ability to quickly, successfully pass along big fuel cost increase


Maersk Q226 Results: Price Gains Exceeded Fuel Cost Increases (By a Lot) | Guidance Lifted Again!

Junior Finance Analyst, Steno Research

Ulrik Simmelholt

Junior Finance Analyst

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

Macroeconomics

<ul><li>Takeaways upfront: No container shipping through Suez towards Europe and price increases ahead; Energy and dry bulk shipping is still alive; Expect transportation and apparel to see price increases in Europe; Hedging 2024 portfolios with long Shipping bets and/or long Energy bets make increasing sense.</li><li>Happy New Year everyone! Things are escalating in the Red Sea as shipping giants such as Maersk and Hapaq-Lloyd haven’t been convinced by the military efforts in the Red Sea and have now completely avoided transporting goods from Asia to Europe through the Red Sea.</li><li>That can be seen in prices which have seen one-way traffic the last week. Freight rates are up &gt;100% this week, and we hear from sources that Maersk is now suggesting an all-in rate of USD 6000 TEU.</li></ul>

Takeaways upfront: No container shipping through Suez towards Europe and price increases ahead; Energy and dry bulk shipping is still alive; Expect transportation and apparel to see price increases in Europe; Hedging 2024 portfolios with long Shipping bets and/or long Energy bets make increasing sense.Happy New Year everyone! Things are escalating in the Red Sea as shipping giants such as Maersk and Hapaq-Lloyd haven’t been convinced by the military efforts in the Red Sea and have now completely avoided transporting goods from Asia to Europe through the Red Sea.That can be seen in prices which have seen one-way traffic the last week. Freight rates are up &gt;100% this week, and we hear from sources that Maersk is now suggesting an all-in rate of USD 6000 TEU.

Suez Watch: Massively Rising Container Freight Rates, While Dry Bulk, LNG and Crude Rates More Muted

HK/China Equity Long-Short

Osbert Tang, CFA

Orient Overseas (International) / Equity Bottom-Up

<ul>
<li>We continue to adopt this strategy, as the outlook for <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a> is weaker than <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC International (1308 HK)</a>, which generated 51pp in the last year. </li>
<li>For FY26-27, OOIL will face more bunker and capacity pressure. Its metrics are less attractive, for example, dividend yield of 1.2-2%, vs. SITC's 7.6-9.2%.</li>
<li>OOIL is more expensive at 25x FY26F PER, against 11.3x for SITC. While SITC's P/B is the highest among peers, it has an enviable average ROE of 42.8%.</li>
</ul>


We continue to adopt this strategy, as the outlook for Orient Overseas International (316 HK) is weaker than SITC International (1308 HK), which generated 51pp in the last year. 
For FY26-27, OOIL will face more bunker and capacity pressure. Its metrics are less attractive, for example, dividend yield of 1.2-2%, vs. SITC's 7.6-9.2%.
OOIL is more expensive at 25x FY26F PER, against 11.3x for SITC. While SITC's P/B is the highest among peers, it has an enviable average ROE of 42.8%.


China Pair Trade Update: Long SITC Intl (1308 HK), Short OOIL (316 HK)

Event-Driven

ZIM Integrated Shipping Services / Event-Driven

ZIM Integrated Shipping Services (ZIM US)

<ul>
<li>Hapag-Lloyd last week announced an all cash US$4.2 bn bid for shares of Israel's ZIM</li>
<li>The deal will likely face regulators' scrutiny in Israel, Germany, maybe in EU, US too</li>
<li>Moreover, we believe long-term returns on the acquired assets will likely be negative</li>
</ul>


Hapag-Lloyd last week announced an all cash US$4.2 bn bid for shares of Israel's ZIM
The deal will likely face regulators' scrutiny in Israel, Germany, maybe in EU, US too
Moreover, we believe long-term returns on the acquired assets will likely be negative


Hapag-Lloyd Announced US$4.2 Bn Bid for Israel's ZIM | Unfortunately, We Can't Get the Math to Math

