Transport Sector, China and Asia-focused Research

Charles De Trenck

Equity Bottom-Up

A sure sign that we are still in the tender underbelly of shipping markets for equities (and that shipping’s recovery is a long drawn out affair) is when a placement manages to contribute to tanking other shares, and shares of the target placement company get hit 15+% as soon as a whiff of placement hits the market.<a href="https://www.smartkarma.com/entities/929" target="_blank" data-smartkarma-citation="entities:929:1">Pacific Basin Shipping Ltd (2343 HK)</a> and its proposed<a href="http://www.pacificbasin.com/upload//e2343_Announcement_RightIssue(18Apr16).pdf" target="_blank">cash raising</a>in the form of warrants issue in April 2016 running through to Summer 2016  was particularly painful:  1) It was the…

A sure sign that we are still in the tender underbelly of shipping markets for equities (and that shipping’s recovery is a long drawn out affair) is when a placement manages to contribute to tanking other shares, and shares of the target placement company get hit 15+% as soon as a whiff of placement hits the market.Pacific Basin Shipping Ltd (2343 HK) and its proposedcash raisingin the form of warrants issue in April 2016 running through to Summer 2016  was particularly painful:  1) It was the…

Bulk's (Shipping's) Thin Market for Placements…Again/Still ...Today Being Diana Shipping's Turn

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.

Nordic American Tankers / Equity Bottom-Up

Nordic American Tankers ( NAT US)- High Spot Exposure to Hurt Revenue and Profitability<ul><li>
Revenue above expectations; earnings in line with estimates: Nordic American Tankers’ (NAT’s) operating revenue excluding a settlement gain of USD 5.3m fell 29.6% y/y in 3Q16 to USD 71.7m (north of our estimate of 58.3m) from the levels in 3Q15. NAT’s revenue fell even though its fleet increased as the average realised freight rate plunged more than 50% y/y to USD 16,700pd. TCE revenue dropped 39.2% y/y to USD…</li></ul>

Nordic American Tankers ( NAT US)- High Spot Exposure to Hurt Revenue and Profitability
Revenue above expectations; earnings in line with estimates: Nordic American Tankers’ (NAT’s) operating revenue excluding a settlement gain of USD 5.3m fell 29.6% y/y in 3Q16 to USD 71.7m (north of our estimate of 58.3m) from the levels in 3Q15. NAT’s revenue fell even though its fleet increased as the average realised freight rate plunged more than 50% y/y to USD 16,700pd. TCE revenue dropped 39.2% y/y to USD…

Nordic American Tankers ( NAT US)- High Spot Exposure to Hurt Revenue and Profitability

Pacific Basin Shipping / Equity Bottom-Up

DRYS has now spiked (before suspension) more than 2000% post Trump and as the BDI (Baltic Dry Index) popped above 1,000. Most of the trading activity in US shipping names has happened over the last two days. As a result, we had multiple TV segments on CNBC on Wednesday on these shares. The <a href="http://blogs.wsj.com/moneybeat/2016/11/16/unmoored-from-reality-dryships-halted-after-1500-post-election-rally/" target="_blank">WSJ</a> also took to writing on the topic for generalist readers. …This funky stock roller coaster, as well as longer-term stock holds are quickly recapped further below.The worst shipping companies, including…

DRYS has now spiked (before suspension) more than 2000% post Trump and as the BDI (Baltic Dry Index) popped above 1,000. Most of the trading activity in US shipping names has happened over the last two days. As a result, we had multiple TV segments on CNBC on Wednesday on these shares. The WSJ also took to writing on the topic for generalist readers. …This funky stock roller coaster, as well as longer-term stock holds are quickly recapped further below.The worst shipping companies, including…

Shipping Stocks Go Bananas, the Worst Rising the Most

In this note: 1) some interesting reversals, 2) some updates on stock pick performances, 3) other updates and items of note. A few enclosures added.Of all the interesting things that happened over the last few weeks, to me, were two reversals most investors would have not gone for until they happened. Ultimately, it was a story about the market expecting key commodities to retreat, only to find the reverse.Interesting piece from Rickards last week is discussed.

In this note: 1) some interesting reversals, 2) some updates on stock pick performances, 3) other updates and items of note. A few enclosures added.Of all the interesting things that happened over the last few weeks, to me, were two reversals most investors would have not gone for until they happened. Ultimately, it was a story about the market expecting key commodities to retreat, only to find the reverse.Interesting piece from Rickards last week is discussed.

Interesting Counter-Intuitive Reversals Last Few Weeks (Breakouts…Positions…Key Notes)

The tanker sector experienced a substantial sell-off on 17 December as a result of three Teekay group companies slashing their distributions. Teekay Offshore (TOO) and Teekay LNG (TGP) slashed their distrubutions by 80%, while the parent Teekay (TK) slashed its distribution by 90%. Ironically, the Tanker arm (the one we follow more closely), had raised its distribution guidance only a few days ago! TK took the biggest share hit with share price falling some 59%, while TGP and TOO fell 51% and 52%, respectively. TNK shares fell some 9% in sympathy, while other tanker shares took hits as well.

The tanker sector experienced a substantial sell-off on 17 December as a result of three Teekay group companies slashing their distributions. Teekay Offshore (TOO) and Teekay LNG (TGP) slashed their distrubutions by 80%, while the parent Teekay (TK) slashed its distribution by 90%. Ironically, the Tanker arm (the one we follow more closely), had raised its distribution guidance only a few days ago! TK took the biggest share hit with share price falling some 59%, while TGP and TOO fell 51% and 52%, respectively. TNK shares fell some 9% in sympathy, while other tanker shares took hits as well.

Tanker's Hit Broadside by Teekay Distrution Cuts

United States

Nordic American Tankers Limited is a shipping company that owns and charters Suezmax tankers for oil transportation.  The Company's ships are all active in the spot freight market.

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Nordic American Tankers (NAT US)

Bulk's (Shipping's) Thin Market for Placements…Again/Still ...Today Being Diana Shipping's Turn

A sure sign that we are still in the tender underbelly of shipping markets for equities (and that shipping’s recovery is a long drawn out affair)...

Charles De Trenck