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)

Since the GFC, the global port operators have been under-performing the MSCI world index. The divergence has increased in the last 18 months and is now reaching an extreme. Does this make the sector a buy? We believe the industry dynamics are changing and the sector is pricing in  a structural slowdown in global trade. The growth industry has matured and is now more akin to valuations given to a utilities business i.e. P/E compression is in play despite still strong margins and earnings. We believe that ports sector on a macro basis is moving from a growth stock to a value stock which commands stable but lower P/E.  Wider implications for this would be the investor profile for the ports will change as more value investors get in and growth investors move away. We expect Chinese operators to get aggressive on M&amp;A and cheapest valuation in the sector in years on account of structural weakness to drive M&amp;A.

Since the GFC, the global port operators have been under-performing the MSCI world index. The divergence has increased in the last 18 months and is now reaching an extreme. Does this make the sector a buy? We believe the industry dynamics are changing and the sector is pricing in  a structural slowdown in global trade. The growth industry has matured and is now more akin to valuations given to a utilities business i.e. P/E compression is in play despite still strong margins and earnings. We believe that ports sector on a macro basis is moving from a growth stock to a value stock which commands stable but lower P/E.  Wider implications for this would be the investor profile for the ports will change as more value investors get in and growth investors move away. We expect Chinese operators to get aggressive on M&amp;A and cheapest valuation in the sector in years on account of structural weakness to drive M&amp;A. 

Port Operators - Valuations Downshift on Structural Changes

Frontier and emerging markets (Vietnam)

Dylan Waller

Nomadic Equity

Transition from the Irish Stock Exchange to the London Stock ExchangeDragon Capital’s fund <a href="https://www.smartkarma.com/entities/22754" target="_blank" data-smartkarma-citation="entities:22754">Vietnam Enterprise Investments Limited</a>, which currently trades on the Irish Stock Exchange, may trade on the main market of the London Stock Exchange next month.  The company plans to hold an Extraordinary General Meeting on June the 21st to vote on the approval of this transfer, which is expected to potentially take place next month.  The fund currently manages over $850 million, and is most notable for…

Transition from the Irish Stock Exchange to the London Stock ExchangeDragon Capital’s fund Vietnam Enterprise Investments Limited, which currently trades on the Irish Stock Exchange, may trade on the main market of the London Stock Exchange next month.  The company plans to hold an Extraordinary General Meeting on June the 21st to vote on the approval of this transfer, which is expected to potentially take place next month.  The fund currently manages over $850 million, and is most notable for…

Dragon Capital's VEIL Fund: A 3rd London Listing for Vietnam May Emerge Next Month

Last year saw a record amount of container-ship capacity hit the water. We take a look at which operators accepted delivery and which trades they deployed them in. Record delieveries, record maximum ship size.  Last year was full of records in the container shipping industry, but unfortunately for carriers they were mostly of the unwanted variety. One such record (made by bad by virtue of the second worst ever demand growth) was a record intake of new ships. There were 209 new ships that hit the…

Last year saw a record amount of container-ship capacity hit the water. We take a look at which operators accepted delivery and which trades they deployed them in. Record delieveries, record maximum ship size.  Last year was full of records in the container shipping industry, but unfortunately for carriers they were mostly of the unwanted variety. One such record (made by bad by virtue of the second worst ever demand growth) was a record intake of new ships. There were 209 new ships that hit the…

Container Shipping - 2015 Full of Records, Big Ships, Super Size Me and It Ain't Over Yet

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The £2.55 billion takeover of Ultra by Advent looks set to be waved on by the UK government after the Business Secretary said he was minded to accept the deal.</li>
<li>Cobham was itself taken over and broken up by Advent over the course of 2019 and 2020, amidst some controversy. As in that case, Advent will bag its prey. </li>
<li>The 3500p offer price represents 15.4x EV/Fwd EBITDA (same as at the time of deal announcement). Gross spread is 1.49%, estimated annual return is 8.8% (assuming settlement by 30 August).</li>
</ul>


The £2.55 billion takeover of Ultra by Advent looks set to be waved on by the UK government after the Business Secretary said he was minded to accept the deal.
Cobham was itself taken over and broken up by Advent over the course of 2019 and 2020, amidst some controversy. As in that case, Advent will bag its prey. 
The 3500p offer price represents 15.4x EV/Fwd EBITDA (same as at the time of deal announcement). Gross spread is 1.49%, estimated annual return is 8.8% (assuming settlement by 30 August).


