全球海運(yùn)業(yè)-全球集裝箱運(yùn)輸：還沒結(jié)束-2021.7.26

Equities●Marine

26July2021

Exhibit1.Ratingchangesandvaluationsummary:Upsideof33-106%onourBuy-ratedstocks;don’tignoreOOIL’s26%yield

Mktcap

3M

Rating

Targetprice

Share

Upside/

HSBCevscons

_______2021e_______

Priceperform.

Stock

Ticker

Curr

(USDm)ADTV

OldNew

Old

New

pricedownside

2021e

2022e

PE(x)PB(x)

ROE

Yield

1-year

vspeak

APMollerMaersk

MAERSKBDC

DKK

52,049

75

Buy

Buy

22,500

23,000

17,250

33.3%

11%

76%

4.5

1.32

34.1%

12.4%

104%

-7%

COSCOShipping-H

1919HK

HKD

37,228

165

Buy

Buy

27.00

27.00

13.12

105.8%

15%

78%

2.1

1.40

96.0%

11.6%

505%

-23%

COSCOShipping-A

601919CH

RMB

45,630

1,031

Buy

Buy

34.62*

34.00

21.09

61.2%

15%

78%

4.1

2.69

96.0%

6.0%

530%

-14%

OOIL

316HK

HKD

11,238

28

NA

Buy

NA250.00137.10

82.3%

5%

10%

1.9

1.30

83.4%

26.4%

287%

-25%

EvergreenMarine

2603TT

TWD

28,887

1,623

Buy

Hold

200.00

165.00

155.00

6.5%

4%

-3%

4.7

3.04

95.8%

10.6%

1316%

-24%

HapagLloyd

HLAGGR

EUR

37,690

6

BuyHold190.00190.00181.90

4.5%

4%

30%

7.3

3.05

51.2%

4.1%

276%

-13%

SITC

1308HK

HKD

10,592

26

Buy

Buy

47.00

50.00

30.70

62.9%

7%

3%

11.9

6.20

62.3%

6.0%

281%

-6%

*AdjustedfromRMB45.00duetocorporateactionon14July2021;weareroundingourtargetpriceinthisnote

Note:HSBCvsconsensusisbasedonrecurringprofitestimates;InitiateonOOILatBuyrating;YieldforMaerskincludessharebuyback;Pricedatcloseof21July2021

Source:Bloomberg,RefinitivDatastream,HSBCestimates

Weraiseourestimatesin2021-22etoreflecthigherfreightrates,buttrim2023eestimatesonrisksfromhighervesseldeliveries

Exhibit2.Containershipping:HSBCEBITDAandrecurringprofitestimaterevisions

________New_________

________Old_________

_____Difference______

Curr

2020a

2021e

2022e

2023e

2021e

2022e

2023e

2021e

2022e

2023e

EBITDA

Maersk

USDm

8,226

16,934

13,949

11,080

15,432

12,313

12,492

10%

13%

-11%

COSCOShipping

RMBm

26,599

103,662

72,986

52,369

97,481

70,311

58,002

6%

4%

-10%

OOIL

USDm

1,399

6,485

4,626

3,365

NA

NA

NA

NA

NA

NA

Evergreen

TWDm

55,523

234,090

146,550

75,192

212,917

147,365

102,533

10%

-1%

-27%

Hapag-Lloyd

EURm

2,670

6,029

4,635

3,803

5,266

4,121

4,182

14%

12%

-9%

SITC

USDm

464

1,048

1,057

1,217

943

916

1,070

11%

15%

14%

With2021elargelyreflected,weseeupgradesfor2022einevitableforMaersk,COSCOShippingandHapagLloyd;albeitlimitedforEvergreen

