Asia Pacific Equity Research 30 April 2014
Underweight
COSCO Corporation
COSC.SI, COS SP Price: S$0.72
Muted 1Q14 with lion's share of revenues from offshore but not sure if worst is over
Price Target: S$0.65
1Q14 review: muted earnings performance but an “OK” quarter: Cosco Corp reported a slightly lower-than-expected 1Q14 net profit of S$13mn but up 20% y/y driven by 42% y/y increase in sales and no reversal of expected losses last year. The earnings account for 22%/25% of FY14 JPM/consensus net earnings estimates of S$58mn/S$52mn. GP margins this quarter were largely in line at 9.2% vs. FY14 JPMe of 9.4% and 1Q14 also saw limited impact of allowance for expected losses on construction contracts (reversal of S$3mn in 1Q14 vs. allowance of S$51mn in the last quarter). Key takeaways from the analyst briefing: (1) US$630mn drillship arbitration under way by buyer for interest, damages; company has already paid a deposit of approximately US$110 mn, (2) Gross profit margins for offshore/shipbuilding were at 7%, while repair/conversion posted a 15% gross profit margin, (3) Lower depreciation in 2014 on account of revised depreciable life, (4) Admin/distribution costs were driven by higher commission costs this quarter, (5) Company is targeting new orders worth US$2bn in 2014 (order wins of US$217mn YTD), 6) Company remains cautious on outlook for 2014.
Singapore Ship Building & Repairs Ajay Mirchandani
AC
(65) 6882-2419
[email protected] Bloomberg JPMA MIRCHANDANI
J.P. Morgan Securities Singapore Private Limited Price Performance 0.90 0.85 S$
0.80 0.75 0.70 0.65 Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
COSC.SI share price (S$) FTSTI (rebased)
Abs Rel
YTD -4.6% -7.4%
1m 1.4% -1.5%
3m 2.9% -4.9%
12m -17.7% -14.6%
Underweight: Our SOTP-based Dec-14 price target of S$0.65 implies 25x FY14E P/E and 1.1x P/B. Key upside/downside risks to our price target include: (1) continued "cost over-runs" or "better-than-expected" execution improvement, (2) a sharp surge/fall in the BDI, and (3) a rebound/drop in orders.
COSCO Corporation (Reuters: COSC.SI, Bloomberg: COS SP) S$ in mn, year-end Dec FY11A FY12A FY13A Revenue (S$ mn) 4,163 3,734 3,508 Net Profit (recurring) (S$ mn) 140 106 31 EPS (recurring) (S$) 0.06 0.05 0.01 EPS (reported) (S$) 0.06 0.05 0.01 Gross Margin 9.1% 13.0% 9.2% DPS (S$) 0.03 0.02 0.01 P/E (x) 11.5 15.3 52.7 P/BV (x) 1.2 1.3 1.2 Div Yield 4.2% 2.8% 1.4% ROE 11.2% 8.2% 2.3% Net Debt/Equity 29.1% 65.1% 80.6%
FY14E 3,460 58 0.03 0.03 9.4% 0.02 27.7 1.2 2.8% 4.3% 51.0%
FY15E 3,816 57 0.03 0.03 8.7% 0.02 28.4 1.2 2.8% 4.2% 47.3%
Company Data Shares O/S (mn) Market Cap (S$ mn) Market Cap ($ mn) Price (S$) Date Of Price Free Float(%) 3M - Avg daily vol (mn) 3M - Avg daily val (S$ mn) FTSTI Exchange Rate Price Target End Date
2,239 1,612 1,284 0.72 30 Apr 14 1.06 0.75 3237.74 1.26 31-Dec-14
Source: Company data, Bloomberg, J.P. Morgan estimates.
See page 25 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Key catalysts for the stock price: • Continued cost over runs
Upside risks to our view: • More-than-expected order wins • Improvement in margins • Sharp surge in BDI
Key financial metrics Revenues (S$ mn) Revenue growth (%) EBIT (S$ mn) EBIT margin (%) Tax rate (%) Net profit (S$ mn) EPS (S$) EPS growth (%) DPS (S$) BVPS (S$ mn) Operating cash flow (S$ mn) Free cash flow (S$ mn) Interest cover (X) Net margin (%) Sales/assets (X)
FY12A 3,734
FY13A 3,508 -6% 171 4.9% 13% 31 0.014 -71% 0.01 0.60 (130) (182) 1.5 1% 0.5
FY14E 3,460 -1% 240 6.9% 22% 58 0.026 90% 0.02 0.60 752 683 2.1 2% 0.4
FY15E 3,816 10% 237 6.2% 22% 57 0.025 -2% 0.02 0.61 196 120 2.1 1% 0.5
Debt/equity (%) Net debt/equity (%) ROE (%) Key model assumptions Orderwin assumption (S$ mn) GP margin (%)
148% 65% 8% FY12A
174% 81% 2% FY13E 1500 9.2%
173% 51% 4% FY14E 1500 9.4%
172% 47% 4% FY15E 1500 8.7%
329 8.8% 26% 106 0.047 0.02 0.57 (580) (703) 3.3 3% 0.5
13.0%
Valuation and price target basis Our Dec-14PT of S$0.65 is based on SOTP of the individual business segments, namely ship repair, shipbuilding, offshore, conversion and shipping. We value the ship repair & conversion based on 7x P/ average P/E for ship repair yards. We value shipbuilding, offshore based on the existing value of the order book and an implied value of S$1.5 billion annually. The shipping segment is valued based on a 5x P/E of Cosco's fleet of 10 dry bulk carriers.
Table to support valuation and price target
EBITDA FY14E 7.6% 0%
Valuation 568 7.0x 211 630
Per share 0.25
Shipping valuation -Applied P/E
47 5.0x
0.02
Fair value of Cosco Corp
1,456
0.65
Ship repair & conversion valuation -Applied P/E (to implied earnings) Existing orderbook valuation Potential new orders valuation @S$1.5 billion annually
Source: Bloomberg, Company and J.P. Morgan estimates.
Sensitivity analysis Senstivity to 1% chg in GP margin 1% change in borrowing cost
Downside risks to our view: • Higher steel prices • Decline in margins
0.09 0.28
Source: Bloomberg, Company data and J.P. Morgan estimates.
FY15E 8.3% 0%
EPS FY14E 27.8% -15%
JPMe vs. consensus, change in estimates Net Income JPMe old JPMe new % chg Consensus
FY15E 31.3% -16%
Source: Bloomberg, Company data and J.P. Morgan estimates.
FY14E 58 58 0% 52
FY15E 57 57 0% 71
Source: Bloomberg, Company and J.P. Morgan estimates.
Table 1: Valuations for companies under coverage Company Singapore Keppel Corp SMM Ezion Dyna-Mac Ezra COSCO Corp Malaysia Bumi Armada Sapura Kencana* MMHE Dialog UMW Oil & Gas Perisai
Mkt Cap (US$ mm)
Price (LC)
Rating 13E
P/E 14E
15E
13E
P/B 14E
15E
13E
15,225 6,769 2,177 324 818 1,283
10.53 4.07 2.27 0.41 1.05 0.72
3,593 7,911 1,936 2,674 2,669 574
4.00 4.31 3.95 3.59 4.03 1.57
OW N OW OW NR UW
12.7x 17.0x 16.5x 15.0x N/M 35.5x
12.6x 14.1x 9.9x 13.2x 17.0x 27.7x
11.0x 12.9x 9.8x 8.8x 11.4x 28.3x
2.0x 3.2x 3.3x 2.2x 0.7x 1.3x
1.8x 3.0x 2.5x 2.1x 0.7x 1.2x
1.7x 2.7x 2.0x 1.9x 0.7x 1.2x
4.3% 3.5% 0.1% 4.7% 0.0% 2.8%
4.3% 4.3% 0.2% 5.3% 0.0% 2.8%
4.3% 4.6% 0.2% 8.0% 0.0% 2.8%
15.7% 19.7% 24.1% 14.8% -3.8% 3.5%
15.1% 21.9% 26.1% 16.1% 4.4% 4.5%
15.9% 21.8% 21.0% 22.9% 6.3% 4.4%
OW OW N OW N OW
24.9x 26.2x 30.3x 48.8x 44.9x 23.6x
18.7x 16.6x 28.9x 41.9x 28.1x 23.5x
16.4x 14.3x 26.4x 34.7x 22.6x 12.9x
2.8x 2.6x 2.4x 6.4x 3.0x 1.9x
2.5x 2.2x 2.2x 5.8x 2.8x 1.7x
2.3x 1.9x 2.1x 5.3x 2.5x 1.5x
0.8% 0.0% 0.7% 0.8% 0.2% 0.0%
1.1% 0.0% 0.7% 1.0% 0.4% 0.0%
1.2% 0.0% 0.8% 1.2% 0.4% 0.0%
11.9% 12.0% 8.1% 15.2% 12.6% 10.5%
14.4% 14.4% 7.9% 15.8% 10.3% 7.7%
14.6% 14.4% 8.1% 17.3% 11.6% 12.6%
Source: J.P Morgan Estimates, Bloomberg. Priced as of 30 Apr 2014.
