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

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/980/original/BANNER-BoxDec20.png?1609781008" class="editor-image img-responsive" data-smartkarma-image-id="180980"></figure></section>Within container shipping space, recent share price performance suggests investors believe the benefits of the cyclical upturn will mainly accrue to carriers like <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>.To maintain a positive view on container carriers in the near- and medium-term, investors must embrace several key assumptions regarding demand, supply, and fuel prices. We lay out five of these key assumptions and the risks associated with them. We conclude that investors may not fully appreciate all the risks facing the sector in early 2021.

Within container shipping space, recent share price performance suggests investors believe the benefits of the cyclical upturn will mainly accrue to carriers like Evergreen Marine Corp (2603 TT).To maintain a positive view on container carriers in the near- and medium-term, investors must embrace several key assumptions regarding demand, supply, and fuel prices. We lay out five of these key assumptions and the risks associated with them. We conclude that investors may not fully appreciate all the risks facing the sector in early 2021. 

The Shaky Assumptions Behind Recent Strong Performance of Asian Container Carriers

On the afternoon of Friday, March 23rd, <a href="https://www.smartkarma.com/entities/15428" target="_blank" data-smartkarma-citation="entities:15428:1">Evergreen Marine Corp Ltd (2603 TT)</a> reported FY17 preliminary results, which show the company made Operating and Net losses in Q417. After several consecutive quarters of steady improvements in core profitability, we were surprised to see the company post a significant Operating loss in the December quarter -- and we believe we are far more pessimistic on the container sector cycle than many observers, having turned negative on the sector several months…

On the afternoon of Friday, March 23rd, Evergreen Marine Corp Ltd (2603 TT) reported FY17 preliminary results, which show the company made Operating and Net losses in Q417. After several consecutive quarters of steady improvements in core profitability, we were surprised to see the company post a significant Operating loss in the December quarter -- and we believe we are far more pessimistic on the container sector cycle than many observers, having turned negative on the sector several months…

'Trade War' Chatter & A Surprise Q4 Loss: Time to Revisit Long CAL/Short Evergreen Pair Trade

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

Equity analyst - Containers, Drewry Maritime Financial Research

Nilesh Tiwary

Equity analyst - Containers

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)

SummaryThe major indicators of container shipping in 2017 remained more firm than in 2016. The y/y comparisons for many data sets depict robust improvement. However, the outlook for 2018 is mixed. The supply-demand balance will improve slightly, demand growth will continue to be strong, and freight rates and the profits of carriers will strengthen at lower-than-expected rates as several temporary factors create a bump on the road to recovery. The creation of bigger alliances, and the escalation of…

SummaryThe major indicators of container shipping in 2017 remained more firm than in 2016. The y/y comparisons for many data sets depict robust improvement. However, the outlook for 2018 is mixed.  The supply-demand balance will improve slightly, demand growth will continue to be strong, and freight rates and the profits of carriers will strengthen at lower-than-expected rates as several temporary factors create a bump on the road to recovery.  The creation of bigger alliances, and the escalation of…

Container Shipping 2018 - Demand Buoyancy Drives Positive Outlook

Last week we noted that, after several quarters of improving profitability, container shipping earnings could begin to stagnate as the industry faces new headwinds and tougher Y/Y comparisons (see <a href="https://www.smartkarma.com/insights/you-are-here-taiwanese-japanese-container-carriers-recovery-valuations-since-hanjin-s-demise" target="_blank" data-smartkarma-citation="insights:14725">You Are Here--&gt; Taiwanese &amp; Japanese Container Carriers’ Recovery &amp; Valuations Since Hanjin’s Demise</a>). Q2FY17 results from Japan's three largest shipping companies, released during the midday break on October 31st, suggest those headwinds may indeed be gaining strength, and that further upside from the…

Last week we noted that, after several quarters of improving profitability, container shipping earnings could begin to stagnate as the industry faces new headwinds and tougher Y/Y comparisons (see You Are Here--&gt; Taiwanese &amp; Japanese Container Carriers’ Recovery &amp; Valuations Since Hanjin’s Demise). Q2FY17 results from Japan's three largest shipping companies, released during the midday break on October 31st, suggest those headwinds may indeed be gaining strength, and that further upside from the…

Container Shipping Cyclical Gains Waning; Japan's K-Line Cuts 3/18 OP Target on Rising Competition

South Korea

Hanjin Shipping Co., Ltd. provides marine transportation service.  The Company commands different types of vessels including container vessels, liquefied natural gas (LNG) carriers, bulk carriers, and oil tankers.  In addition, Hanjin Shipping leases ships, and commercial buildings.

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Hanjin Shipping (117930 KS)

The Shaky Assumptions Behind Recent Strong Performance of Asian Container Carriers

Container carriers have performed very well since mid-2020, and we concede we underestimated the strength of spot rates in recent weeks. But...

Tracking Traffic

'Trade War' Chatter & A Surprise Q4 Loss: Time to Revisit Long CAL/Short Evergreen Pair Trade

On the afternoon of Friday, March 23rd, Evergreen Marine Corp Ltd (2603 TT) reported FY17 preliminary results, which show the company made...

Daniel Hellberg

Container Shipping 2018 - Demand Buoyancy Drives Positive Outlook

SummaryThe major indicators of container shipping in 2017 remained more firm than in 2016. The y/y comparisons for many data sets depict robust...

Drewry Maritime Financial Research

Container Shipping Cyclical Gains Waning; Japan's K-Line Cuts 3/18 OP Target on Rising Competition

Last week we noted that, after several quarters of improving profitability, container shipping earnings could begin to stagnate as the industry...

Daniel Hellberg

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52-week Range

Market Cap (USDm)

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The Shaky Assumptions Behind Recent Strong Performance of Asian Container Carriers

Container carriers have performed very well since mid-2020, and we concede we underestimated the strength of spot rates in recent weeks. But...

Tracking Traffic

'Trade War' Chatter & A Surprise Q4 Loss: Time to Revisit Long CAL/Short Evergreen Pair Trade

On the afternoon of Friday, March 23rd, Evergreen Marine Corp Ltd (2603 TT) reported FY17 preliminary results, which show the company made...

Daniel Hellberg

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

Container Shipping 2018 - Demand Buoyancy Drives Positive Outlook

SummaryThe major indicators of container shipping in 2017 remained more firm than in 2016. The y/y comparisons for many data sets depict robust...

Drewry Maritime Financial Research

Container Shipping Cyclical Gains Waning; Japan's K-Line Cuts 3/18 OP Target on Rising Competition

Last week we noted that, after several quarters of improving profitability, container shipping earnings could begin to stagnate as the industry...

Daniel Hellberg