AsiaPacificEquityResearch31January2018DryBulkShipping2018OutlookMutedsupplygrowthleadsustopreferdrybulkovercontainershipping;accumulatePacBasinonweaknessInfrastructure,Industrials&TransportKarenLi,CFAAC(852)2800-8589karen.yy.li@jpmorgan.comBloombergJPMAKLIJ.P.MorganSecurities(AsiaPacific)LimitedVarunGinodia,CFA(91-22)6157-3321varun.x.ginodia@jpmorgan.comJ.P.MorganSecurities(AsiaPacific)Limited/J.P.MorganIndiaPrivateLimitedCalvinCWong,CFA(852)28008502calvin.wong@jpmorgan.comJ.P.MorganSecurities(AsiaPacific)LimitedHanliFan,CFA(852)2800-8566hanli.fan@jpmorgan.comJ.P.MorganSecurities(AsiaPacific)LimitedJamesTeo(65)6882-1374james.teo@jpmorgan.comJ.P.MorganSecurities(AsiaPacific)LimitedSeepage23foranalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.www.jpmorganmarkets.comWeturnedcautiousondrybulkshippinganddowngradedPacBasintoNinSep’17drivenbyourconcernsonincreasedenvironmentalregulationinChinaandtighterstancetowardsPPPandhousingmarket.Seeournoteshereandhere.PacBasin’ssharepricehasfallen7%sinceitsrecentpeakinmid-Oct’17vs15%riseforHSIindex.Lookingahead,wepreferdrybulkshippingovercontainershippinggivenmutedsupplygrowthincaseofdrybulkandrecoveryinglobalcapexsupportiveofdemandgrowth.WeareNonPacBasinbutwouldadviseinvestorstoaccumulateonweakness.Raisingour2018-19EglobaldrybulkshippingdemandforecastsaswefactorinhigherglobalGDPgrowth…:Thatsaid,our2018-19demandforecasts(2~3%Y/Y)arestilllowerthan2017E(4%Y/Y)asweexpectChina’simportdemandtomoderateaswedonotthinkthepositivecatalystsseenin2017(recordhighsteelmarginsandChinasteelproductionandhighcoaldemand)willcontinue.OurestimatesimplyaGDPmultiplierof1xin2018Eand0.9xin2019Evs1.2xin2017E.…whilekeepingoursupplygrowthexpectationsla...
