SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

COSCO SHIPPING Holdings   / Equity Bottom-Up

<ul><li>The WTO has forecasted a rise in global trade volume in 2024, especially for business cycle related goods.</li><li>In Singapore, the 10 most traded stocks of the Sector have averaged 5.8% gains while booking S$25 million of combined net institutional inflow.</li><li>Among Singapore’s 10 most traded Transportation stocks, the three strongest performing stocks over the past fortnight included COSCO Shipping Singapore, Chasen and Samudera Shipping, averaging 16.6% gains, with all three notching up higher trading turnover levels compared to 2023 levels.</li></ul>

The WTO has forecasted a rise in global trade volume in 2024, especially for business cycle related goods.In Singapore, the 10 most traded stocks of the Sector have averaged 5.8% gains while booking S$25 million of combined net institutional inflow.Among Singapore’s 10 most traded Transportation stocks, the three strongest performing stocks over the past fortnight included COSCO Shipping Singapore, Chasen and Samudera Shipping, averaging 16.6% gains, with all three notching up higher trading turnover levels compared to 2023 levels.

Transportation Stocks on Move in Early 2024

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>The 72.5% decline in <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>'s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.  </li>
<li>Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.</li>
<li>Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.</li>
</ul>


The 72.5% decline in SITC International (1308 HK)'s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.  
Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.
Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.


SITC International (1308 HK): Bidding Farewell to the Trough

Orient Overseas International / Equity Bottom-Up

<ul>
<li>The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. <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 a beneficiary.</li>
<li>There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. </li>
<li>OOIL's net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. </li>
</ul>


The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. 
OOIL's net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. 


Orient Overseas Intl (316 HK): Is It Time for a Reversal?

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Our index suggests long-haul rates remained stable in May as carriers approach peak season</li>
<li>Cleanup of West Coast slowdown, lower fuel prices should both serve as Summer tailwinds</li>
<li>We believe conditions could improve in H2 2023, and shares remain cheap on Price / Assets</li>
</ul>


Our index suggests long-haul rates remained stable in May as carriers approach peak season
Cleanup of West Coast slowdown, lower fuel prices should both serve as Summer tailwinds
We believe conditions could improve in H2 2023, and shares remain cheap on Price / Assets


Monthly Container Shipping Tracker | Rates Stable | Strike Averted | Fuel Prices Lower  (June 2023)

Equity Capital Markets

<ul>
<li>In terms of fleet characteristics, market exposure, and recent financial performance, we believe <a href="https://www.smartkarma.com/entities/t-s-lines" target="_blank" data-smartkarma-citation="entities:39795:1" rel="noopener">T.S. Lines (TSL HK)</a> and Taiwan's <a href="https://www.smartkarma.com/entities/wan-hai-lines-ltd" target="_blank" data-smartkarma-citation="entities:14262:1" rel="noopener">Wan Hai Lines (2615 TT)</a> are directly comparable</li>
<li>WHL has more exposure to the Transpacific, but still boasts a much larger Intra-Asia operation owing to its scale advantage (fleet and revenue about four times the size of TSL)</li>
<li>Given the similarities we outline in this insight, we believe TSL's shares should trade at EV/Fleet and EV/Revenue multiples in line with WHL's; no premium is justified, in our view</li>
</ul>


In terms of fleet characteristics, market exposure, and recent financial performance, we believe T.S. Lines (TSL HK) and Taiwan's Wan Hai Lines (2615 TT) are directly comparable
WHL has more exposure to the Transpacific, but still boasts a much larger Intra-Asia operation owing to its scale advantage (fleet and revenue about four times the size of TSL)
Given the similarities we outline in this insight, we believe TSL's shares should trade at EV/Fleet and EV/Revenue multiples in line with WHL's; no premium is justified, in our view


TS Lines Pre-IPO | Like Wan Hai Lines, but Smaller | Intra-Asia Update | Approaches to Valuation

China

COSCO SHIPPING Holdings Co., Ltd offers marine freight transportation services.  The Company offers container shipping, dry bulk shipping, logistics services, freight forwarding, and terminal and container leasing services internationally.  COSCO SHIPPING Holdings Co., Ltd operates container ships and terminals, and manufactures shipping containers.

COSCO Shipping Holdings (1919 HK)

Transportation Stocks on Move in Early 2024

The WTO has forecasted a rise in global trade volume in 2024, especially for business cycle related goods. In Singapore, the 10 most traded stocks...

Singapore Exchange Ltd (SGX)

SITC International (1308 HK): Bidding Farewell to the Trough

SITC's disappointing FY23 earnings decline may be already priced in. With sequentially higher freight rates, there is a potential for a rebound in...

Osbert Tang, CFA

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

SCFI surged 25% due to the Red Sea crisis, benefiting OOIL, suggesting consensus forecasts are too bearish. It is attractive at 0.7x P/B and 8%...

Osbert Tang, CFA

Monthly Container Shipping Tracker | Rates Stable | Strike Averted | Fuel Prices Lower (June 2023)

We are gaining conviction in our view that market conditions have bottomed for long-haul carriers, and that their shares appear depressed compared...

Tracking Traffic

TS Lines Pre-IPO | Like Wan Hai Lines, but Smaller | Intra-Asia Update | Approaches to Valuation

The obvious, direct comparable for TS Lines is Wan Hai Lines of Taiwan. In this insight we compare the two, review market conditions, and suggest...

Tracking Traffic

Transportation Stocks on Move in Early 2024

The WTO has forecasted a rise in global trade volume in 2024, especially for business cycle related goods. In Singapore, the 10 most traded stocks...

Singapore Exchange Ltd (SGX)

SITC International (1308 HK): Bidding Farewell to the Trough

​SITC's disappointing FY23 earnings decline may be already priced in. With sequentially higher freight rates, there is a potential for a rebound in...

Osbert Tang, CFA

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

​SCFI surged 25% due to the Red Sea crisis, benefiting OOIL, suggesting consensus forecasts are too bearish. It is attractive at 0.7x P/B and 8%...

Osbert Tang, CFA

Monthly Container Shipping Tracker | Rates Stable | Strike Averted | Fuel Prices Lower (June 2023)

We are gaining conviction in our view that market conditions have bottomed for long-haul carriers, and that their shares appear depressed compared...

Tracking Traffic

TS Lines Pre-IPO | Like Wan Hai Lines, but Smaller | Intra-Asia Update | Approaches to Valuation

The obvious, direct comparable for TS Lines is Wan Hai Lines of Taiwan. In this insight we compare the two, review market conditions, and suggest...

Tracking Traffic

SITC's disappointing FY23 earnings decline may be already priced in. With sequentially higher freight rates, there is a potential for a rebound in...

SCFI surged 25% due to the Red Sea crisis, benefiting OOIL, suggesting consensus forecasts are too bearish. It is attractive at 0.7x P/B and 8%...