Recurringprofit

Maersk

USDm

2,716

11,731

8,777

6,004

10,229

7,119

7,380

15%

23%

-19%

COSCOShipping

RMBm

9,927

81,012

53,031

34,266

74,820

50,021

38,697

8%

6%

-11%

OOIL

USDm

922

5,941

4,111

2,844

NA

NA

NA

NA

NA

NA

Evergreen

TWDm

23,958

173,755

104,748

47,231

156,580

105,226

69,299

11%

0%

-32%

Hapag-Lloyd

EURm

1,034

4,409

3,066

2,200

3,651

2,559

2,634

21%

20%

-16%

SITC

USDm

352

901

909

1,047

800

771

900

13%

18%

16%

Note:InitiateonOOIL;Source:Companydata,HSBCestimates

Exhibit3.Containershipping:HSBCversusconsensus

_______HSBC________

_____Consensus______

_____Difference______

Curr

2020a

2021e

2022e

2023e

2021e

2022e

2023e

2021e

2022e

2023e

EBITDA

Maersk

USDm

8,226

16,934

13,949

11,080

16,620

11,044

9,530

2%

26%

16%

COSCOShipping

RMBm

26,599

103,662

72,986

52,369

112,011

63,135

46,628

-7%

16%

12%

OOIL

USDm

1,399

6,485

4,626

3,365

6,710

4,456

3,080

-3%

4%

9%

Evergreen

TWDm

55,523

234,090

146,550

75,192

232,018

162,411

79,223

1%

-10%

-5%

Hapag-Lloyd

EURm

2,670

6,029

4,635

3,803

5,916

3,906

3,347

2%

19%

14%

SITC

USDm

464

1,048

1,057

1,217

1,050

1,125

1,303

0%

-6%

-7%

Recurringprofit

Maersk

USDm

2,716

11,731

8,777

6,004

10,571

4,996

3,964

11%

76%

51%

COSCOShipping

RMBm

9,973

81,012

53,031

34,266

70,425

29,742

22,837

15%

78%

50%

OOIL

USDm

922

5,941

4,111

2,844

5,640

3,741

2,260

5%

10%

26%

Evergreen

TWDm

23,958

173,755

104,748

47,231

166,864

107,479

52,757

4%

-3%

-10%

Hapag-Lloyd

EURm

1,034

4,409

3,066

2,200

4,225

2,355

1,865

4%

30%

18%

SITC

USDm

345

901

906

1,043

839

876

997

7%

3%

5%

Note:InitiateonOOIL;Source:Companydata,HSBCestimates

2

Exhibit4.Containershipping:Itain’toveryet

Containershippingstocksdeclined0%

6-25%

-5%

-6%

-10%

-7%

FromrecentpeakinJuly

-15%

-13%

-14%

-20%

-25%

-23%

-24%

-25%

-30%

SITC

Maersk

HapagLloyd

CSH-A

CSH-H

Evergreen

OOIL

Sharepriceperformancevs.recentpeak(%)

Equities●Marine

26July2021

Lately,shippingstocksunderperformed,butonlyafterrallying104-1,316%inthepast12months.

Freightratescontinuetorisedrivenbycongestionscoincidingwithpeakseasonwhileconsensusupgradescontinuedonpositiveprofitalertsbycompanies

ThekeyconcernsareMrBiden’sproposalstocurbshippingcosts,theEU’sinclusionofshippinginits

EmissionsTradingSystem,risingordersfornewvesselsandpotentialstallingofearningsmomentum

Freightrateindicesbreakrecords

22-48%

Increaseq-o-qin3Q21tilldate

Tightneartermdemand-supplybutrisksto2023e

21%

Orderbookisthehighestsince2014

70%

60%

50%

40%

30%

20%

10%

0%

10%

8%

6%

4%

2%

0%-2%-4%

%changeq-o-q

61% 64%

57%

48%

41%

25%

28%

22%

24%

10%

17%

14%

CCFI

SCFI

FBX

WCI

1Q21

2Q21

3Q21tilldate

8.9%

6.6%

6.2%

3.6%

4.5%

3.5%

2.8%

2.0%

-1.2%

-2.0%

2019

2020

2021e

2022e

2023e

3Q21issettobebettervs1Q21/2Q21withfreightrateindicesuponaverageup22-48%q-o-q.

2H21couldbestrongeraswellasweexpectcongestionstopersistatleastuntilLunarNewYearnextyear

Risingnewvesselorderswillmostlybedeliveredin

2023eand2024e

Unwindingofsupplychaincongestionswillraiseeffective

capacityin2022e.Moreimportantlyin2023eweexpect

recordvesseldeliveriesof1.5mTEUs(6%offleet)

Scrappingofoldervesselsmaypickupbutwillnotbe

sufficienttooffsetthenewvesseldeliveries

Upsiderisksto2022econsensusestimates

76-78%

HigherforMaerskandCOSCOShippingin2022e

Globalcontainertrade(%y-o-y)

