20151026-高盛-Asia_Pacific__Transportation__Shipping__Container__Read-across_from_Maersk_and_OOCL__revising_estimates_14页_398kb

Asia Pacific Container Shipping Market Summary

Core Content and Key Insights

Market Overview

The Asia Pacific container shipping market faced challenges in 2015, with a decline in container rates, especially in the Asia-Europe trade lane. This led to revised earnings estimates and a downward adjustment in target prices for most companies. However, the market is expected to recover in 2016 due to improved supply-demand balance, reduced vessel deliveries, and increased vessel scrapping.

Company Performance

• Maersk Line: Reduced its 2015 underlying profit guidance by 27% due to poor market conditions, particularly in the latter part of 3Q and October.
• OOCL (OOIL):
  • Reported a 2% year-on-year increase in total container volume, outperforming Maersk’s 1% growth.
  • Achieved a 10% increase in Transpacific volumes, outperforming the industry's 6% growth.
  • Transpacific rates declined by 10% yoy, but the company maintained profitability in 3Q15, with liner revenues of over $1.3bn, down only 2% qoq.
  • OOIL remains a top recommendation with a "Buy*" rating.
• Evergreen Marine:
  • 3Q15 total liner revenue fell by 2% qoq, but the company outperformed in the Transpacific trade.
  • Maintains a "Buy" rating with a 12-month target price of HK$21.60.
• NOL (Neptune Orient Lines):
  • 3Q15 revenue dropped by 5% qoq.
  • Maintains a "Buy" rating with a target price of S$1.30.
• Wan Hai Lines:
  • 3Q15 revenue declined by 7% qoq.
  • Maintains a "Neutral" rating with a target price of NT$30.90.
• Yang Ming:
  • 3Q15 revenue fell by 5% qoq.
  • Maintains a "Neutral" rating with a target price of NT$14.20.
• Hanjin Shipping:
  • 3Q15 revenue declined by 5% qoq.
  • Maintains a "Neutral" rating with a target price of W$6,300.
• CSCL (H & A):
  • 3Q15 revenue fell by 5% qoq.
  • Maintains a "Sell" rating for both listings.

Earnings Forecasts and Target Price Adjustments

• 2015E Earnings: Cut by an average of 36% due to weak rates.
• 2016E-18E Earnings: Remain broadly unchanged, with optimism for recovery.
• Target Price Adjustments:
  • OOIL: Revised to HK$64.00, a 4% decrease.
  • Evergreen: Revised to HK$21.60, a 9% decrease.
  • NOL: Target price remains S$1.30.
  • Wan Hai: Revised to NT$30.90, a 9% decrease.
  • Yang Ming: Revised to NT$14.20, a 9% decrease.
  • Hanjin: Revised to W$6,300, a 9% decrease.
  • CSCL (H & A): Revised to HK$2.50 and Rmb 2.30, respectively, a 4% and 3% decrease.

Key Financial Metrics

Industry Assumptions and Outlook

• 2015E Rate Assumptions:
  • Transpacific: -3% (vs. previous -13%)
  • Asia-Europe: -24% (vs. previous -13%)
  • Intra-Asia: -10% (vs. previous -7%)
• 2016E Rate Assumptions:
  • Transpacific: -2%
  • Asia-Europe: 15%
  • Intra-Asia: -10%
• Supply-Demand Outlook: Expected to normalize in 2016, with reduced vessel deliveries and increased vessel scrapping.
• Key Drivers of Recovery:
  • New lows in vessel deliveries.
  • Higher vessel scrapping rates, especially due to the Panama Canal expansion.
  • Normalization of trade, leading to mid-cycle EBIT margins.

Outlook for 2016

• The report maintains a positive outlook for 2016, with expectations of improved EBIT margins.
• Companies with high Transpacific exposure, such as OOIL, Evergreen, and NOL, are highlighted as top picks.
• The report anticipates a stronger performance in 2016 compared to 2015, with improved rates and demand.

Risks and Considerations

• Macro Risks: Uncertain economic conditions and supply-demand outlook.
• Fuel Price Volatility: Bunker fuel prices are a significant risk factor.
• Industry Consolidation: Potential delays or cancellations in vessel deliveries and industry consolidation could impact supply.
• Operational Risks: High gearing ratio for some companies poses recapitalization and liquidity risks.

Conclusion

The Asia Pacific container shipping market experienced a challenging 2015, marked by rate declines and weak demand, particularly in the Asia-Europe trade lane. Despite this, OOCL (OOIL) and other companies with strong Transpacific exposure demonstrated resilience and outperformed peers. The report maintains a positive outlook for 2016, anticipating a recovery driven by improved industry conditions, reduced vessel deliveries, and increased vessel scrapping. The top picks for 2016 are OOIL, Evergreen, and NOL, with revised target prices and a focus on their strong performance in the Transpacific trade.