2
Dividend yield 14E 15E
13E
ROE 14E
15E
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
1Q14 review Table 2: 1Q14 vs.1Q13 vs. 4Q13 S$ in millions, otherwise specified 1Q14 1,039 (944) 96 9.2% (60) 20 57 5.4% (28) 0 0 29 (6) 23 (10) 13 0 13
Revenue COGS Gross profit G.P. margin (%) SG&A Other operating income/(exp) EBIT EBIT margin (%) Interest expense Share of associates/JV profit Exceptionals Profit before tax Tax Profit after tax Minority interests Net profit Exceptionals Net profit (recurring)
1Q13 733 (654) 79 10.7% (41) 11 48 6.6% (27) 0 0 21 (6) 16 (6) 10 0 10
y/y 42% 44% 22%
4Q13 895 (822) 74 8.2% (91) 43 26 2.9% (27) 0 0 (1) 3 2 3 5 0 5
45% 88% 17% 1% -58% nm 36% 4% 48% 79% 30% nm 30%
q/q 16% 15% 30%
FY14E 3,460 (3,134) 326 9.4% (208) 121 240 6.9% (115) 0 0 124 (27) 97 (39) 58 0 58
-34% -53% 114% 1% 90% nm -3339% -315% 1092% -486% 174% nm 174%
FY13 3,508 (3,187) 321 9.2% (260) 110 171 4.9% (111) 0 0 61 (8) 53 (22) 31 0 31
y/y -1% -2% 2%
1Q14 as a % of FY14E 30% 30% 29%
-20% 10% 40%
29% 17% 24%
4%
24%
nm 104% 235% 84% 75% 90% nm 90%
23% 22% 24% 27% 22% 22%
Source: Company data, J.P. Morgan estimates.
Figure 1: Revenue break-up %. S$ million 979 13
1,000 800
975 14
338
336
890
843 12
296
14
282 600 400
473
200 0
404
453
77
1,039
989
937 14
13
733
13
137
144
55 120
1Q12
2Q12
3Q12
205
122
401
467
40 108
58
4Q12
Ship repair
Conversion
72
15
105
72
1Q13 Offshore/Marine
Shipbuilding
791
673
614
48 106
12
918
545
61 96
68 98
63 90
92 72
2Q13
3Q13
4Q13
1Q14
Drybulk Shipping
Source: Company data, J.P. Morgan estimates.
Figure 2: Cosco Net Orderbook (US$ bn) 7.3 7.0 6.8
7.0
6.3
6.1 6.1 5.9 5.6 5.9 5.5
5.2
6.4 6.1 5.8 5.9 5.7 6.1
6.4 6.7
1Q13
8.1
3Q11
7.4
4Q09
7.0
3Q09
6.6
7.2
7.8 7.6
3.2
1Q14
4Q13
3Q13
2Q13
4Q12
3Q12
2Q12
1Q12
4Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
2Q07
1.3
1Q07
9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
Source: Company data.
3
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Figure 3: Cosco gross margin (%) 40.0%
32.5% 33.5% 32.2% 29.2% 29.7% 30.8% 28.0% 30.0% 26.0% 23.4% 25.0% 21.5% 35.0%
20.0%
20.4%
18.2% 10.8% 12.0% 14.5% 9.2% 12.6% 12.3% 10.7% 8.2% 9.7%10.7% 9.4% 12.1% 11.1% 8.6%9.3%10.1% 7.4% 7.5% 4.3%
16.4%
15.0% 10.0% 5.0%
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
4Q09
3Q09
2Q09
4Q08
3Q08
2Q08
1Q08
4Q07
3Q07
2Q07
1Q07
4Q06
3Q06
2Q06
1Q06
-2.5%
1Q09
0.0% -5.0%
Source: Company data.
Figure 4: Allowance of expected losses on construction contracts (S$mn) 40 16
20 0
(20)
(28)
(40)
18 3.0
0.0 (0.8)
(8)
(15)
(14)
(22) (20)
(33.9) (47)
(60)
(51.0)
Source: Company data.
Figure 5: Net debt to Equity (%) 120%
106%
100%
81%
80%
65%
60% 29%
40% 20%
7%
0% FY10
FY11
FY12 Net Debt/Equit y
Source: Company data.
4
FY13
1Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
(80)
2Q12
(75)
1Q12
0
9
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Table 3: Orders won by Cosco Group in 2013 Date of award
Customer
28-Jan-13
a European ship owner (Name Undisclosed)
21-Feb-13
Energy Drilling Pte Ltd
10-May-13
A Malaysian shipowner
21-May-13
A Chinese ship owner
21-Jun-13
A Singapore entity
9-Jul-13
Asian, European company
Vessel Type
2x PSVx 1+1x Semisub Tender rig 1x floater launch barge 1x LNG Vessel Conversion of hulls to FAUs 1 oil tanker, 1 stinger barge. 1x semisub accommodation vessel
17-Jul-13
Cotemar (a Mexican company)
1-Aug-13
A Chinese company
2x PSVs, 2x AHTS
1-Aug-13
A European company
1x Jack up
12-Sep-13 17-Oct-13 17-Oct-13
Netherlands' Company Asian company --
17-Oct-13 8-Nov-13 14-Nov-13 4-Dec-13
Chinese buyer Prosafe ----Total Value
4PSVs, 4 carriers, 2 salvage lifting vessels, 1 Jack up rig 1 semi sub accom 1 cargo and training ship 2+4 accom semi 2 JUs, 1 carrier 2 bulk carriers
Description Contracts to build 2 x PSVs for a European owner for becomes effective (delivery in 1Q15). Contract with Energy Drilling Pte Ltd to construct 1 unit Semi Submersible Tender Assist Drilling Rig. The turn-key contract includes the supply of the DES (Derrick Equipment Set) and the delivery is set for June 2015. Cosco (Zhoushan) Shipyard wins contracts from a Malaysian shipowner to build a floatover barge with delivery in 4Q13 Cosco (Dalian) Shipyard wins contract for 1 28k CBM LNG vessel with delivery scheduled in 1Q15 Cosco (Nantong) wins contract for conversion of 2x hulls to floating accommodation unit (FAUs). Delivery after 24 months a) Contract from an Asian company to build 22k DWT oil tanker, with delivery in 4Q14. b) Contract from European company to build stinger barge with delivery in 1Q14 Contract to build 1 harsh environment semi-submersible accommodation vessel to operate in Santos Basin, GoM and North Sea. Delivery in 24 months time a) Contract from a Chinese company to build 2 deep water platform supply vessels, with delivery in 2015 b) contract from the same company for 2x AHTS with delivery in 2Q15. Contract value stands at RMB590mn. Contract from a European company for 1 Jackup drilling rig with delivery in 3Q15 Contracts include from a) Netherlands based co. to build 2 PSVs, b) from Singapore company for 2 PSVs, c) China based company for 2 salvage lifting vessels, d) from Europe based company for 2 module carriers, e) Europe based company for 4 dry bulk carriers Contract to build 1 jackup rig Contract for 1 semi sub hull declared effective Contract to build 1 cargo and training ship Contract for 2+4 accommodation semi-sub. Delivery in 2016 Contract for 2 JUs and 1 bulk carrier Secures contract for 2 64000 DWT bulk carriers
Value
Value
US$ mn
S$ mn
54
66
200
244
23
29
82
102
170
213
36
45
200
250
96
120
170
213
366 180 170
458 225 213
54 400 380 54 ~US$2635mn
68 500 475 68 ~S$3286mn
Value
Value
US$ mn
S$ mn
57 60
71 75
100 ~US$217mn
125 ~S$271mn
Source: Company data. J.P. Morgan estimates.
