Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

We began to turn cautious on container shipping last Summer and became more negative as Summer turned to Fall. Our view was that average freight rates and carrier profitability had improved sharply in the months following <a href="https://www.smartkarma.com/entities/18689" target="_blank" data-smartkarma-citation="entities:18689:1">Hanjin Shipping Co Ltd (117930 KS)</a>'s August 2016 bankruptcy, and that further fundamental improvements would be much harder to come by. About six months after turning cautious on container shipping, we remain negative on the sector, and we believe 2018 will turn out to be worse…

We began to turn cautious on container shipping last Summer and became more negative as Summer turned to Fall. Our view was that average freight rates and carrier profitability had improved sharply in the months following Hanjin Shipping Co Ltd (117930 KS)'s August 2016 bankruptcy, and that further fundamental improvements would be much harder to come by. About six months after turning cautious on container shipping, we remain negative on the sector, and we believe 2018 will turn out to be worse…

Container Shipping Sector: Six Months of Declining Share Prices Explained in Three Charts

Infrastructure Analyst - Ports & Terminals, Drewry Maritime Financial Research

Victor Wai, CFA

Infrastructure Analyst - Ports & Terminals

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.

Hutchison Port Holdings / Equity Bottom-Up

In line with expectations: Hutchison Port Holdings Trust delivered a set of weak results that reflected our thesis for an Unattractive call on the Singapore-listed Trust. PATMI plunged 38.4%y/y to HKD 237.8m (USD 30.5m) on the back of a slight revenue weakness of 3.4% y/y, from HKD 2.96bn (USD 379m) to HKD2.86bn (USD 367m) in 4Q17. We could not find any source of optimism that postulates FY18e to be a turnaround year for the company.NDRC ruling will not crush HPHT: On 1 February 2018, the…

In line with expectations: Hutchison Port Holdings Trust delivered a set of weak results that reflected our thesis for an Unattractive call on the Singapore-listed Trust. PATMI plunged 38.4%y/y to HKD 237.8m (USD 30.5m) on the back of a slight revenue weakness of 3.4% y/y, from HKD 2.96bn (USD 379m) to HKD2.86bn (USD 367m) in 4Q17. We could not find any source of optimism that postulates FY18e to be a turnaround year for the company.NDRC ruling will not crush HPHT: On 1 February 2018, the…

HPH Trust - Upbeat Facade Masks Uncertainties

Hutchison Port Holdings Trust (HPHT SP Equity) kisses the support level of $0.40 apiece, with investors finding some feline-cuteness for the once-loved port infrastructure play. Amid a resurgent trade recovery post-Global Financial Crisis, Li Ka-Shing spun off the Pearl River Delta assets and listed them as a Trust for $1.01, promising attractive dividends for shareholders who take a long-term view on ports.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/040/107/original/HPHT_4.JPG?1512883791" class="editor-image img-responsive" data-smartkarma-image-id="40107"></figure><div class="content-caption">Throwback to the busy days... Source: JOC</div>Despite a series of misses in its earnings -…

Hutchison Port Holdings Trust (HPHT SP Equity) kisses the support level of $0.40 apiece, with investors finding some feline-cuteness for the once-loved port infrastructure play. Amid a resurgent trade recovery post-Global Financial Crisis, Li Ka-Shing spun off the Pearl River Delta assets and listed them as a Trust for $1.01, promising attractive dividends for shareholders who take a long-term view on ports.Throwback to the busy days... Source: JOCDespite a series of misses in its earnings -…

Hutchison Port Trust - Dead Cat Bounce No.10?

Cosco Shipping Ports (CSP) announced a third berth with PSA Singapore at the Pasir Panjang Terminal. We believe shareholders of CSP have little to gain from the enhanced deal.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/039/557/original/CSP.PNG?1512064185" class="editor-image img-responsive" data-smartkarma-image-id="39557"></figure><div class="content-caption">Cosco-PSA Terminal, source: IHS, MPA</div>Singapore-backed PSA wishes to entrench shipping lines to conduct transhipment activities in the republic. As cargo volumes pick up in the region, shipping lines may opt for more direct calls at out ports, rather than using feeder vessels to ferry containers from hub ports like Singapore…

Cosco Shipping Ports (CSP) announced a third berth with PSA Singapore at the Pasir Panjang Terminal. We believe shareholders of CSP have little to gain from the enhanced deal.Cosco-PSA Terminal, source: IHS, MPASingapore-backed PSA wishes to entrench shipping lines to conduct transhipment activities in the republic. As cargo volumes pick up in the region, shipping lines may opt for more direct calls at out ports, rather than using feeder vessels to ferry containers from hub ports like Singapore…