100%

80%

76%

78%

60%

30%

40%

11%

15%

10%

20%

7%3%

5%

4%

4%

0%

-3%

-20%

Maersk

COSCOShipping

OOIL

Evergreen

HapagLloyd

SITC

HSBCvsConsensus2021e

HSBCvsConsensus2022e

Weexpectdemandtonormalisein2022ebutcongestionsmayeaseonlygraduallynextyearwithheadwindsfromlabourunionnegotiationsatCaliforniaPorts

Freightratesmayremainelevatedin2H21andearly2022settingthebaseforhighercontractratesevennextyear

While2021econsensusearningsupgradesmaybe

nearingthepeak,westillseeupsiderisksfor2022eat

leastforMaerskandCOSCOShipping

Moreupsidetosectorvaluations

3.5x

40

4.0x

43.2

45

2.96x

3.0x

2.96x

35

20

2.5x

30

Avg12-mfwdPB1.25x

25

2.0x

Consensus12-monthforwardPB

1.5x

15

1.0x

10

near4SDabovemeansince2011

0.5x

5

0.0x

0

Jun-11Jun-12Jun-13Jun-14

Jun-15

Jun-16Jun-17

Jun-18

Jun-19

Jun-20

Jun-21

12-mfwdPB(x)

Avg12-mfwdPB(x)

+1Std.dev

-1Std.dev

12-mFwdROE(%,RH)

Attractivedividends

Avg.2021-Avg.2021-

Yieldover

4-26%

22ePB

22eROE

nextyear

APMollerMaersk

1.26x

28%

12.4%

COSCOShipping-H

1.25x

67%

11.6%

Dividendyieldoverthenextyear

COSCOShipping-A

2.41x

67%

6.0%

OOIL

1.18x

63%

26.4%

EvergreenMarine

2.95x

67%

10.6%

HapagLloyd

2.83x

39%

4.1%

SITC

5.77x

56%

6.0%

Source:Companydata,ClarksonsResearchServices,RefinitivDatastream,Bloomberg,HSBCestimates

Thecontainershippingnameswecoverareoffrecent

peaks…

…butgivenourexpectationsoffurtherconsensus

earningsupgradesfor2022eweexpecttheearnings

momentummaycontinuefurther

WeraiseourTPsforMaerskby2%andforSITCby6%onhigherearningsestimates.ForEvergreen,wecutourTPby18%asearningsupgradesalmostrunitscourse.

InitiateOOILatBuy;reiterateBuyonCOSCOShipping-H/A,Maersk&SITC;downgradeHapag-LloydandEvergreentoHold

OOIL,Maersk,COSCOShippingandEvergreenhaveattractivedouble-digitdividendyieldsoverthenextyearwithstrongearningsmomentum

3

Equities●Marine

26July2021

Contents

Itain’toveryet

5

Freightratesrallymaylast

atleastuntil1Q22e

10

OOIL(316HK)

19

Stockcalls

25

Containershipping

demandmodel

38

Containershipping

supplymodel

39

Disclosureappendix

48

Disclaimer

51

4

Equities●Marine

26July2021

Itain’toveryet

Despitecontinuedpositivecatalysts(higherfreightratesandearningsupgrades)shippingstocksunderperformedlatelyperhapsonregulatoryheadwindsamidstpeakingearningmomentum

While2021econsensusearningsupgradesmaybenearingthepeak,weseeupsiderisksfor2022e.Risingnewvesselorderbookimpliessupplywilllikelybeoverwhelmingin2023e

InitiateOOILatBuy,reiterateBuyonCOSCOShipping-H/A,Maersk&SITC;downgradeHapag-Lloyd&EvergreentoHold

Congestionandstayathomedemand–twindriversoffreightandsharepricerally

Anunforgettableupcycleamidtheworstcrisis

Containershippingstocksthatwecoverhaverallied104-1,316%inthepastoneyearonstronger-than-expecteddemandrecoverydrivenbystay-athomeconsumerspendingandcontinuoussupplychaindisruptions.Amongotherthings,differentcompanies’capitalstructurealsocontributedtodivergenceinsharepriceperformanceasshowninchangeinEVinexhibit5.,Indeed,allmajorfreightrateindicesSCFI,CCFI,NCFI,FBXandWCI–areattheirrecordhighsandup46-104%YTDandonanaverage108-254%highery-o-y.Asshowninexhibit6,asharpincreaseinfreightrateshavedrivenconsensus2021earningsbyasmuchas13foldssincethebeginningoftheyear.

