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

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

Transport Sector, China and Asia-focused Research

Charles De Trenck

There came to light this week complaints from a Korean politician on how <a href="https://www.smartkarma.com/entities/18689" target="_blank" data-smartkarma-citation="entities:18689:1">Hanjin Shipping Co Ltd (117930 KS)</a> was allowed to go bankrupt. But the behind scenes disclosures get even worse, and reflect badly on a couple of large container lines. The implications are that <a href="https://www.smartkarma.com/entities/13494" target="_blank" data-smartkarma-citation="entities:13494:1">Hyundai Merchant Marine (011200 KS)</a> and Korea Inc were played by leading competitors.The main news and allegation was reported in shipping press (LL):<blockquote>
Hanjin Shipping was left to collapse by South Korea’s former government as it did…
</blockquote>

There came to light this week complaints from a Korean politician on how Hanjin Shipping Co Ltd (117930 KS) was allowed to go bankrupt. But the behind scenes disclosures get even worse, and reflect badly on a couple of large container lines. The implications are that Hyundai Merchant Marine (011200 KS) and Korea Inc were played by leading competitors.The main news and allegation was reported in shipping press (LL):
Hanjin Shipping was left to collapse by South Korea’s former government as it did…


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 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

The Hanjin Fallout Re-Examined

There came to light this week complaints from a Korean politician on how Hanjin Shipping Co Ltd (117930 KS) was allowed to go bankrupt. But the...

Charles De Trenck

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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 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

The Hanjin Fallout Re-Examined

There came to light this week complaints from a Korean politician on how Hanjin Shipping Co Ltd (117930 KS) was allowed to go bankrupt. But the...

Charles De Trenck