PSA Wins, Cosco Shipping Ports Loses in Joint Partnership

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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China Merchants Port, or CMP, became a pure port operator, following its disposal of 24.5%-owned associate CIMC, the container manufacturer. This allows the company to focus on its core competence in port operation, and with the cash proceeds of HKD 8.5 billion, we see the company accelerated its port expansion. The recent acquisitions include: CNY 5.4 billion for 60% Shantou Port in China, and up to USD 1.1 billion investment for a 99-year exclusive concession right on Hambantota Port in Sri Lanka. We expect acquisitions to be a dominant theme for CMP in the coming years, which is tightly aligned with China’s “one-belt-one-road” strategy. While the growing assets should warrant a sound bottom-line growth, we’re concerned that the aggressive expansion plan would require higher capital investments. Given the recent acquisitions for container terminals were mostly priced at around 1.6-2.2 times price/book, compared with the 1.1-1.2 times price/book for CMP’s existing assets, we would expect dilution to the company’s return on invested capital.Analyst: Jennifer Song

China Merchants Port, or CMP, became a pure port operator, following its disposal of 24.5%-owned associate CIMC, the container manufacturer. This allows the company to focus on its core competence in port operation, and with the cash proceeds of HKD 8.5 billion, we see the company accelerated its port expansion. The recent acquisitions include: CNY 5.4 billion for 60% Shantou Port in China, and up to USD 1.1 billion investment for a 99-year exclusive concession right on Hambantota Port in Sri Lanka. We expect acquisitions to be a dominant theme for CMP in the coming years, which is tightly aligned with China’s “one-belt-one-road” strategy. While the growing assets should warrant a sound bottom-line growth, we’re concerned that the aggressive expansion plan would require higher capital investments. Given the recent acquisitions for container terminals were mostly priced at around 1.6-2.2 times price/book, compared with the 1.1-1.2 times price/book for CMP’s existing assets, we would expect dilution to the company’s return on invested capital.Analyst: Jennifer Song

Disposal of CIMC Boosted CMP's 1H; M&A a Dominant Theme for 2017

Hong Kong

China Merchants Port is a leading global port developer, investor, and operator, primarily engaged in port operations, bonded logistics, and property investment. The company manages container and bulk/general cargo terminals, operates logistics parks, and provides port transportation and airport cargo handling services. It is headquartered in Hong Kong and was founded in 1991.

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China Merchants Port (144 HK)

HPH Trust - Upbeat Facade Masks Uncertainties

In line with expectations: Hutchison Port Holdings Trust delivered a set of weak results that reflected our thesis for an Unattractive call on the...

Drewry Maritime Financial Research

Hutchison Port Trust - Dead Cat Bounce No.10?

Hutchison Port Holdings Trust (HPHT SP Equity) kisses the support level of $0.40 apiece, with investors finding some feline-cuteness for the...

Drewry Maritime Financial Research

PSA Wins, Cosco Shipping Ports Loses in Joint Partnership

Cosco Shipping Ports (CSP) announced a third berth with PSA Singapore at the Pasir Panjang Terminal. We believe shareholders of CSP have little to...

Drewry Maritime Financial Research

Disposal of CIMC Boosted CMP's 1H; M&A a Dominant Theme for 2017

China Merchants Port, or CMP, became a pure port operator, following its disposal of 24.5%-owned associate CIMC, the container manufacturer. This...

Morningstar, Inc.

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52-week Range

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Container Shipping Sector: Six Months of Declining Share Prices Explained in Three Charts

We began to turn cautious on container shipping last Summer and became more negative as Summer turned to Fall. Our view was that average freight...

Daniel Hellberg

HPH Trust - Upbeat Facade Masks Uncertainties

In line with expectations: Hutchison Port Holdings Trust delivered a set of weak results that reflected our thesis for an Unattractive call on the...

Drewry Maritime Financial Research

Hutchison Port Trust - Dead Cat Bounce No.10?

Hutchison Port Holdings Trust (HPHT SP Equity) kisses the support level of $0.40 apiece, with investors finding some feline-cuteness for the...

Drewry Maritime Financial Research

PSA Wins, Cosco Shipping Ports Loses in Joint Partnership

Cosco Shipping Ports (CSP) announced a third berth with PSA Singapore at the Pasir Panjang Terminal. We believe shareholders of CSP have little to...

Drewry Maritime Financial Research

Disposal of CIMC Boosted CMP's 1H; M&A a Dominant Theme for 2017

China Merchants Port, or CMP, became a pure port operator, following its disposal of 24.5%-owned associate CIMC, the container manufacturer. This...

Morningstar, Inc.