Transport Sector, China and Asia-focused Research

Charles De Trenck

Macroeconomics

Considered a possible risk for some time, China finally moved to block inflows of old China-bound vessels for scrapping  last week, in a continued bid to reduce pollution. The ban is expected to be in place by end 2018. Recall our updates last year on moves to block inflows of waste products, and the negative impact on China inbound container volumes, with continued impact in 2018.Short-term there is little impact on scrap steel prices. But this will mess with shipowner plans to comply with…

Considered a possible risk for some time, China finally moved to block inflows of old China-bound vessels for scrapping  last week, in a continued bid to reduce pollution. The ban is expected to be in place by end 2018. Recall our updates last year on moves to block inflows of waste products, and the negative impact on China inbound container volumes, with continued impact in 2018.Short-term there is little impact on scrap steel prices. But this will mess with shipowner plans to comply with…

China’s Ongoing Bid for Less Waste: China Bans Foreign Vessel Scrapping (Scrap Steel Data to ’69)

Thematic (Sector/Industry)

I recently witnessed a typical mistake in using EV (enterprise value; short form, market cap + net debt), where the author used it interchangeably with market cap. This got me to thinking how recent non-freshly minted MBAs as well as maybe even other three letter certified specialists, at the margin, may cut corners when valuing their stocks and portfolios and end up siding with momentum investors.It is still fresh in my mind how many (not all) colleagues, especially China-linked, used to care more about inside scoops than valuation approaches. I tend to see many tech plays in light of momentum and not valuation. We could call many of these counters CNBC or Cramer stocks.The discussion is dividend into a discussion and interview on faulty uses of the cost of capital in shipping,  as well as a discussion on some of the mechanical problems now inherent in WACC, especially as it applies to shipping and long-term finance of cyclical assets.

I recently witnessed a typical mistake in using EV (enterprise value; short form, market cap + net debt), where the author used it interchangeably with market cap. This got me to thinking how recent non-freshly minted MBAs as well as maybe even other three letter certified specialists, at the margin, may cut corners when valuing their stocks and portfolios and end up siding with momentum investors.It is still fresh in my mind how many (not all) colleagues, especially China-linked, used to care more about inside scoops than valuation approaches. I tend to see many tech plays in light of momentum and not valuation. We could call many of these counters CNBC or Cramer stocks.The discussion is dividend into a discussion and interview on faulty uses of the cost of capital in shipping,  as well as a discussion on some of the mechanical problems now inherent in WACC, especially as it applies to shipping and long-term finance of cyclical assets.

Frankenstein WACCs. False Idols of Equity, Debt (And Shipping Interview with Sr. Investor)

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.

<ul><li>After a strong freight rate rally in 2017, which also rubbed on stock prices, we have seen a significant correction in the recent past as the BDI has come down sharply from 1,743 in December to the current 1,089. The underlying reason for this revision is the seasonal weakness, owing to muted industrial activity in China. The moderation in commodity demand was exacerbated by the lag effect of steel production cuts announced by the Chinese government in October 2017. </li><li>Dry bulk stocks have witnessed outsized gains in 2017, but have corrected sharply amid the global rout in capital markets and the recent correction in dry bulk rates. We believe this provides an opportunity for investors to enter frontline stocks with no liquidity concerns. We prefer Star Bulk Carriers Corp (SBLK US) and Scorpio Bulkers (SALT US) as both have a well-balanced charter coverage, which will support earnings in first-quarter 2018, and are available at attractive valuations.</li></ul>

After a strong freight rate rally in 2017, which also rubbed on stock prices, we have seen a significant correction in the recent past as the BDI has come down sharply from 1,743 in December to the current 1,089. The underlying reason for this revision is the seasonal weakness, owing to muted industrial activity in China. The moderation in commodity demand was exacerbated by the lag effect of steel production cuts announced by the Chinese government in October 2017. Dry bulk stocks have witnessed outsized gains in 2017, but have corrected sharply amid the global rout in capital markets and the recent correction in dry bulk rates. We believe this provides an opportunity for investors to enter frontline stocks with no liquidity concerns. We prefer Star Bulk Carriers Corp (SBLK US) and Scorpio Bulkers (SALT US) as both have a well-balanced charter coverage, which will support earnings in first-quarter 2018, and are available at attractive valuations.