Table 4: Orders won by Cosco Group in 2014 (YTD) Date of award
Customer
14-Feb-14 17-Feb-14
European buyer Singapore buyer
21-Apr-14
a) Asian buyer b) European buyer Total Value
Vessel Type 2 Livestock carriers 2 PSVs 4 ERRV, 2 PSVs
Description
Contract from European buyer to build 2 livestock carriers Contract from a Singapore company for 2 PSVs a) Contract from Asian company to build 4 ERRVs b) Contract from European ship-owner to build 2 PSVs
Source: Company data, J.P. Morgan estimates.
5
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Figure 6: Cosco: P/E multiple 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0
28.4 23.4 18.4 13.4
P/E
-2 s.d.
-1 s.d
Average
Mar-14
Sep-13
Apr-13
Oct-12
Apr-12
Nov-11
May-11
Nov-10
Jun-10
Dec-09
Jun-09
Jan-09
8.4
+1 s.d.
+2 s.d.
Source: Bloomberg.
Figure 7: Cosco: P/BV multiple 4.00
3.4
3.00
2.6 1.9
2.00
1.2
1.00
P/BV Source: Bloomberg.
6
-2 s.d.
-1 s.d
Average
+1 s.d.
Mar-14
Sep-13
Apr-13
Oct-12
Apr-12
Nov-11
May-11
Nov-10
Jun-10
Dec-09
Jun-09
Jan-09
0.00
0.5
+2 s.d.
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Global Shipbuilding Industry Newbuild outlook remains depressed Figure 8: Dry Bulk: Order-book as % of fleet
Figure 9: Container: Order-book as % of fleet
Figure 10: Tanker: Order-book as % of fleet
% (As of 10 Apr 2014)
% (As of 10 Apr 2014)
% (As of 10 Apr 2014)
90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%
As a % of total TEU As a % of total fleet (no.)
70.0%
As a % of total fleet (no.)
60.0% 50.0%
As a % of total DWT As a % of total fleet (no.)
30.0%
30.0% 20.0%
20.0%
10.0%
10.0%
0.0% Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
50.0% 40.0%
40.0%
Source: Clarksons, J.P. Morgan.
60.0%
0.0%
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
As a % of total DWT
Source: Clarksons, J.P. Morgan.
Source: Clarksons, J.P. Morgan.
Table 5: Tankers: Orderbook-to-fleet ratio Specified (As of 10 Apr 2014)
VLCC Suezmax Aframax Panamax Small Specialized Specialized Total tankers
Size DWT 200,000 + 120-200,000 80-120,000 60-80,000 10-60,000 >10,000 <10,000 >10,000
Fleet No. 624 495 894 416 3,401 1,513 7,457 5,830
Million DWT 191.6 76.6 95.9 30.1 109.1 32.7 22.2 503
No. 89 36 111 34 449 131 173 719
Order book Million DWT 27.8 5.6 12.5 2.5 18.7 3.5 0.7 67
Orderbook as % of fleet By no. of vessels (%) By million DWT (%) 14.3% 14.5% 7.3% 7.3% 12.4% 13.0% 8.2% 8.3% 13.2% 17.1% 8.7% 10.7% 2.3% 3.2% 12.3% 13.3%
Million DWT 298.1 189.7 159.1 86.7 734
No. 332 427 717 448 1,924
Order book Million DWT 65.4 34.5 42.4 15.6 158
Orderbook as % of fleet By no. of vessels (%) By million DWT (%) 20.9% 21.9% 17.8% 18.2% 23.8% 26.6% 14.7% 18.0% 19.1% 21.5%
000 TEU 695.7 3387.6 3662.3 3664.4 3705.6 2200.2 17,316
No. 6 118 8 84 146 106 468
Order book 000 TEU 4.5 212.0 27.1 417.1 1360.8 1632.2 3,654
Orderbook as % of fleet By no. of vessels (%) By 000 TEU (%) 0.5% 0.6% 6.3% 6.3% 0.9% 0.7% 13.4% 11.4% 34.9% 36.7% 65.8% 74.2% 9.2% 21.1%
Source: Shipping Intelligence Weekly, Clarksons.
Table 6: Bulkers: Orderbook-to-fleet ratio Specified (As of 10 Apr 2014)
Capesize Panamax Handymax Handysize Total bulkers
Size DWT 100000 + 60-100,000 40-60,000 10-40,000
Fleet No. 1,590 2,405 3,008 3,050 10,053
Source: Shipping Intelligence Weekly, Clarksons.
Table 7: Containers: Orderbook-to-fleet ratio Specified (As of 10 Apr 2014)
100-999 1,000-1,999 2,000-2,999 Panamax Post-Panamax Post-Panamax Total containers
Size TEU 100-999 1,000-1,999 2,000-2,999 3,000 + 3,000-7,999 8,000+
Fleet No. 1,140 1,879 875 629 418 161 5,102
Source: Shipping Intelligence Weekly, Clarksons.
7
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Figure 11: Tanker contracts by countries
Figure 12: Bulker contracts by countries
Figure 13: Container contracts by countries
% in terms of DWT (As of 10 Apr 2014)
% in terms of DWT (As of 10 Apr 2014)
% in terms of TEU (As of 10 Apr 2014)
13,747 120.0% 44,530 36,012 37,388 15,188 9,872 2.8% 5,4182.7% 100.0% 9.5%10.1% 8.9% 6.7% 2.4% 2.1% 3.0%13.9%7.1%20.6% 80.0% 12.4% 6.9% 44.3% 56.3% 60.0% 56.6% 53.8% 73.4% 59.6% 60.3% 40.0% 36.7% 20.0% 44.9% 29.6% 29.7% 18.5% 14.8% 12.2% 0.0% 2008 2009 2010 2011 2012 2013 2014 China
South Korea
Japan
120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0%
2008 2009 2010 2011 2012 2013 2014
Others
Source: Clarksons, J.P. Morgan. Note: 2012 is YTD figure
96,208 24,122 23,802 34,941 94,140 87,350 22,617 5.2% 15.0%25.0% 11.3% 31.1% 24.3%2.9% 1.0% 46.2% 28.0% 1.6% 2.9%16.3% 30.3%21.2%0.7% 12.2% 6.4% 16.9% 7.9% 61.8% 1.0% 60.6%69.5% 49.9%53.6%52.2% 44.9%
China
South Korea
Japan
Others
Source: Clarksons, J.P. Morgan. Note: 2012 is YTD figure
1,895 120.0% 1,023 88 585 359 415 100.0% 6.3% 1.9% 3.5% 0.2% 3.3% 12.5%14.0%16.4% 0.4% 7.9% 80.0% 1,166 64.0% 60.0% 65.8%96.6%66.0% 42.1% 47.8% 64.7% 40.0% 20.0% 0.0%
43.6% 28.0%32.3% 26.0%2.2% 30.5%19.7% 2008 2009 2010 2011 2012 2013 China
South Korea
Japan
Others
Source: Clarksons, J.P. Morgan. Note: 2012 is YTD figure
Figure 14: Bulkers: monthly contracts by countries Million DWT (As of 10 Apr 2014) 25.0 20.0 12.4 12.3 15.0
10.7 8.9
10.0
0.0
12.4
9.1 7.6 7.0 6.2 5.0 6.0 5.76.6 5.3 4 .8 3.2 3.62.0 3.02.5 2.6 3.5 1.3 0.30.5 0.70.30.2
China
South Korea
Others
9.3
12.0
11.9 11.9 11.2 11.0 6.0 9.6 5.5 6.4 6.5 7.7 7.7 6.3 5.54.6 5.3 5.8 3.0 4.3 4.93.3 2.8 3.5 3.33.45.22.2 2.5 2.3 2.6 1.0 1.43.0 2.1 1.31.8 1.3 3.2 1.1 0.9 0.8 0.00.0 1.3 1.0 0.0
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
5.0
19.8
Source: Clarksons.