Exhibit5.Containershipping:Sharepriceperformanceinthepastoneyear

1400%

1316%

1200%

1000%

104%

505%

530%

287%

276%

289%

800%

41%

108%

465%

163%

465%

114%

281%

200%

600%

400%

0%

Maersk

CSH-H

CSH-A

OOIL

Evergreen

HapagLloyd

SITC

EV

Shareprice

Note:CSH=COSCOShipping;pricedatcloseof20July2021

Source:RefinitivDatastream

Exhibit6.Containershipping:Consensus2021eearningsupgradesin2021YTD

1400%

1236%

1200%

1000%

816%

800%

581%

600%

350%

400%

228%

171%

200%

0%

Maersk

COSCOShipping

OOIL

Evergreen

HapagLloyd

SITC

Source:Bloomberg

Aspeedbumporrolloverofthecycle?

Inthepastthreeweeks,containershippingstocksdeclined6-25%underperformingthelocalindices.Wearguethatdemand-supplyfundamentalsremainintactwithongoingportandlogisticssupplychaincongestionsgloballycoincidingwiththepeakseason.Notsurprisinglyfreightrateshavecontinuedtoriseweekonweektonewrecordhighs.Atthesametime,consensusearningsupgradescontinueddrivenbypositiveprofitalerts.

5

Exhibit7.Containershipping:SharepriceperformancefromrecentpeakinearlyJuly

0%

-5%

-6%

-10%

-7%

-15%

-13%

-14%

-20%

-25%

-23%

-24%

-25%

-30%

SITC

Maersk

HapagLloyd

CSH-A

CSH-H

Evergreen

OOIL

Sharepriceperformancevs.recentpeak(%)

Note:CSH=COSCOShipping;pricedatcloseof21July2021

Source:RefinitivDatastream

Equities●Marine

26July2021

Exhibit8.Containershipping:Consensus2021eearningsupgradesin2021YTD

100% 95%

80%

60%

34%

40%

14%

12%

20%

6%

7%

0%

Maersk

COSCOShipping

OOIL

Evergreen

HapagLloyd

SITC

Source:Bloomberg

Weattributetherecentunderperformancemainlytoregulatoryheadwindsamidstrisingorderbookandperhapspeakingearningsmomentum.

On9July2021,PresidentBidenissuedanexecutiveorderencouragingtheFederalMaritimeCommissiontocrackdownonunreasonabledetention&demurrage(D&D)feeschargedbycarrierstoUSexporters(seeSailingintotheregulatorymist,10July2021).TheUSFederalMaritimeCommission(FMC)onTuesday(19July)toldthetopninecontainerlinesoperatingonUStradesthattheagencywillimmediatelybeginauditinghowtheybillcustomers’detentionanddemurragechargesamidincreasedpressurefromshipperstocrackdownonunreasonablestoragefeestiedtoongoingportcongestion.Webelievethatnormaliseddemandwitheaseincongestiongoinginto2022wouldleadtodeclineindetentionanddemurragechargesbymarketforceitself.

Similarly,on23July,China’sforeigntradedepartmentattheMinistryofcommercevoicedconcernsaroundrisingshippingcostsandurgedshippingcompaniestohavealong-termperspectivevsshort-termconsiderationsandactwithself-disciplinewhilecomplyingwiththelawsandregulations(source:ChinaDaily,23July2021).Recallthat,inSeptember2020,therewasnewsofaninterventionfromtheChinesegovernmentontranspacificfreightrates(Regulatoryinterventionintranspacifictrade:ourtake,14September2020).Consequently,transpacificfreightratesremainedrange-boundforaboutsevenmonthsbeforerisingagainsinceend-March,drivenbytheSuezCanaldisruption.Wearguethateveryshipthatisseaworthyissailingandsocurrentrecord-highfreightratesaredrivenbythestrongdemandandcongestionratherthananyindustrycollusion.