Dry Bulk Shipping - Recovery to Normalise in 2018

I really want to get to my <a href="https://www.smartkarma.com/entities/929" target="_blank" data-smartkarma-citation="entities:929:1">Pacific Basin Shipping Ltd (2343 HK)</a> Meeting Notes -- which I will in a few days. But I have more to say first. Dealing with a few family issues has also sucked away time over the last two weeks. Pacific Basin is going to continue performing in 2018, from a low 2016 base. To be sure, the PB Road Back remains a tough slog.What has not been as tough a slog is <a href="https://www.smartkarma.com/entities/6510" target="_blank" data-smartkarma-citation="entities:6510:1">Alcoa Inc (AA US)</a>, which has been on a tear, in 2017 and even more recently. In early December it stood at about…

I really want to get to my Pacific Basin Shipping Ltd (2343 HK) Meeting Notes -- which I will in a few days. But I have more to say first. Dealing with a few family issues has also sucked away time over the last two weeks. Pacific Basin is going to continue performing in 2018, from a low 2016 base. To be sure, the PB Road Back remains a tough slog.What has not been as tough a slog is Alcoa Inc (AA US), which has been on a tear, in 2017 and even more recently. In early December it stood at about…

A Few Stock Picks Up 10-20% in Couple of Weeks…Why Alcoa ….

People who bought China, <a href="https://www.smartkarma.com/entities/5891" target="_blank" data-smartkarma-citation="entities:5891:1">Nvidia Corp (NVDA US)</a>, <a href="https://www.smartkarma.com/entities/438" target="_blank" data-smartkarma-citation="entities:438:1">iShares MSCI Emerging Markets Indx (ETF) (EEM US)</a> somewhere in 2017 performed well. A bit below the radar is that commodities started doing well too from mid-17. There is more to come. A recent chance to add right around my EV pieces a month ago were materials like aluminum.My core 2017 into 2018 stocks are: <a href="https://www.smartkarma.com/entities/929" target="_blank" data-smartkarma-citation="entities:929:1">Pacific Basin Shipping Ltd (2343 HK)</a> (continued accumulate on pullbacks, most recently a little more at HK$1.6 levels, recall some lightening…

People who bought China, Nvidia Corp (NVDA US), iShares MSCI Emerging Markets Indx (ETF) (EEM US) somewhere in 2017 performed well. A bit below the radar is that commodities started doing well too from mid-17. There is more to come. A recent chance to add right around my EV pieces a month ago were materials like aluminum.My core 2017 into 2018 stocks are: Pacific Basin Shipping Ltd (2343 HK) (continued accumulate on pullbacks, most recently a little more at HK$1.6 levels, recall some lightening…

Strategy: Around the Horn 2018, the Long and Short of It. Pacific Basin Initial Notes

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Pacific Basin Shipping (2343 HK)

China’s Ongoing Bid for Less Waste: China Bans Foreign Vessel Scrapping (Scrap Steel Data to ’69)

Considered a possible risk for some time, China finally moved to block inflows of old China-bound vessels for scrapping last week, in a continued...

Charles De Trenck

Frankenstein WACCs. False Idols of Equity, Debt (And Shipping Interview with Sr. Investor)

I recently witnessed a typical mistake in using EV (enterprise value; short form, market cap + net debt), where the author used it interchangeably...

Charles De Trenck

Dry Bulk Shipping - Recovery to Normalise in 2018

After a strong freight rate rally in 2017, which also rubbed on stock prices, we have seen a significant correction in the recent past as the BDI...

Drewry Maritime Financial Research

A Few Stock Picks Up 10-20% in Couple of Weeks…Why Alcoa ….

I really want to get to my Pacific Basin Shipping Ltd (2343 HK) Meeting Notes -- which I will in a few days. But I have more to say first. Dealing...

Charles De Trenck

Strategy: Around the Horn 2018, the Long and Short of It. Pacific Basin Initial Notes

People who bought China, Nvidia Corp (NVDA US), iShares MSCI Emerging Markets Indx (ETF) (EEM US) somewhere in 2017 performed well. A bit below the...

Charles De Trenck

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)