Figure 15: Tankers: monthly contracts by countries Million DWT (As of 10 Apr 2014)
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
11.5 13.0 China South Korea Others 11.0 8.1 7.8 9.0 5.9 7.0 5.1 5.9 3.1 4.84.7 4.2 4.04.2 3.9 3.8 3.4 3.1 3.62.8 3.4 2.7 3.8 5.0 3.0 2.8 2.9 2 .8 2 .8 3 .7 2.5 2.2 2.2 2.0 1.4 2.0 1.72.3 1.8 1.6 0.5 1.3 3.0 1.6 1.3 1.2 1.2 1.2 1.1 0.9 1.4 0.4 0 .6 0.6 0.50.60.6 0.20.20.00.00.4 0.9 0.8 0.1 0.5 0.5 0 .5 0 .7 0.4 0.4 0.4 0 .3 0.7 0.00.00.0 0.5 1.0 0.8 0.4 -1.0
Source: Clarksons.
Figure 16: Containers: monthly contracts by countries (’000 TEU) Million DWT (As 10 Apr 2014) 526
550.0 410
450.0
China
South Korea
Others
Others
338 289 245146
350.0
-50.0
Source: Clarksons.
8
135 150 9983 77 113 91 5
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
201 250.0 175 189 184 184 148 143 129 140 118 107 102 8995 150.0 75101 65 56 56 26 7 24 9 5 4 729 20 164623 16 22 18 24 1721 0 0 043 1 0 0 0 140 0 2 0 1 0 0 1 0 2 7 21 3 000 50.0
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
New build ship prices – flattish to weak across Bulkers – NB vs. 2nd hand prices
Tankers – NB vs. 2nd hand prices
Handymax (bulk) – NB prices vs. 2nd hand prices Figure 17: Handymax bulkers – New build vs. 2nd hand prices
Aframax tankers – NB prices vs. 2nd hand prices Figure 18: Aframax tankers – New build vs. 2nd hand prices
LHS: $ million, RHS: % (As of 10 Apr 2014
LHS: $ million, RHS: % (As of 10 Apr 2014)
200 150
27
50 -
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
24
100
-
Handymax Secondhand (lhs)
Secondhand/Newbuild (rhs)
Panamax (bulk) – NB prices vs. 2nd hand prices Figure 19: Panamax bulkers – New build vs. 2nd hand prices
LHS: $ million, RHS: % (As of 10 Apr 2014)
Suezmax tankers – NB prices vs. 2nd hand prices Figure 20: Suezmax tankers – New build vs. 2nd hand prices
200 160 120
29 27
80
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
95
40 -
71 64 50
Secondhand/Newbuild (rhs)
120 100 80 60 40 20 -
Suezmax Secondhand (lhs)
Suezmax Newbuild (lh s)
Panamax Secondhand (lhs)
Panamax Newbuild (lhs)
Source: Clarksons, J.P. Morgan.
Source: Clarksons, J.P. Morgan.
VLCC tankers – NB prices vs. 2nd hand prices Figure 22: UL/VLCC tankers – New build vs. 2nd hand prices
Capsesize (bulk) – NB prices vs. 2nd hand prices Figure 21: Capesize bulkers – New build vs. 2nd hand prices
LHS: $ million, RHS: % (As of 10 Apr 2014)
Capesize Secondhand (lhs)
Secondhand/Newbuild (rhs)
Mar-14
Mar-13
Mar-12
Mar-11
-
30 -
Mar-08
50
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
40
60
57 63 Mar-07
56
100
Mar-06
71
90 91
Mar-05
150
120
Mar-04
200
180 160 140 120 100 80 60 40 20 Mar-03
LHS: $ million, RHS: % (As of 10 Apr 2014)
Capesize Newbuild (lhs)
120 100 80 60 40 20 -
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
LHS: $ million, RHS: % (As of 10 Apr 2014)
Secondhand/Newbuild (rhs)
Aframax Secondhand (lhs)
Aframax Newbuild (lhs) Source: Clarksons, J.P. Morgan
200 180 160 140 120 100 80 60 40 20 -
25
37
Source: Clarksons, J.P. Morgan
Secondhand/Newbuild (rhs)
75 50
Handymax Newbuil d (lh s)
100 90 80 70 60 50 40 30 20 10 -
100
55
Mar-10
Secondhand/Newbuild (rhs)
125
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
90
90 80 70 60 50 40 30 20 10 -
Mar-09
120 100 80 60 40 20 0
VLCC Secondhand (lhs)
VLCC Newbuil d (lh s) Source: Clarksons, J.P. Morgan.
Source: Clarksons, J.P. Morgan.
9
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Panamax/Sub-Panamax FCC– NB vs. 2nd hand prices
Post-Panamax FCC – NB vs. 2nd hand prices
Panamax FCC (5100 TEU) – NB vs. 2nd hand prices
Post-Panamax FCC (8000-8500 TEU) – NB vs. 2nd hand prices
Figure 23: Panamax FCC (5100 TEU) new build prices
Figure 24: Post-Panamax FCC (8000-8500 TEU) new build prices
$ million (As of 10 Apr 2014)
$ million (As of 10 Apr 2014)
Source: Clarksons, J.P. Morgan.
Panamax FCC (3400-3600 TEU) – NB vs. 2nd hand prices
Figure 25: Panamax FCC (3400-3600 TEU) – NB vs. 2nd hand prices LHS: $ million, RHS: % (As of 10 Apr 2014)
100
60
80
Source: Clarksons, J.P. Morgan.
Sub-Panamax FCC (2300-2900 TEU) – NB vs. 2nd hand prices
Figure 27: Sub-Panamax (2300-2900 TEU) – NB vs. 2nd hand prices LHS: $ million, RHS: % (As of 10 Apr 2014)
120 100 32
Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
16
2nd hand/Newbuild (rhs) Sub Panamax Newbuil d (lh s) Source: Clarksons, J.P. Morgan.
10
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
80 60 40 20 -
Sub Panamax 2nd hand (lhs)
Source: Clarksons, J.P. Morgan.
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
20 -
Panamax FCC 2nd hand (lhs)
60 50
40
Mar-06
-
68
60
Mar-05
30
Panamax FCC Newbuild (lhs)
-
Mar-08
90
Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
17
120
Mar-04
46
20 10
Post-Panamax FCC (6600-6800 TEU) – NB vs. 2nd hand prices
Figure 26: Post-Panamax FCC (6200-6500 TEU) new build prices
Mar-03
39
40 30
Source: Clarksons, J.P. Morgan.
$ million (As of 10 Apr 2014)
120
2nd hand/Newbuild (rhs)
88
Mar-02
80 70 60 50 40 30 20 10 -
160 140 120 100 80 60 40 20 -
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
Mar-03
56
Mar-02
90 80 70 60 50 40 30 20 10 -
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
New build and 2nd hand prices Table 8: New build prices by vessel type In $ million in $ mn Tanker (VLCC) Tanker (Panamax) Bulker (Capesize) Bulker (Panamax) Container (8500 TEU) Container (6500 TEU)
2014 Apr 100.0 45.5 57.0 29.5 88.0 68.0
2014 Mar 99.5 45.5 56.5 29.5 88.0 68.0
mom % 0.5% 0.0% 0.9% 0.0% 0.0% 0.0%
2013 Apr 90.0 40.5 47.0 25.8 77.5 58.0
yoy % 11.1% 12.3% 21.3% 14.6% 13.5% 17.2%
2014 ytd Avg. 98.5 45.4 56.3 29.3 87.9 67.5
2013 ytd Avg. 91.0 40.5 46.4 25.8 76.8 57.6
yoy % 8.2% 12.0% 21.3% 13.8% 14.5% 17.2%
2012 Avg. 95.7 42.3 46.5 26.9 82.5 61.9
2011 Avg. 101.5 44.2 52.3 31.9 93.4 71.5
2010 Avg 102.9 45.5 57.6 34.3 90.8 71.5
2009 Avg 119.8 51.7 66.1 35.3 99.0 77.7
2008 Avg. 154.5 65.2 94.5 53.1 134.9 106.1
2007 Avg. 137.6 60.3 86.9 47.0 128.3 104.4
Source: Clarksons.