Exhibit9.Containershipping:orderbookexpandingto21%asarisingsectorrisks

8,000

70%

60%

6,000

50%

4,000

40%

21.0%

30%

2,000

20%

10%

0

0%

May-01May-02May-03May-04May-05May-06May-07May-08May-09May-10May-11

May-12May-13May-14May-15May-16May-17May-18May-19May-20

May-21

Orderbook('000TEU)

%offleet(RH)

Note:Dataasof16July2021

Source:Alphaliner,ClarksonsResearchServices

Exhibit10.Containershipping:sectorPB-ROE

4.0x

43.2

45

3.5x

40

3.0x

2.96x

35

2.5x

30

Avg12-mfwdPB1.25x

25

2.0x

20

1.5x

15

1.0x

10

0.5x

5

0.0x

0

Jun-11Jun-12Jun-13Jun-14Jun-15Jun-16Jun-17

Jun-18Jun-19Jun-20

Jun-21

12-mfwdPB(x)

Avg12-mfwdPB(x)

Note:BasedonaverageofAPMollerMaersk,COSCOShippingHoldings-H,Evergreen,HapagLloydandSITC

Source:RefinitivDatastream,HSBC

6

Equities●Marine

26July2021

Restockingcyclecontinuesevenascongestionswilllikelylingerforlonger

TheEuropeanCommissionconcludedalegislationlastweektoincludeshippinginitsemissionstradingsystem(ETS)whichwillrequirecarrierstopurchaseETSemissionallowancestooffsetthereportedCO2emissionsstartingin2023witha3-yearphaseinperiod.Moreover,tostartwithliabilityisforonly20%ofemissionsforthefirst12months.However,wethinkthatIMO(InternationalMaritimeOrganisation)shouldleadthisefforttobringalloceangoingvesselsintothisdrive.Anyregionaldrivemaycreateanunevenplayingfieldfordifferentshippinglines.Infact,weseethisproposalasawaytoputpressureontheIMOtoratherexpeditetheprocessandforcethememberstatestoactdecisively.

Otherconcernsincludepotentialstallingofearningsmomentumandrisingrisksofoversupplyasthenewvesselsorderbooknowexceeds21%,thehighestlevelsince2014

Wheretofromhere?

Thekeyquestionthatwegetaskedbyinvestorsiswhetherthisrallyinfreightratesissustainablegoinginto2H21andifsharepriceshavepeaked.OurshortansweristhatweshouldseestrongfreightratemomentumanddemandrecoveryatleastuntiltheLunarNewYearin2022astherestockingcyclecontinuesandcongestionswilllikelylingerforlonger.WhilewearestillfacingtherippleeffectsfromSuezCanalblockageoflaterMarchandYantiandisruptionswillbebigger,thereareseveralchokepointsacrosstheworldwhichwouldkeepsupplychainsstressed.Evenin2022e,upcominglabournegotiationsinUSWestCoastportscouldpotentiallybeasourceofmassivedisruptionsgiventhepastexperiences.

Differencesinvaluationsemergeandwebelieveitistimetobeselective

Shipperscanexpectthehighfreightrates,strongdemand,anddisruptedmarketsinairandoceantocontinueatleastuntiltheLunarNewYearinFebruary2022

Kuehne+NagelCEODetlefTrefzgeratthe2Q21resultsbriefing(21July2021)

Overallweexpect3Q21etobestrongervs2Q21/1Q21andfreightratestoremainelevatedthroughearly2022whichcouldpotentiallyimproveprospectsfornextyear’sannualcontractnegotiations.Weremainconstructiveonthesectorandexpecttheupcomingresultsseasontotriggerfurtherconsensusearningsupgrades,particularlyfor2022e.However,wedoacknowledgetherisksfromrecordhighdeliveriesin2023e.

Julyisgood.3Q21nowlooksbetterthan2Q21.4Q21canbeasgoodas3QifCOVID-relatedportcongestionandlowefficiencypersist

EvergreenMarinechairmansaidduringitsAGMon21July2021

Westilllikemostofthenamesbutsuggestinvestorsstayontheside-linesinEvergreen&Hapag-Lloyd(downgradetoHold)andcontinuetoaddpositionsinBuy-ratedMaerskandSITC,andespeciallyinourpreferredBuys,COSCOShippingandOOIL.

