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

<ul>
<li>As we begin lapping easy comps, our momentum index looks "less bad"</li>
<li>Red Sea re-routes, interest rate moves, fuel all helped lift shares recently</li>
<li>We think lots of bad news has been priced into shares at current levels</li>
</ul>


As we begin lapping easy comps, our momentum index looks "less bad"
Red Sea re-routes, interest rate moves, fuel all helped lift shares recently
We think lots of bad news has been priced into shares at current levels


Monthly Container Shipping Tracker | Lapping Easy Comps | Red Sea Re-Routes & More (December 2023)

<ul>
<li>Price momentum stagnant, but could North American volume surge be an inflection point?</li>
<li>Fuel price hasn't risen since outbreak of violence in mideast, but no longer a tailwind, either</li>
<li>Look to Maersk results on November 3 for guidance, US inventory de-stocking commentary</li>
</ul>


Price momentum stagnant, but could North American volume surge be an inflection point?
Fuel price hasn't risen since outbreak of violence in mideast, but no longer a tailwind, either
Look to Maersk results on November 3 for guidance, US inventory de-stocking commentary


Monthly Container Shipping Tracker | Rebound in NAM Volume Could Be Inflection Point (October 2023)

<ul>
<li>Our index suggests pricing momentum remains depressed, but stable in Q3; fuel prices have begun to rise from Q2 lows, but probably don't offer much lift to earnings now</li>
<li>We looked at intra-Asian carrier TS Lines (which applied to list its shares in Hong Kong in April) and provided a quick update on market conditions in the Intra-Asian trade</li>
<li>Shares of a few container shipping companies -- including Evergreen Marine of Taiwan -- have performed well YTD in 2023; we remain positive on the sector's medium-term outlook</li>
</ul>


Our index suggests pricing momentum remains depressed, but stable in Q3; fuel prices have begun to rise from Q2 lows, but probably don't offer much lift to earnings now
We looked at intra-Asian carrier TS Lines (which applied to list its shares in Hong Kong in April) and provided a quick update on market conditions in the Intra-Asian trade
Shares of a few container shipping companies -- including Evergreen Marine of Taiwan -- have performed well YTD in 2023; we remain positive on the sector's medium-term outlook


Monthly Container Shipping Tracker | Rates Stable | Fuel (Barely) Lower Y/Y | (September 2023)

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

<ul>
<li>On Friday container giant <a href="https://www.smartkarma.com/entities/ap-moeller-maersk-a-s" target="_blank" data-smartkarma-citation="entities:22428:1" rel="noopener">AP Moeller - Maersk A/S (MAERSKB DC)</a> raised FY23 guidance, lifting the bottom of its EBITDA range &amp; increasing target FCF from US$2bn+ to US$3bn+</li>
<li>Despite beating Q2 expectations and raising FY guidance, management warned that the "normalization" of container shipping conditions is taking longer than anticipated</li>
<li>Maersk's shares traded down on the news, but the company's statements confirm our thesis: market conditions in 2023 are not nearly as bad as expected (Maersk's TTM ROIC 34%!)</li>
</ul>


On Friday container giant AP Moeller - Maersk A/S (MAERSKB DC) raised FY23 guidance, lifting the bottom of its EBITDA range &amp; increasing target FCF from US$2bn+ to US$3bn+
Despite beating Q2 expectations and raising FY guidance, management warned that the "normalization" of container shipping conditions is taking longer than anticipated
Maersk's shares traded down on the news, but the company's statements confirm our thesis: market conditions in 2023 are not nearly as bad as expected (Maersk's TTM ROIC 34%!)


Maersk Q2: Raised FY23 Guidance | Beat on Earnings, Too | Takeaway: Conditions Not Disastrous

<ul>
<li>Maersk's Q1 earnings were solid, despite plummeting container rates and volumes. Annualizing Q1 Net Income would give RoE of about 17%, which is a healthy level, in our view. </li>
<li>Q1 EBITDA of US$4 bn is equivalent to 36% to 50% of full-year guidance, which remains unchanged. Maersk indicated Q1 will likely be its most profitable quarter in 2023.</li>
<li>Maersk's result reinforces our view that container rates are bottoming. A related takeaway is that a slowing goods inflation rate could lose a tailwind it's enjoyed since last October.</li>
</ul>


Maersk's Q1 earnings were solid, despite plummeting container rates and volumes. Annualizing Q1 Net Income would give RoE of about 17%, which is a healthy level, in our view. 
Q1 EBITDA of US$4 bn is equivalent to 36% to 50% of full-year guidance, which remains unchanged. Maersk indicated Q1 will likely be its most profitable quarter in 2023.
Maersk's result reinforces our view that container rates are bottoming. A related takeaway is that a slowing goods inflation rate could lose a tailwind it's enjoyed since last October.


Maersk Q1: Earnings Fine | Guidance Intact | Takeaways for Container Shipping (And Inflation)

Hong Kong

China Merchants Holdings International Company Limited, through its subsidiaries and associated companies, operates container and cargo terminals, port transportation, and airport cargo handling.  The Company also manufactures containers, paint, and trailers as well as operates toll road, shipping, property, and dealing securities businesses.

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China Merchants Port (144 HK)

Monthly Container Shipping Tracker | Lapping Easy Comps | Red Sea Re-Routes & More (December 2023)

We believe price momentum has started to get "less bad", mainly due to easier Y/Y comps. A potential Red Sea re-route could soak up lots of under...

Tracking Traffic

Monthly Container Shipping Tracker | Rebound in NAM Volume Could Be Inflection Point (October 2023)

Pricing still appears stagnant, but a sharp rebound in container volumes moving into the ports along North America's Pacific coast in September...

Tracking Traffic

Monthly Container Shipping Tracker | Rates Stable | Fuel (Barely) Lower Y/Y | (September 2023)

According to our index, container shipping price momentum remains depressed, but stable. On the other hand, fuel prices -- a boon to earnings for...

Tracking Traffic

Maersk Q2: Raised FY23 Guidance | Beat on Earnings, Too | Takeaway: Conditions Not Disastrous

Maersk Q2 results beat expectations handily. More importantly, the company raised FY23 guidance for EBITDA and FCF, though management also...

Tracking Traffic

Maersk Q1: Earnings Fine | Guidance Intact | Takeaways for Container Shipping (And Inflation)

Maersk's Q1 result showed a steep Y/Y decline in earnings due to lower rates. But RoE is fine, and the company maintained guidance, which supports...

Tracking Traffic

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