Table 9: Secondhand prices by vessel types In $ million in $ mn
2014 Apr
2014 Mar
mom %
2013 Apr
yoy %
2014 ytd Avg.
2013 ytd Avg.
yoy %
2012 Avg.
2011 Avg.
2010 Avg
2009 Avg
Tanker (VLCC) * Tanker (Panamax) **
74.0 36.0
73.0 35.0
1.4% 2.9%
55.0 27.0
34.5% 33.3%
71.8 33.8
56.0 25.5
28.1% 32.4%
62.4 26.1
76.6 34.8
87.3 38.7
84.6 37.1
Bulker (Capesize) *** Bulker (Panamax) ****
53.0 28.0
52.0 28.0
1.9% 0.0%
33.0 19.0
60.6% 47.4%
49.8 27.5
33.5 18.5
48.5% 48.6%
34.2 22.1
43.1 31.0
57.0 38.6
52.8 32.5
2008 Avg. 141. 7 57.8 124. 1 70.9
Source: Clarksons. Note: * 310K 5 years old; ** D/H 73K DWT 'Coated' 5 years old; *** 170K 5 years old; **** 76K 5 year old.
Figure 28: Second hand to new build prices – VLCC tankers (%)
Figure 29: Second hand to new build prices – Panamax tankers (%)
100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
50%
50%
Source: Clarksons.
Figure 30: Second hand to new build prices – Capesize bulkers (%)
Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14
110%
Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14
110%
Source: Clarksons.
Figure 31: Second hand to new build prices – Panamax bulkers (%)
150%
160%
130%
140%
110%
120%
90%
100%
70%
80%
50%
60%
30%
40%
Source: Clarksons.
Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14
180%
Apr-96 Apr-97 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14
170%
Source: Clarksons.
11
2007 Avg. 125.8 58.6 112.5 66.8
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Global ship fleet overview Table 10: Global Tanker fleet overview Tankers (mn DWT) Fleet Deliveries Demolition New Orders Orderbook Newbuild Prices (VLCC, $ mn) Newbuild Price Index Secondhand Prices (VLCC, $ mn) Secondhand Price Index Timecharter rates ($/day)
2002 292.78 23.37 17.17 20.29 57.57 63.5 116
2003 301.47 30.31 19.3 48.83 76.08 77 138
2004 317.81 28.1 8.03 37.81 85.79 110 184
2005 341.18 30.25 4.04 29.84 85.38 120 191
2006 360.63 25.54 2.93 90.97 148.97 129 214
2007 382.2 30.9 3.36 46.79 163.46 146 238
2008 402.85 36.67 4.07 54.96 177.36 150 232
2009 431.73 47.89 8.43 14.20 138.03 101 156
2010 448.66 41.14 12.84 38.31 126.40 105 165
2011 474.44 39.85 9.72 9.97 84.84 99 156
2012 492.69 32.36 11.63 13.93 58.29 93 147
2013 501.57 21.4 11.02 37.16 65.47 94 153
54 100
70 131
108 193
117 225
118 239
135 257
104 186 53,327
79 126 34,442
85 136 30,349
58 122 25,375
57 112 20,400
60 129 n/a
Source: Clarksons
Table 11: Global Bulker fleet overview Bulkers (mn DWT) Fleet Deliveries Demolition New Orders Orderbook Newbuild Prices ( $ mn) Newbuild Price Index Secondhand Prices ( $ mn) Secondhand Price Index Dayrates ($/day) Dayrates Index
2002 294 14 6 22 32 36 94
2003 302 12 4 36 56 48 116
2004 322 20 0 33 69 64 152
2005 344 23 1 30 76 59 157
2006 368 26 2 57 106 68 177
2007 392 25 1 169 246 97 232
2008 418 25 6 104 320 88 204
2009 460 44 11 38 299 56 145
2010 538 81 7 104 304 57 150
2011 618 99 23 43 233 49 130
2012 682 100 34 25 142 46 119
2013 721 63 23 87 158 54 128
29 92 11,380 65
44 133 34,410 195
65 197 58,727 333
57 187 43,338 246
81 258 38,575 219
150 462 94,884 539
45 158 83,264 473
55 187 30,607 174
50 202 24,202 137
36 155 13,645 77
33 118 7,416 42
44 150 15,195 86
Source: Clarksons
Table 12: Global Container fleet overview Containers ('000 TEU) Fleet Deliveries Demolition New Orders Orderbook Newbuild Prices ( $ mn) Newbuild Price Index Secondhand Prices ( $ mn) Secondhand Price Index Dayrates ($/day) SCFI Index Source: Clarksons
12
2002 6,070 645 68 418 1,115 33 71
2003 6,611 567 26 2,074 2,622 43 86
2004 7,258 653 8 1,656 3,625 53 106
2005 8,198 944 2 1,666 4,341 53 114
2006 9,550 1,378 24 1,744 4,665 57 116
2007 10,839 1,315 21 3,247 6,575 63 124
2008 12,234 1,503 101 1,165 6,189 60 113
2009 12,958 1,105 378 88 4,941 36 78
2010 14,202 1,389 130 585 3,850 50 95
2011 15,323 1,211 78 1,831 4,353 50 91
2012 16,235 1,255 333 427 3,426 37 73
2013 17,119 1,336 441 1,952 3,820 39 79
28 61
36 73
48 125
49 116
53 121
64 137
38 81
22 49 1,395 1,040
44 86 1,772 1,367
32 66 869 1,007
22 37 1,448 1,254
17 37 1,448 1,078
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Quick overview of key yards in China Table 13: Top 20 Chinese yards –order book by vessel types '000 DWT (As of 11 April 2014) Yard
Tankers
Bulkers
Containerships
Jiangsu Rongsheng Shanghai Waigaoqiao STX Dalian Dalian Shipbuilding Jinhai Heavy Ind. Jiangsu New YZJ Bohai Shipbld. Hudong Zhonghua Guangzhou Longxue Jiangnan Changxing Beihai Shipyard Tsuneishi Zhoushan Zhejiang Yangfan Jiangsu Eastern Shanghai Jiangnan CIC (Jiangsu) New Times S.B. Shanghai S.Y. Chengxi Shipyd. Jinling Shipyard Others Total
2442.0 4152.6 499.4 4603.0 320.0 0.0 956.8 228.0 2423.2 0.0 0.0 0.0 0.0 0.0 319.0 110.0 280.0 0.0 0.0 0.0 5293.1 21627.1
3422.9 11040.5 1475.5 1080.0 1480.1 7227.4 2117.1 1300.1 3528.0 770.4 4784.0 2485.1 3830.7 2170.9 369.2 2838.8 978.0 114.1 5554.6 3519.1 36637.1 96723.3
424.0 0.0 926.0 1975.5 950.0 2319.2 0.0 1363.2 0.0 792.4 0.0 0.0 375.4 0.0 585.0 351.0 940.2 424.7 0.0 116.0 3062.8 14605.4
Gas Carriers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 880.0 0.0 616.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 637.9 2134.7
Others
Total
%of total
0.0 16.8 169.4 150.0 0.0 72.0 2.4 265.0 0.0 0.0 0.0 0.0 0.0 13.2 0.0 0.0 0.0 246.8 0.0 85.0 4105.0 5125.6
6288.9 15209.9 3070.3 7808.5 2750.1 9618.6 3076.3 4036.3 5951.2 2179.6 4784.0 2485.1 4206.1 2184.1 1273.2 3299.8 2198.2 785.5 5554.6 3720.1 49735.9 140216.0
4.5% 10.8% 2.2% 5.6% 2.0% 6.9% 2.2% 2.9% 4.2% 1.6% 3.4% 1.8% 3.0% 1.6% 0.9% 2.4% 1.6% 0.6% 4.0% 2.7% 35.5%
Source: Clarksons, J.P. Morgan.
