HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Orient Overseas (International) / Equity Bottom-Up

<ul>
<li>We continue to adopt this strategy, as the outlook for <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a> is weaker than <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC International (1308 HK)</a>, which generated 51pp in the last year. </li>
<li>For FY26-27, OOIL will face more bunker and capacity pressure. Its metrics are less attractive, for example, dividend yield of 1.2-2%, vs. SITC's 7.6-9.2%.</li>
<li>OOIL is more expensive at 25x FY26F PER, against 11.3x for SITC. While SITC's P/B is the highest among peers, it has an enviable average ROE of 42.8%.</li>
</ul>


We continue to adopt this strategy, as the outlook for Orient Overseas International (316 HK) is weaker than SITC International (1308 HK), which generated 51pp in the last year. 
For FY26-27, OOIL will face more bunker and capacity pressure. Its metrics are less attractive, for example, dividend yield of 1.2-2%, vs. SITC's 7.6-9.2%.
OOIL is more expensive at 25x FY26F PER, against 11.3x for SITC. While SITC's P/B is the highest among peers, it has an enviable average ROE of 42.8%.


China Pair Trade Update: Long SITC Intl (1308 HK), Short OOIL (316 HK)

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Event-Driven

ZIM Integrated Shipping Services / Event-Driven

ZIM Integrated Shipping Services (ZIM US)

<ul>
<li>Hapag-Lloyd last week announced an all cash US$4.2 bn bid for shares of Israel's ZIM</li>
<li>The deal will likely face regulators' scrutiny in Israel, Germany, maybe in EU, US too</li>
<li>Moreover, we believe long-term returns on the acquired assets will likely be negative</li>
</ul>


Hapag-Lloyd last week announced an all cash US$4.2 bn bid for shares of Israel's ZIM
The deal will likely face regulators' scrutiny in Israel, Germany, maybe in EU, US too
Moreover, we believe long-term returns on the acquired assets will likely be negative


Hapag-Lloyd Announced US$4.2 Bn Bid for Israel's ZIM | Unfortunately, We Can't Get the Math to Math

<ul>
<li>Taiwan's two deep-sea container carriers reported a Y/Y decline in combined revenue in April</li>
<li>In USD terms, the two carriers' combined revenues are down -48% vs 2024 peak levels</li>
<li>Sector YTD &amp; Y/Y share performance do <em>not</em> reflect worsening fundamentals; stay SHORT</li>
</ul>


Taiwan's two deep-sea container carriers reported a Y/Y decline in combined revenue in April
In USD terms, the two carriers' combined revenues are down -48% vs 2024 peak levels
Sector YTD &amp; Y/Y share performance do not reflect worsening fundamentals; stay SHORT


Taiwan's Deep-Sea Carriers Saw Revenue Decline Y/Y in April, First Time Since Dec-2023 | Stay SHORT!

<ul>
<li>Lower average freight rate momentum and deceleration in 4Q24 load factor expansions for <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a> have raised alarm for a weaker industry outlook.</li>
<li>Spot freight rate has come down by 6.8% in the last two weeks. The potential ease of conflicts in Ukraine and the Middle East may induce a capacity return.</li>
<li>The consensus forecasts for FY25-26 have been downgraded by 5-9%, suggesting caution in the market. Its dividend yield will lower from 14.0% in FY24 to just 4.3% in FY26.</li>
</ul>


Lower average freight rate momentum and deceleration in 4Q24 load factor expansions for Orient Overseas International (316 HK) have raised alarm for a weaker industry outlook.
Spot freight rate has come down by 6.8% in the last two weeks. The potential ease of conflicts in Ukraine and the Middle East may induce a capacity return.
The consensus forecasts for FY25-26 have been downgraded by 5-9%, suggesting caution in the market. Its dividend yield will lower from 14.0% in FY24 to just 4.3% in FY26.


Orient Overseas Intl (316 HK): Initial Warning Signs?

