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

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

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

<ul>
<li>Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).</li>
<li>We view Hapag-Lloyd's ESG as "Adequate". The company's "Adequate" Environmental score offsets its "Strong" Social and Governance scores, as the Environmental pillar carries the highest weightage in our assessment. Controversies are "Immaterial" and Disclosure is "Adequate". </li>
<li>Following a wave of consolidations and its merger with UASC, Hapag-Lloyd has become the fifth-largest provider of container shipping services globally, with its market share of 8% placing the company behind Maersk/Hamburg Sud, Mediterranean Shipping Company, Cosco-OOCL and CMA CGM-NOL.</li>
</ul>


Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Hapag-Lloyd's ESG as "Adequate". The company's "Adequate" Environmental score offsets its "Strong" Social and Governance scores, as the Environmental pillar carries the highest weightage in our assessment. Controversies are "Immaterial" and Disclosure is "Adequate". 
Following a wave of consolidations and its merger with UASC, Hapag-Lloyd has become the fifth-largest provider of container shipping services globally, with its market share of 8% placing the company behind Maersk/Hamburg Sud, Mediterranean Shipping Company, Cosco-OOCL and CMA CGM-NOL.


Hapag-Lloyd - ESG Report - Lucror Analytics

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.</li>
<li>The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.</li>
<li>This is a follow-up insight to <a href="https://www.smartkarma.com/insights/stoxx-europe-indices-quiddity-leaderboard-for-june-2022-rebalance" target="_blank" data-smartkarma-citation="insights:68708" rel="noopener">STOXX Europe Indices: Quiddity Leaderboard for June 2022 Rebalance</a> with an updated look at potential index changes in June 2022.</li>
</ul>


The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.
The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.
This is a follow-up insight to STOXX Europe Indices: Quiddity Leaderboard for June 2022 Rebalance with an updated look at potential index changes in June 2022.


STOXX Europe Indices: Quiddity Leaderboard for June 2022 2.0

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Orient Overseas (International) / Equity Capital Markets

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates. However, this will be the fourth placement in the name and will be the largest and is being offered at the tightest discount. None of the past deals held on to the deal price in the near term.

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates. However, this will be the fourth placement in the name and will be the largest and is being offered at the tightest discount. None of the past deals held on to the deal price in the near term.

Orient Overseas Placement - Fourth Deal This Year. Is the Largest and at the Tightest Discount.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Event-Driven

Yang Ming Marine Transport / Event-Driven

Drewry's released its latest Container Forecaster report, published on the 30 June, forecasting EBIT for the container carriers of US$88bn in 2021, possibly as high as US$100bn.
To put that in context, in February 2018 McKinsey &amp; Company<a href="https://www.marinelink.com/news/overcapacity-struggles433904" target="_blank" rel="noopener"> estimated</a> that low rates of returns for container shippers had destroyed "over $100 billion in shareholder value over the last 20 years".
Therefore container shipping companies are effectively recouping 20 years of losses in one year.
As discussed in <a href="https://skr.ma/dft2W" target="_blank" rel="noopener">Squeeze Box: The Port Congestion Contagion</a>, container spot rates are up 1,000+% in the last year. According to Drewry, average freight rates (spot and contract) across global trades are expected to rise by around 50% in 2021, an uplift of as much as 30% on its March forecast.
According to <a href="https://theloadstar.com/i-paid-ridiculous-charges-my-cargo-still-got-rolled-and-the-carrier-wanted-more/" target="_blank" rel="noopener">Loadstar</a>, a "serious offer" of $25,000 per 40ft had been quoted to a shipper that needed to move 300 containers from Shanghai and Yantian to Los Angeles this month. A year ago, the spot rate was US$1,700.
That "offer" costs US$7.5mn. You could have bought a 15-year old 2800 TEUs vessel earlier this year for that kind of cash.
Spot rate quotations are blowing through measures from the Shanghai Containerized Freight Index (the most relevant index for containers) and the Drewry Index, as those spot prices are based on figures one week prior to a ship's departure. But given the unprecedented demand from exporters, slots are being offered by carriers closer to the departure date as they try to squeeze out all available cash.
As one commentator put it: "The shipper is going economy and their cargo is traveling first class". 
In this insight, I take a look at <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a> which is up 3,380% in the last year, and whether this company still has legs.

Drewry's released its latest Container Forecaster report, published on the 30 June, forecasting EBIT for the container carriers of US$88bn in 2021, possibly as high as US$100bn.
To put that in context, in February 2018 McKinsey &amp; Company estimated that low rates of returns for container shippers had destroyed "over $100 billion in shareholder value over the last 20 years".
Therefore container shipping companies are effectively recouping 20 years of losses in one year.
As discussed in Squeeze Box: The Port Congestion Contagion, container spot rates are up 1,000+% in the last year. According to Drewry, average freight rates (spot and contract) across global trades are expected to rise by around 50% in 2021, an uplift of as much as 30% on its March forecast.
According to Loadstar, a "serious offer" of $25,000 per 40ft had been quoted to a shipper that needed to move 300 containers from Shanghai and Yantian to Los Angeles this month. A year ago, the spot rate was US$1,700.
That "offer" costs US$7.5mn. You could have bought a 15-year old 2800 TEUs vessel earlier this year for that kind of cash.
Spot rate quotations are blowing through measures from the Shanghai Containerized Freight Index (the most relevant index for containers) and the Drewry Index, as those spot prices are based on figures one week prior to a ship's departure. But given the unprecedented demand from exporters, slots are being offered by carriers closer to the departure date as they try to squeeze out all available cash.
As one commentator put it: "The shipper is going economy and their cargo is traveling first class". 
In this insight, I take a look at Yang Ming Marine Transport (2609 TT) which is up 3,380% in the last year, and whether this company still has legs. 

Yang Ming Marine (2609 TT): Cargo Shipping In First Class

Germany

Hapag-Lloyd AG operates as a container shipping line company. The Company offers transportation of goods by sea, road, rail, and inland waterway vessels. Hapag-Lloyd serves customers worldwide.

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Hapag-Lloyd AG (HLAG GR)

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

Hapag-Lloyd - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view Hapag-Lloyd's ESG as...

Lucror Analytics

STOXX Europe Indices: Quiddity Leaderboard for June 2022 2.0

A look at the potential ADDs and potential DELETEs for the STOXX Europe 600 Index and the EURO STOXX Index during the June 2022 Review.

Janaghan Jeyakumar, CFA

Orient Overseas Placement - Fourth Deal This Year. Is the Largest and at the Tightest Discount.

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates

Sumeet Singh

Yang Ming Marine (2609 TT): Cargo Shipping In First Class

Carriers have gone up A LOT. I think they can continue to go up a lot. And Yang Ming has the strongest forward growth profile out of the listed peers.

David Blennerhassett

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