13
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Table 14: China orderbook by yards and vessel types '000 DWT (As of 11 April 2014) CSSC Owned Shanghai Waigaoqiao Hudong Zhonghua Jiangnan Changxing Guangzhou S.Y. Int. Shanghai S.Y. Chengxi Shipyd. Wuhu Shipyard Guangzhou Huangpu Jiangzhou S/Y Jiangnan SY Group Weihai Donghai Guangzhou Wenchong Jiangxi Huadong Guangzhou Longxue
Tanker 9,246 4,153 228 0 2,442 0 0 0 0 0 0 0 0 0 2,423
Bulkers 23,183 11,041 1,300 770 0 114 5,555 0 0 0 875 0 0 0 3,528
Container 2,814 0 1,363 792 0 425 0 0 0 0 234 0 0 0 0
Gas Carriers 1,736 0 880 617 0 0 0 0 0 0 239 0 0 0 0
Others 820 17 265 0 75 247 0 6 0 210 0 0 0 0 0
Total 37,799 15,210 4,036 2,180 2,517 786 5,555 6 0 210 1,348 0 0 0 5,951
CSIC Owned Bohai Shipbld. Chongqing Chuandong Dalian Shipbuilding Shanhaiguan S/Y Xinhe Shipyard Wuchang S.Y. Beihai Shipyard
5,592 957 32 4,603 0 0 0 0
7,981 2,117 0 1,080 0 0 0 4,784
1,975 0 0 1,975 0 0 0 0
0 0 0 0 0 0 0 0
152 2 0 150 0 0 0 0
15,701 3,076 32 7,808 0 0 0 4,784
Yangzijiang Jiangsu Yangzijiang Jiangsu New YZJ
0 0 0
7,227 0 7,227
2,319 0 2,319
0 0 0
72 0 72
9,619 0 9,619
Cosco COSCO Dalian COSCO Guangdong COSCO Zhoushan COSCO (Nantong)
775 22 0 753 0
1,105 397 70 638 0
0 0 0 0 0
23 23 0 0 0
186 81 89 16 0
2,089 523 159 1,407 0
COSCO Kawasaki Nantong Cosco KHI
0 0
3,415 3,415
470 470
0 0
164 164
4,049 4,049
Sinopacific Dayang S.B. Zhejiang S.B. Qidong Dajiang
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
2,442
3,423
424
0
0
6,289
New Century New Century S/Y New Times S.B.
280 0 280
978 0 978
940 0 940
0 0 0
0 0 0
2,198 0 2,198
STX Dalian Jinhai Heavy Ind. TOTAL CHINA
499 320 21,627
1,476 1,480 96,723
926 950 14,605
0 0 2,135
169 0 5,126
3,070 2,750 140,216
Jiangsu Rongsheng
Source: Clarksons, J.P. Morgan.
14
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Ageing Analysis Ageing Analysis-Tankers Figure 32: Ageing analysis of UL/VLCC tankers 20+ 2%
15-19 9%
0-4 38% 10-14 26%
5-9 25% Source: Clarksons.
Figure 33: Ageing analysis of Suezmax tankers 20+ 4%
15-19 11%
0-4 41% 10-14 21%
5-9 23% Source: Clarksons.
Figure 34: Ageing analysis of Aframax tankers 20+ 5%
0-4 29%
15-19 10%
10-14 22%
5-9 34% Source: Clarksons.
15
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Ageing Analysis-Bulkers Figure 35: Ageing analysis of Capesize Bulkers 20+ 8%
Figure 36: Ageing analysis of Panamax Bulkers 20+ 8%
15-19 10% 10-14 8%
15-19 12%
0-4 49%
0-4 58%
10-14 13%
5-9 16% 5-9 18% Source: Clarksons.
Source: Clarksons.
Figure 37: Ageing analysis of Handysize Bulkers
Figure 38: Ageing analysis of Handymax Bulkers
20+ 11%
20+ 7% 15-19 12%
0-4 53%
16
10-14 11%
0-4 54%
10-14 9%
5-9 17%
5-9 15% Source: Clarksons.
15-19 11%
Source: Clarksons.
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Ageing Analysis-Containers Figure 39: Ageing analysis of Feeder/Feedermax Containers 0-4 8%
25+ 11%
Figure 40: Ageing analysis of Handy Containers 0-4 17%
20-24 7%
25+ 4%
20-24 8%
15-19 23%
5-9 33% 15-19 26%
5-9 32% 10-14 16%
10-14 15% Source: Clarksons.
Source: Clarksons.
Figure 41: Ageing analysis of Sub-Panamax Containers 0-4 11%
Figure 42: Ageing analysis of Panamax Containers
25+ 20-24 2% 5%
25+ 20-24 1% 4%
0-4 24%
15-19 19%
15-19 11%
10-14 16% 5-9 38% 10-14 25% Source: Clarksons.
5-9 44% Source: Clarksons.
17
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Dayrates/Earnings by vessel type Dayrates/Earnings-Bulkers Figure 43: Capesize, 1990/91-built-Average Spot Earnings
Figure 44: Capesize, 1999/00-built-Average Spot Earnings
US$/day
US$/day
160000 140000 120000 100000 80000 60000 40000 20000 0
40000 35000 30000 25000 20000 15000 10000 5000 0
90000 80000 70000 60000 50000 40000 30000 20000 10000 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 (RHS) 2009 2010 2011 2012 2013(RHS)
45000 40000 35000 30000 25000 20000 15000 10000 5000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 (RHS) 2009 2010 2011 2012 2013(RHS)
Source: Clarksons.
Source: Clarksons.
Figure 45: Panamax, 1997/98-built-Average Spot Earnings
Figure 46: Handymax, 45,000 dwt, Average Trip Earnings
US$/day
US$/day
35000
14000
30000
14000
30000
12000
25000
12000
25000
10000
20000
8000
15000
6000
10000
4000
5000
2000
0
0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 (RHS) 2009 2010 2011 2012 2013(RHS)
Source: Clarksons.
18
10000
20000
8000
15000
6000
10000
4000
5000 0
2000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 (RHS) 2009 2010 2011 2012 2013(RHS)
Source: Clarksons.
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Dayrates/Earnings-Container Figure 47: SCFI Comprehensive Index
Figure 48: SCFI Shanghai-Europe (base port) Freight Rate
Index
US$/TEU
1600 1400 1200 1000 800 600 400 200 0
2000 1800 1600 1400 1200 1000 800 600 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014
2011
2012
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013
2014
2011
2012
2013
Source: Clarksons.
Source: Clarksons.
Figure 49: SCFI Shanghai-WC America (base port) Freight Rate
Figure 50: SCFI Shanghai-SE Asia (Singapore) Freight Rate
US$/TEU
US$/TEU
3000
300
2500
250
2000
200
1500
150
1000
100
500
50
0
0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014
Source: Clarksons.
2011
2012
Jan Feb Mar Apr May Jun
2013
2014
2011
Jul Aug Sep Oct Nov Dec 2012
2013
Source: Clarksons.
19
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Demand-Supply dynamics by vessel type Demand-Supply dynamics-Tankers Figure 51: Demand-supply growth-UL/VLCC
Figure 52: Demand-supply growth-Suezmax
%
%
14% 12% 12% 10% 8% 6% 4% 2% 2% 0% -2% 2010
12% 10% 8% 10% 6% 7% 4% 2% 0% -2% -4% 2010
10% 6%
7% 5%
2% 0% 1%
2011
2012 Demand
2013
0%
2014E
8%
8% 8% 5% 1%
-2% 2011
Supply
2012 Demand
Source: Clarksons.
2013
Source: Clarksons.
Figure 54: Demand-supply growth-Panamax
%
%
20% 10%
1% -4%
-4%
20
-3%
-1%
-10% -16%
1%
-20%
2012
2013
3% -3% -10%
2014E
-40% 2010
Supply Source: Clarksons.
-6% -34%
-30%
-8% 2011
-2%
14%
0% 1%
Demand Source: Clarksons.
