HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Pacific Basin Shipping / Equity Bottom-Up

The 3Q21 trading update for <a href="https://www.smartkarma.com/entities/pacific-basin-shipping-ltd" target="_blank" data-smartkarma-citation="entities:929:1" rel="noopener">Pacific Basin Shipping (2343 HK)</a> painted a positive picture for the earnings performance for 2H21 and FY22. There is good QoQ improvement in time-charter equivalents for its Handysize and Supramax fleet in 3Q21, which are 69.3% and 98.6%, respectively, higher than 1H21. On such basis, we estimate that its 3Q21 profit may be some 33% more than 1H21, blowing away market consensus by sizeable margin.Additionally, the growth in minor bulk trade, particularly construction materials, cement and clinker and grains, has underpinned good Handysize and Supramax demand. The supply pressure is also light as net fleet growth is expected to be 3% and 1.8% for FY21 and FY22, respectively. We also think Pacific Basin may take opportunistic disposals of vessel to capture the favourable capital value movements. All in all, we think that having retreated 25% from the peak, the stock has returned to more attractive valuation multiples.

The 3Q21 trading update for Pacific Basin Shipping (2343 HK) painted a positive picture for the earnings performance for 2H21 and FY22. There is good QoQ improvement in time-charter equivalents for its Handysize and Supramax fleet in 3Q21, which are 69.3% and 98.6%, respectively, higher than 1H21. On such basis, we estimate that its 3Q21 profit may be some 33% more than 1H21, blowing away market consensus by sizeable margin.Additionally, the growth in minor bulk trade, particularly construction materials, cement and clinker and grains, has underpinned good Handysize and Supramax demand. The supply pressure is also light as net fleet growth is expected to be 3% and 1.8% for FY21 and FY22, respectively. We also think Pacific Basin may take opportunistic disposals of vessel to capture the favourable capital value movements. All in all, we think that having retreated 25% from the peak, the stock has returned to more attractive valuation multiples.

Pacific Basin Shipping (2343 HK): Stellar 2H21 in the Making

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.

While Handysize vessels withstood the test of time as TCE earnings dipped only 3.0% (USD 280pd) to USD 9,080pd, Supramaxes faced the real punch as earnings dropped by 7.6% (USD 850pd) to USD 10,400pd in 1Q19 y/y. Cargoes for small carriers have been majorly impacted due to the distressed soybean trade led by the US-China trade dispute and indirect import restrictions on Australian coal at Chinese ports. Weakness in the first quarter will impact the 1H19 result but we expect a better 2H19 result as freight rates have picked up.

While Handysize vessels withstood the test of time as TCE earnings dipped only 3.0% (USD 280pd) to USD 9,080pd, Supramaxes faced the real punch as earnings dropped by 7.6% (USD 850pd) to USD 10,400pd in 1Q19 y/y. Cargoes for small carriers have been majorly impacted due to the distressed soybean trade led by the US-China trade dispute and indirect import restrictions on Australian coal at Chinese ports. Weakness in the first quarter will impact the 1H19 result but we expect a better 2H19 result as freight rates have picked up.

Pacific Basin (2343 HK): Small Is the New Forerunner

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Equity Capital Markets

CSSC (Hong Kong) Shipping / Equity Capital Markets

CSSC (HK) Shipping, the ship leasing company under one of the world's largest shipyard CSSC (China State Shipbuilding Corp), is said to be pre-marketing its USD 300 to 500 million IPO. In this insight, we will discuss the following topics:
<ul>
<li>The company's business segments</li>
<li>The company's assets</li>
<li>The industry backdrop</li>
<li>Financial snapshot and highlights</li>
<li>Our thoughts on valuation</li>
</ul>

CSSC (HK) Shipping, the ship leasing company under one of the world's largest shipyard CSSC (China State Shipbuilding Corp), is said to be pre-marketing its USD 300 to 500 million IPO. In this insight, we will discuss the following topics:

The company's business segments
The company's assets
The industry backdrop
Financial snapshot and highlights
Our thoughts on valuation


CSSC (HK) Shipping IPO: A Cyclical Business Masked as an Income Stock

Lead Analyst, Drewry Maritime Financial Research

Victoria Saraglis

Lead Analyst

Pacific Basin posted net income of USD 46.3m over the past twelve months after incurring aggregate losses of ~USD 130m in the previous 2 years. Back-to-back net profits recorded in the past year have reinforced optimistic expectations for forthcoming quarters, and therefore, have encouraged the board of the company to declare an interim dividend of HK 2.5 cents per share.

Pacific Basin posted net income of USD 46.3m over the past twelve months after incurring aggregate losses of ~USD 130m in the previous 2 years. Back-to-back net profits recorded in the past year have reinforced optimistic expectations for forthcoming quarters, and therefore, have encouraged the board of the company to declare an interim dividend of HK 2.5 cents per share.

Amid Mayhem on the Hong Kong Exchange, Pacific Basin’s Dividend Reinstatement Fails to Impress

Transport Sector, China and Asia-focused Research

Charles De Trenck

So many ship stock charts said the same thing on breakouts last week. We couldn’t have asked for more. <a href="https://www.smartkarma.com/profiles/250" target="_blank" data-smartkarma-citation="accounts:250">John-Paul Smith</a> said so much by way of a macro view.Bulk, tankers, and even container vessel owners  all broke to or flirted with new highs last week. But, these sub-categories also tell different stories – as they should.Stocks: If we look at Bulk in general, <a href="https://www.smartkarma.com/entities/21071" target="_blank" data-smartkarma-citation="entities:21071:1">Star Bulk Carriers Corp (SBLK US)</a> and <a href="https://www.smartkarma.com/entities/929" target="_blank" data-smartkarma-citation="entities:929:1">Pacific Basin Shipping Ltd (2343 HK)</a>,  and <a href="https://www.smartkarma.com/entities/21069" target="_blank" data-smartkarma-citation="entities:21069:1">Diana Shipping Inc (DSX US)</a> tell different but related…

So many ship stock charts said the same thing on breakouts last week. We couldn’t have asked for more. John-Paul Smith said so much by way of a macro view.Bulk, tankers, and even container vessel owners  all broke to or flirted with new highs last week. But, these sub-categories also tell different stories – as they should.Stocks: If we look at Bulk in general, Star Bulk Carriers Corp (SBLK US) and Pacific Basin Shipping Ltd (2343 HK),  and Diana Shipping Inc (DSX US) tell different but related…

We’ve Got All the Breakouts We Want To Make Money in Shipping

Hong Kong

Pacific Basin Shipping is a maritime transport company specializing in international dry bulk shipping, operating a global fleet of Handysize and Supramax vessels. The company transports a wide range of commodities including grains, coal, iron ore, cement, and forest products. It was founded in 1987 and is headquartered in Hong Kong.

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Pacific Basin Shipping (2343 HK)