Whilearisingtideliftsallboats,thedifferenceinvaluationshavestartedtoemerge.Inthisnote,weinitiatecoverageofOOIL(316HK,Buy,TPHKD250,upside82%),whichonourestimatesoffersthehighestyieldwhiletradingatthelowestvaluationmultiple.Withitsparent’s(COSCOShipping;1919HK)intentiontoresumedividendandfundpartofthefuturecapexusinginternalcashflows,wearguethatOOILwilllikelybecomeayieldplayforbothCOSCOShippingand

7

Exhibit11.Containershipping:Sector2021evaluationandyieldsbystock

Equities●Marine

26July2021

14.0x

12.0x

11.9x

10.0x

7.3x

8.0x

6.0x

4.7x

4.5x

4.1x

4.0x

2.2x

1.9x

2.0x

0.0x

SITCHLAG

EVG

APMMCSH-ACSH-H

OOIL

2021ePE(x)

14.0x

12.0x

11.9x

10.0x

7.3x

8.0x

6.0x

4.7x

4.5x

4.1x

4.0x

2.2x

1.9x

2.0x

0.0x

SITCHLAG

EVG

APMMCSH-ACSH-H

OOIL

2021ePE(x)

30.0%

26.4%

25.0%

20.0%

15.0%

12.4%

11.6%

10.6%

10.0%

6.0%

6.0%

4.1%

5.0%

0.0%

OOILAPMMCSH-HEVGCSH-ASITCHLAG

2021eDividendyield(%)

Note:YieldforMaerskincludessharebuyback.Source:HSBCestimates

investors.WecontinuetoseeupsidepotentialforMaersk(lesscyclicalthantheothers)andSITC(structural)whileweforeseelimitedupsideforEvergreenandHapagLloyd(mostexpensive).

8

Exhibit12.Containershipping:Companyinvestmentthesisandcatalysts

Investmentthesis

Catalysts

Currentprice:

WeforecastMaersk’sEBITDAofUSD17bnin2021e,higherthanthetopendofits

During2021-23e,weestimateMaersktogenerateoperatingcashflowsofUSD41bnandwe

APMoller

Maersk

DKK17,255

guidancerange(USD13-15bn)drivenbybetter-than-expectedratesdevelopmentsince

expectmorethan20%ofthecapitalreturntoshareholders(onjust2020-22edividendsvs

startof2Q21.

currentmarketcap)withupsideriskwhilemaintaininginvestmentgraderating.

MAERSKBDC

Targetprice:

WeexpectMaersktoreviseupitsguidancefor2021duringitsinterimresults

Re-ratingunderway:WhileweexpectMaersk’s2023eEBITDAbedown35%vs2021e,the

DKK23,000

announcementwhichwoulddrivefurtherearningsupgradefor2021-22e.

qualityofearningswillimprovesignificantlywithlogisticsandterminalbusinesseswillbe6-8%

Buy

Upside:

Maersk’shigherexposuretocontractbusinessmeansittrailspeersin2021butwould

higherwhichoftentradesatc10xEV/EBITDAwhileOceansegment’sEBITDAwilldeclineby

33.3%

ensurerelativelyhigher2022evspeersasweexpectspotfreightratestorollover.

42%whichoftentradesat4-5xEBITDA.

Currentprice:

CSH’s1H21preliminaryresultsimplyaquarterlyrecordhighprofitofRMB21.7bnfor

Withsupplychainbottlenecksunabletoeaseintheshortterm,weexpectspotratestoremain

COSCO

Shipping-H

HKD13.12

2Q21,up40%q-o-qvsthepreviousrecordofRMB15.4bnin1Q21.

elevatedthroughout2021andnormalisationmayonlyhappenin2022andtomuchhigherlevels

Weforecast2021eprofitofRMB75bn(ROEof92%),15%higherthanconsensus.We

thaninpre-pandemictimes

1919HK

Targetprice:

alsoexpectitsEBITmargintoimproveto33.1%in2021evs8.3%in2020.

Reinstatementofdividendsinthenearfuturewouldbeasharepricecatalyst.

HKD27.00

RecentcommentaryfromEvergreenre2H21bodeswellforthecompanyandmakes

Buy

Upside:

furtherearningsupwardsrevisionacertainty

105.8%

Currentprice:

Duringits2020resultsbriefing,OOILguidedforamin.ofUSD400mdividendstobe

WeconsiderOOILasoneofthebestlatecycleplaywithcomfortofsignificantlyhigheryieldand

Orient

Overseas

HKD137.10

paidduring2021-23e.Weareconfidentthatstrongoperatingcashflowsshouldbe

oneofthelowestvaluationamongpeers.Withrecentincreaseinfreefloatandliquidity,westill

morethanenoughtocoveritscapexandotheroperatingexpenses,leavingample

seeroomforcatchupwiththestock.