2014E
Supply
Figure 53: Demand-supply growth-Aframax 25% 23% 20% 15% 10% 5% 4% 0% -5% -10% -15% 2010
3% 5%
2011
2012 Demand
2013 Supply
-2%
-29% 2014E
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Demand-Supply dynamics-Containers Figure 55: Demand-Supply growth- Containers %
14.0%
12.8%
12.0% 10.0% 8.0%
8.2%
7.4% 5.3%
6.0%
4.8%
4.0%
3.2% 4.9%
4.8%
2.0% 0.0% 2010
2011
2012
5.1%
3.9%
2013
Demand
6.8%
6.1%
2014
2015E
Supply
Source: Clarksons.
Demand-Supply dynamics-Bulkers Figure 56:Demand-Supply growth- Bulkers %
20.0%
17.2% 14.5%
15.0% 10.0% 5.0%
6.8%
9.0% 6.1%
10.0%
12.6%
6.4%
8.7%
7.0%
0.0%
3.3%
-5.0% 2007
2008
5.9%
4.5% 6.5% 4.4%
-2.7% 2009
2010 Demand
2011
2012
2013
2014E
Supply Source: Clarksons.
21
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
Investment Thesis, Valuation and Risks COSCO Corporation (Underweight; Price Target: S$0.65) Investment Thesis We continue to avoid Cosco given: (1) the poor margin profile on business; and (2) continued cost overruns dragging earnings, although we do see Cosco (in the longer term) being one of the more accomplished offshore yards in China as it builds expertise building rigs and undertaking FPSO conversion. Valuation Our Dec-14 price target of S$0.65 is based on a sum of the parts of the individual business segments, namely ship repair, shipbuilding, offshore, conversion and shipping. We value ship repair and conversion based on the 7x average P/E for ship repair yards. We value shipbuilding and offshore based on the existing value of the order book and an implied value of S$1.5bn annually. The shipping segment is valued based on a 5x P/E of Cosco’s fleet of 10 dry bulk carriers. Valuation (S$ mn) 568 7.0x 211 630
Per share 0.25
Shipping valuation - Applied P/E
47 5.0x
0.02
Fair value of Cosco Corp
1,456
0.65
Ship repair and conversion valuation - Applied P/E (to implied earnings) Existing orderbook valuation Potential new orders valuation @S$1.5bn annually
0.09 0.28
Risks to Rating and Price Target Key upside risks to our price target include: (1) a sharp surge in the BDI; and a (2) rebound in orderbook momentum.
22
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
COSCO Corporation: Summary of Financials Income Statement S$ in millions, year end Dec Revenues % change Y/Y Gross Margin EBITDA % change Y/Y EBITDA Margin EBIT % change Y/Y EBIT Margin Net Interest Earnings before tax % change Y/Y Tax as % of EBT Minority Interests Net income (reported) % change Y/Y Shares outstanding EPS (reported) Balance sheet S$ in millions, year end Dec Cash and cash equivalents Accounts receivable Inventories Others Current assets
Cash flow statement FY11 FY12 FY13 FY14E FY15E S$ in millions, year end Dec 4,163 3,734 3,508 3,460 3,816 Profit before tax 7.8% (10.3%) (6.1%) (1.4%) 10.3% Depreciation & amortization 9.1% 13.0% 9.2% 9.4% 8.7% Change in working capital 498 508 355 455 457 Other non-cash items (18.7%) 2.1% (30.1%) 28.1% 0.5% Cash flow from operations 12.0% 13.6% 10.1% 13.1% 12.0% Capex 334 329 171 240 237 Disposal/(purchase) (24.9%) (1.4%) (47.9%) 39.8% (1.1%) Cash flow from investments 8.0% 8.8% 4.9% 6.9% 6.2% Free cash flow (47) (100) (111) (115) (115) 288 230 61 124 121 Equity raised/(repaid) (28.4%) (20.1%) (73.5%) 103.8% (2.2%) Debt raised/(repaid) (74) (60) (8) (27) (27) Other 25.8% 26.1% 13.4% 22.0% 22.0% Dividends paid (74) (64) (22) (39) (38) Cash flow from financing 140 106 31 58 57 Net change in cash (43.9%) (24.3%) (71.1%) 90.0% (2.2%) Beginning cash 2,239 2,239 2,239 2,239 2,239 Ending cash 0.06 0.05 0.01 0.03 0.03 DPS Ratio Analysis FY11 FY12 FY13 FY14E FY15E S$ in millions, year end Dec 1,585 1,693 2,028 2,666 2,741 EBITDA margin 2,010 2,739 2,912 2,538 2,799 EBIT margin 491 352 1,047 326 360 Net margin 160 105 224 224 224 SG&A/Sales 4,247 4,889 6,211 5,755 6,125 a Sales growth LT investments 4 4 4 4 4 EBIT growth Net fixed assets 2,412 2,226 2,228 1,921 1,777 Net profit growth Total Assets 7,001 7,394 8,735 7,971 8,197 EPS growth Short-term loans 1,668 1,468 1,926 1,926 1,926 Interest coverage (x) Payables 2,697 2,244 2,696 2,080 2,294 Net debt to equity Total current liabilities 4,496 3,778 4,703 4,086 4,300 a Long-term debt 498 1,559 1,856 1,856 1,856 Sales/assets Other liabilities 6 7 1 1 1 Assets/equity Total Liabilities 5,000 5,344 6,560 5,943 6,157 ROE Shareholders' equity 1,301 1,282 1,336 1,349 1,361 ROCE Total Liabilities and equity 7,001 7,394 8,735 8,132 8,358 BVPS 0.58 0.57 0.60 0.60 0.61 a Source: Company reports and J.P. Morgan estimates.
FY11 288 164 (575) 232 (52) (256) (235) (273)
FY12 230 179 (957) 49 (580) (123) (79) (629)
FY13 FY14E FY15E 61 124 121 184 215 220 (543) 478 (81) 121 (39) (38) (130) 752 196 (51) (69) (76) (16) (69) (76) (86) 773 210
0 1,115 (49) (90) 977 690 864 1,584 0.03
0 965 (72) (67) 826 166 1,584 1,675 0.02
0 562 (97) (45) 420 273 1,675 2,025 0.01
FY11 12.0% 8.0% 3.4% 6.4%
FY12 13.6% 8.8% 2.8% 7.5%
FY13 FY14E FY15E 10.1% 13.1% 12.0% 4.9% 6.9% 6.2% 0.9% 1.7% 1.5% 7.4% 6.0% 6.0%
7.8% (10.3%) (6.1%) (24.9%) (1.4%) (47.9%) (43.9%) (24.3%) (71.1%) (43.9%) (24.3%) (71.1%) 10.7 5.1 3.2 29.1% 65.1% 80.6%
0 0 0 (45) (45) 638 2,028 2,666 0.02
(1.4%) 39.8% 90.0% 90.0% 3.9 51.0%
0 0 0 (45) (45) 75 2,666 2,741 0.02
10.3% (1.1%) (2.2%) (2.2%) 4.0 47.3%
63.8% 51.9% 43.5% 41.4% 47.2% 522.2% 557.3% 616.2% 622.2% 596.5% 11.2% 8.2% 2.3% 4.3% 4.2% 8.7% 6.3% 3.1% 3.6% 3.6%
23
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
JPM Q-Profile Cosco Corporation (Singapore) Limited (SINGAPORE / Industrials) As Of: 25-Apr-2014
[email protected]
Local Share Price
Current:
0.73
12 Mth Forward EPS
9.00
0.30
8.00
0.25
7.00
Current:
0.03
0.20
6.00
0.15
5.00 4.00
0.10
3.00
0.05
2.00
0.00
1.00
-0.05
30%
12Mth fwd EY
Current:
Singapore BY