Cobham/​​Ultra Electronics: UK Government Approval

<ul>
<li>The deal is expected to be referred for thorough analysis given political sensitivities as <a href="https://www.smartkarma.com/entities/ultra-electronics-holdings-plc" target="_blank" data-smartkarma-citation="entities:22196:1" rel="noopener">Ultra Electronics Holdings (ULE LN)</a> is a key supplier to the UK’s army. Shorts are increasing.</li>
<li>The review should fall under the old rules though. My standalone fair value estimate (DCF based) is 3,184p. (vs. 2,950p comps-based implied valuation and 3,325p median Capital IQ consensus TP).</li>
<li>
Long ULE LN, TP 3,500p, plus 16p interim. Upside is 17.2%. I just don't see the UK Government blocking a friendly defence deal from an investor coming from a key ally.</li>
</ul>


The deal is expected to be referred for thorough analysis given political sensitivities as Ultra Electronics Holdings (ULE LN) is a key supplier to the UK’s army. Shorts are increasing.
The review should fall under the old rules though. My standalone fair value estimate (DCF based) is 3,184p. (vs. 2,950p comps-based implied valuation and 3,325p median Capital IQ consensus TP).

Long ULE LN, TP 3,500p, plus 16p interim. Upside is 17.2%. I just don't see the UK Government blocking a friendly defence deal from an investor coming from a key ally.


Cobham/​Ultra Electronics: Updated Valuation and Spread

United Kingdom

Cobham is a British aerospace manufacturing company that provides technologies and services for defense, commercial aerospace, and space markets. The company specializes in air-to-air refueling, life support, and weapons carriage, alongside advanced electronic solutions, and aviation services. Founded in 1934, its headquarters are in Wimborne, Dorset, England.

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Cobham (COB LN)

Port Operators - Valuations Downshift on Structural Changes

Since the GFC, the global port operators have been under-performing the MSCI world index. The divergence has increased in the last 18 months and is...

Drewry Maritime Financial Research

Dragon Capital's VEIL Fund: A 3rd London Listing for Vietnam May Emerge Next Month

Transition from the Irish Stock Exchange to the London Stock ExchangeDragon Capital’s fund Vietnam Enterprise Investments Limited, which currently...

Nomadic Equity

Container Shipping - 2015 Full of Records, Big Ships, Super Size Me and It Ain't Over Yet

Last year saw a record amount of container-ship capacity hit the water. We take a look at which operators accepted delivery and which trades they...

Drewry Maritime Financial Research

Cobham/Ultra Electronics: UK Government Approval

The acquisition remains conditional upon the Secretary of State's formal approval, pending the outcome of the public consultation, but it can be...

Jesus Rodriguez Aguilar

Cobham/Ultra Electronics: Updated Valuation and Spread

It is expected that the UK Government will refer the deal for thorough analysis (as formerly with Cobham), but will not block a defence deal led by...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Port Operators - Valuations Downshift on Structural Changes

Since the GFC, the global port operators have been under-performing the MSCI world index. The divergence has increased in the last 18 months and is...

Drewry Maritime Financial Research

Dragon Capital's VEIL Fund: A 3rd London Listing for Vietnam May Emerge Next Month

Transition from the Irish Stock Exchange to the London Stock ExchangeDragon Capital’s fund Vietnam Enterprise Investments Limited, which currently...

Nomadic Equity

Container Shipping - 2015 Full of Records, Big Ships, Super Size Me and It Ain't Over Yet

Last year saw a record amount of container-ship capacity hit the water. We take a look at which operators accepted delivery and which trades they...

Drewry Maritime Financial Research

Cobham/​​Ultra Electronics: UK Government Approval

The acquisition remains conditional upon the Secretary of State's formal approval, pending the outcome of the public consultation, but it can be...

Jesus Rodriguez Aguilar

Cobham/​Ultra Electronics: Updated Valuation and Spread

It is expected that the UK Government will refer the deal for thorough analysis (as formerly with Cobham), but will not block a defence deal led by...

Jesus Rodriguez Aguilar

Cobham/Ultra Electronics: UK Government Approval

Cobham/Ultra Electronics: Updated Valuation and Spread