316HK

Targetprice:

cashreservesfordividendpayments.Weexpectthecompanytopay50%netprofits

Weforecast50%dividendpay-outaswearguethatitskeyshareholderwouldbelookingto

HKD250.00

asdividends,whichimplies26.4%yieldin2021e.

receiveasmuchdividendpossiblenotonlytoresumeitsowndividendbuttofundfuturecapex.

Buy

Upside:

Weforecast363%y-o-ygrowthinOOIL’sEBITDAin2021easweexpectitsEBITDA

82.3%

margintoexpandfrom17.1%in2020to43.3%in2021.

Currentprice:

Evergreennowexpects3Q21tobebetterthan2Q21andnotrulingoutequallystrong

During2021-23e,weestimateEvergreentogenerateoperatingcashflowsofTWD427bnwhich

Evergreen

Marine

TWD155.00

4Q21ifcongestionpersists.

wouldbesufficientto:

However,consensusisalreadyreflectingthesametoalargeextentinourviewandthuswe

Loweritsnetdebttoequityfrom1.07xin2020-endtonetcashpositionby2023e.

2603TT

Targetprice:

seeearningsmomentumaslikelytostallorslowsharplyinthecomingmonths.

WeexpectittogenerateanaverageROEofcloseto50%in2021-23evs-1%during2011-20

TWD165.00

Weexpectabout20%ofthecapitalreturnedtoshareholders(onjust2021-23edividendsvs

Hold

Upside:

currentmarketcap)assuming50%dividendpay-out.

6.5%

Currentprice:

WebelievethatHLAGiswellplacedtobenefitfromthisupcyclewellinto2021withits

During2021-23e,weestimateHLAGtogenerateoperatingcashflowsofEUR14.5bnwhichwould

Hapag-Lloyd

EUR181.90

exposuretoNorth-SouthrouteswhichhavelaggedbehindEast-Westroutesthusfar.

besufficientto:

HLAGGY

Targetprice:

SimilartoMaersk,itsrelativelyhigherexposuretocontractwouldmeanthatearnings

Loweritsnetdebttoequityfrom0.66xin2020-endtonetcashpositionby2023e

pressureon2022ewouldbemuchmoremanageablevssomeofitsAsianpeers.

WeexpectittogenerateanaverageROEof31.8%in2021-23evs-0.7%during2011-20

EUR190.00

Hold

Weexpectabout9.4%ofthecapitalreturnedtoshareholders(onjust2021-23edividendsvs

Upside:

currentmarketcap)assuming30%dividendpay-outwithupsiderisk.

4.5%

Growthandcapextoincreaseproportionofownedfleetandcontainerstobefundedorganically

Currentprice:

WeexpectSITCtodeliverdouble-digitvolumegrowthy-o-yin2021-23eanditsrecent

During2021-23e,weestimateSITCtogenerateoperatingcashflowsofUSD1.3bnwhichwouldbe

SITC

HKD30.70

aggressiveorderbook(50%ofownedfleet)suggestsSITC’soptimismtowardsits

sufficient:

1308HK

Targetprice:

growthprospect.

Topotentiallydistribute70-80%ofitsprofitsasdividends

WearguethatSITCisareratingstorydrivenbyincreasingearningswithcapexforgrowth

Funditsgrowthcapexentirelyfromoperatingcash

HKD50.00

Buy

andongoingdividendpay-outofover70-80%fullyfundedbyoperatingcashflows.

Weexpectreratingofthestocktocontinueinthisdecadeasindustryhasstructurallyimproved

Upside:

WeviewSITCsharesasakeyholdingforinvestorsfocusedonyieldandcompounding

vsthepastdecadeandSITCnowhasagreattrackrecord,highliquidityandevenbetter

62.9%

growth.WithincreasingpenetrationintheSouthandSouthEastAsianmarket,SITCis

balancesheet.

wellpositionedtoleverageanextendedsupplychainasmainlandChinastrivesto

moveawayfromlow-endmanufacturingespeciallyafterRCEPcomesintoeffect.

Pricedatcloseof21July2021.Source:Companydata,Alphaliner,HSBCestimates

9

EquitiesJuly●

2021Marine

Whileactivecapacityexpandedinresponsetorisingdemand,ongoingcongestionsfurtherdrovetheCCFIrally

Equities●Marine

26July2021

Freightratesrallymaylastatleastuntil1Q22e

Tightdemand-supplysituationmaycontinueatleastuntilLunarNew

Yearin2022ea