Shipbuilding Strategy: Deutsche initiates Strategy report preferring regional shipbuilding stocks over shipping stocks, as newsflow on shipbuilding stocks are likely to be more positive over next 6mths. Tips Chinese shipbuilders to Outperform vs Korean builders as Chinese govt support measures…
Note that new order flow for shipbuilders has picked up from a very low base in 2010, and expect momentum to continue into 2010 as dry bulk shipping companies continue to order, while financing has essentially become more readily available and vessel prices still within the lower end of its range...
However, expect Container shipping rates to trend downwards in the seasonally weak 4Q after reaching highs in 3Q, forecasting global container throughput growth to be weaker in 2011 vs 2010…
Recommends Pair trading by Long Shipbuilders and Short Shipping stocks. Maintain Buy Call for Cosco Corp and Yangzijiang with TP of $2.35 and $2.40 respectively, while has NOL ats TOP Sell, with TP of $1.61.
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