Asia Shipping: Goldman Sachs has sector report. Note that Demand for forward bookings good but not great and shipments should increase incrementally, add that Utilization rates should also improve 2-5 ppts during 3Q, with demand expected to grow at a slower rate. Freight rates however remain under pressure on axial routes, with terminal handling charges expected to increase 5%-10%, a bit less than initially assumed…..
Sector has no apparent constraints presently; with power, labor and boxes aplenty. Downside risks to earnings estimates due to weaker-than-expected freight rates, house believe that the mkt appears to be too pessimistic. Valuation multiples have collapsed to 0.84X EV/Fleet Value and 0.76X EV/GCI for 2011E. Reiterate Buy ratings for OOIL, NOL and Hanjin Shipping which have retraced to compelling valuations.
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