Implied Value Of Growth*
Current:
Oct/13
Mar/13
Jan/12
Aug/12
Jun/11
Apr/10
Nov/10
Sep/09
Jul/08
Feb/09
Dec/07
Oct/06
May/07
Mar/06
Jan/05
Aug/05
Jun/04
Apr/03
Nov/03
Sep/02
Jul/01
Feb/02
Dec/00
Oct/99
Mar/99
4%
May/00
-0.10
Oct/13
Mar/13
Jan/12
Aug/12
Jun/11
Apr/10
Earnings Yield (& local bond Yield)
Nov/10
Sep/09
Jul/08
Feb/09
Dec/07
Oct/06
May/07
Mar/06
Jan/05
Aug/05
Jun/04
Apr/03
Nov/03
Sep/02
Jul/01
Feb/02
Dec/00
Oct/99
May/00
Mar/99
0.00
47.16%
1.50
Proxy
1.00
25%
0.50
20%
0.00 -0.50
15%
-1.00 10%
-1.50
5%
-2.00 -2.50
PE (1Yr Forward)
Current:
28.2x
45.0x
Oct/13
Mar/13
Aug/12
Jan/12
Jun/11
Nov/10
Apr/10
Sep/09
Jul/08
Feb/09
Dec/07
Oct/06
May/07
Mar/06
Jan/05
Price/Book Value
Current:
25.0x
40.0x
Aug/05
Jun/04
Apr/03
Nov/03
Sep/02
Jul/01
Feb/02
Dec/00
Oct/99
May/00
-3.00 Mar/99
Oct/13
Mar/13
Aug/12
Jan/12
Jun/11
Nov/10
Apr/10
Sep/09
Feb/09
Jul/08
Dec/07
May/07
Oct/06
Mar/06
Aug/05
Jan/05
Jun/04
Nov/03
Apr/03
Sep/02
Feb/02
Jul/01
Dec/00
May/00
Oct/99
Mar/99
0%
PBV hist
1.2x
PBV Forward
20.0x
35.0x 30.0x
15.0x
25.0x
10.0x
20.0x 15.0x
5.0x
10.0x
0.0x
Oct/13
1.40
Mar/13
Aug/12
Oct/13
Mar/13
Aug/12
Jan/12 Jan/12
Jun/11
Nov/10
Apr/10
Sep/09
Jul/08
Feb/09
Dec/07
Oct/06
May/07
Mar/06
Jan/05
Aug/05
Jun/04
Apr/03
Current:
Nov/03
Sep/02
Jun/11
Nov/10
Apr/10
Sep/09
Feb/09
Jul/08
Dec/07
May/07
Oct/06
Mar/06
Aug/05
Jan/05
Jun/04
Apr/03
Nov/03
Sep/02
Feb/02
Dec/00
May/00
Jul/01 Jul/01
Feb/02
Mar/99
Oct/13
Mar/13
Aug/12
Jan/12
Jun/11
Nov/10
Apr/10
Sep/09
Feb/09
Jul/08
Dec/07
May/07
Oct/06
Mar/06
Jan/05
Aug/05
Jun/04
0.0 Nov/03
1.0
0.00 Apr/03
2.0
10.00
Sep/02
20.00
Feb/02
3.0
Jul/01
4.0
30.00
Dec/00
5.0
40.00
May/00
50.00
Oct/99
6.0
Mar/99
Oct/99
Dividend Yield (Trailing)
60.00
Dec/00
2.34
Mar/99
Oct/13
Mar/13
Aug/12
Jan/12
Jun/11
Current:
-5.0x
May/00
ROE (Trailing)
Nov/10
Apr/10
Sep/09
Feb/09
Jul/08
Dec/07
May/07
Oct/06
Mar/06
Aug/05
Jan/05
Jun/04
Nov/03
Apr/03
Sep/02
Feb/02
Jul/01
Dec/00
May/00
Oct/99
Mar/99
0.0x
Oct/99
5.0x
Summary Cosco Corporation (Singapore) Limited 1309.92 SINGAPORE 0.6342536 SEDOL B0WCDT3 Industrials Machinery Latest Min 12mth Forward PE 3.57 28.25x P/BV (Trailing) 0.43 1.22x Dividend Yield (Trailing) 0.13 1.40 ROE (Trailing) 0.49 2.34 Implied Value of Growth -2.42 47.2%
Max 39.41 20.58 5.63 49.20 0.68
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs
24
Median 17.00 2.28 1.79 10.51 0.26
Average 16.97 3.37 1.90 16.18 0.14
2 S.D.+ 28.75 10.21 4.23 43.95 0.98
2 S.D. 5.19 -3.48 -0.44 -11.59 -0.69
% to Min -87% -64% -91% -79% -613%
As Of: Local Price: EPS: % to Max % to Med 40% -40% 1593% 88% 303% 28% 2003% 349% 45% -44%
* Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)
25-Apr-14 0.73 0.03 % to Avg -40% 177% 36% 592% -69%
Asia Pacific Equity Research 30 April 2014
Ajay Mirchandani (65) 6882-2419 [email protected]
Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention.
Important Disclosures
Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: COSCO Corporation.
Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: COSCO Corporation.
Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from COSCO Corporation. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan– covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing [email protected] with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail [email protected].
COSCO Corporation (COSC.SI, COS SP) Price Chart 18 OW S$8
NOW S$3 S$1.25
UW S$0.7
OW S$3.82 OW S$3.8 OW S$2.5 12 N S$2.35
Price(S$)
N S$1.6
S$2 N S$3.55 OW S$8.4 OW S$4.2 NOW S$2.5 UW S$1.08 S$0.753 UW S$0.66 N S$1.5
N S$0.9
N S$2.2 N S$2.2 N S$1.1N S$1
UW S$0.65
6
0 Oct 06
Apr 08
Oct 09
Apr 11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Jan 15, 2007.
Oct 12
Apr 14
Date
Rating Share Price Price Target (S$) (S$)
15-Jan-07
N
2.81
2.35
04-Jun-07
N
2.73
3.55
11-Jun-07
OW
3.38
3.82
01-Aug-07 OW
4.90
8.00
24-Oct-07
OW
7.30
8.40
24-Mar-08 OW
2.97
4.20
30-Apr-08
3.16
3.80
05-Aug-08 N
2.74
3.00
19-Sep-08 N
1.82
2.50
06-Oct-08
OW
1.55
2.50
31-Oct-08
OW
0.78
1.25
04-Dec-08 OW
0.85
1.08
04-Apr-09
UW
0.91
0.75
03-Aug-09 UW
1.32
0.66
07-May-10 N
1.56
1.50
03-Aug-10 N
1.64
1.60
23-Feb-11 N
2.02
2.20
30-Jun-11
N
1.93
2.20
03-Nov-11 N
1.02
1.10
08-May-12 N
1.00
1.00
02-Aug-12 N
0.96
0.90
10-Aug-12 UW
0.98
0.70
06-Nov-13 UW
0.78
0.65
OW
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of 25
Ajay Mirchandani (65) 6882-2419 [email protected]
Asia Pacific Equity Research 30 April 2014
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. Coverage Universe: Mirchandani, Ajay: Aboitiz Power (AP.PS), Bumi Armada Berhad (BUAB.KL), COSCO Corporation (COSC.SI), DMCI Holdings (DMC.PS), Dialog Group Bhd (DIAL.KL), Dyna-Mac Holdings Ltd (DMHL.SI), Electricity Generating Company (EGCO.BK), Energy Development (EDC) Corporation (EDC.PS), Ezion Holdings Ltd (EZHL.SI), Ezra Holdings Ltd (EZRA.SI), Glencore International PLC (0805.HK), Glow Energy (GLOW.BK), Keppel Corporation (KPLM.SI), Linc Energy Ltd (LINC.SI), Malaysia Marine and Heavy Engineering Holdings Bhd (MHEB.KL), Manila Electric Company (MER.PS), Manila Water Company Inc (MWC.PS), Metro Pacific Investments Corp. (MPI.PS), Perisai Petroleum Teknologi Bhd (PPTB.KL), Ratchaburi Electricity Generating Holding (RATC.BK), SapuraKencana Petroleum Bhd (SKPE.KL), Sembcorp Marine (SCMN.SI), Semirara Mining Corp (SCC.PS), Tenaga (TENA.KL), UMW Oil & Gas Corp Bhd (UMOG.KL), Vard Holdings Ltd (VARD.SI), YTL Power (YTLP.KL) J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2014 J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients*
Overweight (buy) 44% 58% 45% 78%
Neutral (hold) 44% 49% 48% 67%
Underweight (sell) 11% 40% 7% 60%
*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
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