Financial services group DnB NOR has launched a new range of research and analysis on shipping sector stocks in Asia, initiating coverage on eleven Asian shipping companies.
The bank sees substantial investment opportunities for Asian-listed shipping stocks, as companies utilise their accumulated spending power and deploy their excess cash over the next two to three years.
Most Asia-listed companies are cashed-up and have a war chest ready for deployment, according to the bank. However, not all companies are embarking on investment strategies that will be value accretive, relative to their current valuations. China COSCO and Pacific Basin have the most uncommitted capital, available for new projects. Neptune Orient Lines has the lowest gearing in the universe.
"We are positive on companies well positioned in niche market segments, continued cyclical export growth, or have particular inroads to unique opportunities," reports DnB NOR Asia.
"We've projected stronger cash flows and earnings growth for these corporates. In our universe, we expect Hanjin, CSCL, and Yang Ming to generate the strongest EPS growth in 2011."
DnB NOR Asia has run DCF valuations to factor in the cyclical trend in earnings and determine a long-term fair value for the stocks. China COSCO, Hanjin, and CSCL have the highest upside, and the bank expect the largest downside for Orient Overseas, STX Pan Ocean, and Thoresen Thai.
The container shipping strength is set to continue, while dry bulk oversupply will continue to persist, according to the bank.