<ul>
<li>The 1H25 net profit of US$630m (+79.7% YoY) for <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC International (1308 HK)</a> is impressive. It maintains a generous 70% payout ratio, yielding 4.8% for the interim.</li>
<li>Its outlook for 2H25 stays positive despite the recent pull-back in spot rates. Overall demand-supply dynamics continue to be favourable in the short and medium term.</li>
<li>With interim earnings already accounting for 58% of full-year consensus, there is room for an upgrade. At 3.3x P/B, it is not expensive given 30-40% ROEs. </li>
</ul>


The 1H25 net profit of US$630m (+79.7% YoY) for SITC International (1308 HK) is impressive. It maintains a generous 70% payout ratio, yielding 4.8% for the interim.
Its outlook for 2H25 stays positive despite the recent pull-back in spot rates. Overall demand-supply dynamics continue to be favourable in the short and medium term.
With interim earnings already accounting for 58% of full-year consensus, there is room for an upgrade. At 3.3x P/B, it is not expensive given 30-40% ROEs. 


SITC International (1308 HK): A Charming 1H25

Denmark

A.P. Moeller-Maersk A/S is a conglomerate with diversified holdings. The Company operates a fleet including container vessels, tankers, supply ships, special vessels, APM terminials, and oil drilling rigs.  A.P. Moeller-Maersk also operates industrial business and explores for and produces oil and gas. The Company is active worldwide.

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AP Moeller - Maersk A/S (MAERSKB DC)

Maersk Q226 Results: Price Gains Exceeded Fuel Cost Increases (By a Lot) | Guidance Lifted Again!

Maersk pushed price hard in Q226, more than offsetting high and rising fuel costs. The company also bumped up FY26 guidance for the second time in...

Tracking Traffic

Suez Watch: Massively Rising Container Freight Rates, While Dry Bulk, LNG and Crude Rates More Muted

Takeaways upfront No container shipping through Suez towards Europe and price increases ahead; Energy and dry bulk shipping is still alive...

Steno Research

China Pair Trade Update: Long SITC Intl (1308 HK), Short OOIL (316 HK)

OOIL faces a weaker outlook than SITC, with higher expenses and less attractive metrics. SITC offers a higher dividend yield and a lower...

Osbert Tang, CFA

Hapag-Lloyd Announced US$4.2 Bn Bid for Israel's ZIM | Unfortunately, We Can't Get the Math to Math

The deal doesn't make financial sense unless EBITDA margins average 20% or better over the next 15 years, which is more than current margins and...

Tracking Traffic

SITC International (1308 HK): A Charming 1H25

SITC issued a positive profit alert for FY25, suggesting its net profit will be between US$1.2bn and US$1.23bn (+16% to 18.0% YoY). This is 1-3%...

Osbert Tang, CFA

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Maersk Q226 Results: Price Gains Exceeded Fuel Cost Increases (By a Lot) | Guidance Lifted Again!

Maersk pushed price hard in Q226, more than offsetting high and rising fuel costs. The company also bumped up FY26 guidance for the second time in...

Tracking Traffic

Suez Watch: Massively Rising Container Freight Rates, While Dry Bulk, LNG and Crude Rates More Muted

Takeaways upfront No container shipping through Suez towards Europe and price increases ahead; Energy and dry bulk shipping is still alive...

Steno Research

China Pair Trade Update: Long SITC Intl (1308 HK), Short OOIL (316 HK)

​OOIL faces a weaker outlook than SITC, with higher expenses and less attractive metrics. SITC offers a higher dividend yield and a lower...

Osbert Tang, CFA

Hapag-Lloyd Announced US$4.2 Bn Bid for Israel's ZIM | Unfortunately, We Can't Get the Math to Math

The deal doesn't make financial sense unless EBITDA margins average 20% or better over the next 15 years, which is more than current margins and...

Tracking Traffic

SITC International (1308 HK): A Charming 1H25

SITC issued a positive profit alert for FY25, suggesting its net profit will be between US$1.2bn and US$1.23bn (+16% to 18.0% YoY). This is 1-3%...

Osbert Tang, CFA

OOIL faces a weaker outlook than SITC, with higher expenses and less attractive metrics. SITC offers a higher dividend yield and a lower...