Equity Capital Markets

<ul>
<li>So far in 2023 TS Lines has sold off close to one quarter of its shipping capacity</li>
<li>In the company's core market, Intra-Asia, it appears rates have bottomed out here in Q323</li>
<li>We also review Q2 financial results from TS Lines' main comp, Wan Hai Lines (WHL)</li>
</ul>


So far in 2023 TS Lines has sold off close to one quarter of its shipping capacity
In the company's core market, Intra-Asia, it appears rates have bottomed out here in Q323
We also review Q2 financial results from TS Lines' main comp, Wan Hai Lines (WHL)


TS Lines Pre-IPO | Slimming Down Fleet | Intra-Asia Market Update | Latest From Key Comp Wan Hai

Taiwan

Yang Ming Marine Transport provides transportation services and handles domestic and foreign maritime services on cargos.  The Company also operates warehouse, wharf, tug, barge, and container freight station services as well as repairs, leases, and sells containers and chassis.

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Yang Ming Marine Transport (2609 TT)

China Pair Trade Update: Long SITC Intl (1308 HK), Short OOIL (316 HK)

OOIL faces a weaker outlook than SITC, with higher expenses and less attractive metrics. SITC offers a higher dividend yield and a lower...

Osbert Tang, CFA

Hapag-Lloyd Announced US$4.2 Bn Bid for Israel's ZIM | Unfortunately, We Can't Get the Math to Math

The deal doesn't make financial sense unless EBITDA margins average 20% or better over the next 15 years, which is more than current margins and...

Tracking Traffic

Taiwan's Deep-Sea Carriers Saw Revenue Decline Y/Y in April, First Time Since Dec-2023 | Stay SHORT!

April revenue figures from Evergreen and Yang Ming suggest a sharp deterioration in fundamentals, which has not been reflected in YTD or Y/Y share...

Tracking Traffic

Orient Overseas Intl (316 HK): Initial Warning Signs?

Lower freight rates and load factor expansion signal a weaker outlook, with potential capacity return due to easing conflicts. FY25-26 forecasts...

Osbert Tang, CFA

TS Lines Pre-IPO | Slimming Down Fleet | Intra-Asia Market Update | Latest From Key Comp Wan Hai

Intra-Asia container carrier TS Lines filed to list its shares in Hong Kong (again) at the end of May, and its filing included full-year 2023...

Tracking Traffic

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52-week Range

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China Pair Trade Update: Long SITC Intl (1308 HK), Short OOIL (316 HK)

​OOIL faces a weaker outlook than SITC, with higher expenses and less attractive metrics. SITC offers a higher dividend yield and a lower...

Osbert Tang, CFA

Hapag-Lloyd Announced US$4.2 Bn Bid for Israel's ZIM | Unfortunately, We Can't Get the Math to Math

The deal doesn't make financial sense unless EBITDA margins average 20% or better over the next 15 years, which is more than current margins and...

Tracking Traffic

Taiwan's Deep-Sea Carriers Saw Revenue Decline Y/Y in April, First Time Since Dec-2023 | Stay SHORT!

April revenue figures from Evergreen and Yang Ming suggest a sharp deterioration in fundamentals, which has not been reflected in YTD or Y/Y share...

Tracking Traffic

Orient Overseas Intl (316 HK): Initial Warning Signs?

​Lower freight rates and load factor expansion signal a weaker outlook, with potential capacity return due to easing conflicts. FY25-26 forecasts...

Osbert Tang, CFA

TS Lines Pre-IPO | Slimming Down Fleet | Intra-Asia Market Update | Latest From Key Comp Wan Hai

Intra-Asia container carrier TS Lines filed to list its shares in Hong Kong (again) at the end of May, and its filing included full-year 2023...

Tracking Traffic

OOIL faces a weaker outlook than SITC, with higher expenses and less attractive metrics. SITC offers a higher dividend yield and a lower...

Lower freight rates and load factor expansion signal a weaker outlook, with potential capacity return due to easing conflicts. FY25-26 forecasts...