Recent Company updates include: 1) Asia/Europe lane, the original rate increase plan in early September was postponed, mainly because the peak was coming to the end and several carriers took delivery of super large container vessels. It is not easy to raise the freight rate at this moment. After the rate decrease of US$200 per TEU on 12th September, currently the price is hovering at c.US$1,025 per TEU, with downside pressure. Average utilization rate is c.85% to c.90%; 2) Asia/USWC lane rose rate by US$100 per TEU at the beginning of September, and currently the freight rate is c.US$2,000 per TEU; 3) Asia/USEC lane remains unchanged at c.US$3,400 per TEU after the rate increase in August. Utilization of both US lanes are above 90%. 4) YTD locked fuel consumption is 800,000 tons at c.US$590 per ton.
Revise down FY13-FY15 earnings estimates. To reflect the worse than expected recovery of the international container shipping market, we revise down FY13-FY15 earnings to RMB-1,397 million, RMB582 million and RMB3,887 million, respectively.
Maintain ‘Accumulate’ but revise down TP to HK$2.20. Considering the slow recovery of Asia/Europe trade, revise down TP to HK$2.20. Our TP represents 0.8x FY13 P/B ratio. Major risks are 1) the slow recovery of European and U.S. markets; 2) surge of bunker prices; 3) shipping rates plunge due to capacity excess supply.