J.P. 摩根-亚太地区-航运业-干散货航运2018年展望-2018.1.31-26页.pdf

Asia Pacific Equity Research31 January 2018 Dry Bulk Shipping 2018 OutlookMuted supply growth leads us to prefer dry bulk over container shipping;accumulate PacBasin on weaknessInfrastructure,Industrials&TransportKaren Li,CFA AC(852)2800-Bloomberg JPMA KLI J.P.Morgan Securities(Asia Pacific)LimitedVarun Ginodia,CFA(91-22)6157-J.P.Morgan Securities(Asia Pacific)Limited/J.P.Morgan India Private LimitedCalvin C Wong,CFA(852)2800 J.P.Morgan Securities(Asia Pacific)LimitedHanli Fan,CFA(852)2800-J.P.Morgan Securities(Asia Pacific)LimitedJames Teo(65)6882-J.P.Morgan Securities(Asia Pacific)LimitedSee page 23 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 thefirm 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 We turned cautious on dry bulk shipping and downgraded PacBasin to N in Sep17 driven by our concerns on increased environmental regulation in China and tighter stance towards PPP and housing market.See our notes here and here.PacBasins share price has fallen 7%since its recent peak in mid-Oct17 vs 15%rise for HSI index.Looking ahead,we prefer dry bulk shipping over container shipping given muted supply growth in case of dry bulk and recovery in global capex supportive of demand growth.We are N on PacBasin but would advise investors to accumulate on weakness.Raising our 2018-19E global dry bulk shipping demand forecasts as we factor in higher global GDP growth:That said,our 2018-19 demand forecasts(23%Y/Y)are still lower than 2017E(4%Y/Y)as we expect Chinas import demand to moderate as we do not think the positive catalysts seen in 2017(record high steel margins and China steel production and high coal demand)will continue.Our estimates imply a GDP multiplier of 1x in 2018E and 0.9x in 2019E vs 1.2x in 2017E.while keeping our supply growth expectations largely unchanged:We expect global capacity growth to moderate to 2.7%Y/Y in 2018E and 2.5%Y/Y in 2019E(vs 2.9%Y/Y in 2017)as orderbook ratio remains near trough levels while delivery schedule remains moderate(gross supply growth in 2018E of only 4.1%Y/Y based on delivery schedule,much lower than 7%Y/Y at the start of 2017).That said,we see low likelihood of shipowners coming back to the market aggressively in the near-term given secondhand vessels are still trading at an attractive discount to newbuild prices.Favorable demand-supply balance not to be reflected in higher freight ratesyet:Baltic indices rose significantly in 2017 especially in larger vessel segments(Capesize/Panamax indices up 102%/75%).We do not expect this strong performance to be repeated in 2018 as we expect Chinas crude steel production to moderate to+0.6%Y/Y from 5.2%growth in 2017.We also expect Chinas power demand to moderate to 3%Y/Y in 2018E vs 6%in 2017.We expect steel margins to trend lower as 2+26 policy comes to an end in Mar18 driving higher demand for low-grade iron ore which is cheaper which would be negative for imports.Further,dry bulk shipping freight rates are likely to remain under pressure in the near-term as 1Q is seasonally a weak quarter.We would wait for the 2+26 policy to end in Mar18 to get more clarity on government policy on supply side reforms before turning more positive on freight rates.Risk-reward balanced;stay N on PacBasin:We lower our 2018-19E by c8%on average as we factor in lower freight rates partly offset by lower lease rentals.Consequently,we lower our Dec-18 price target to HK$2(from HK$2.1)based on target P/BV of 1x,a 20%premium to PacBasins historical average valuation since listing to factor in an improving demand-supply outlook for the sector.PacBasins share price outperformed its peers in 2017 rising 35%in 2017 vs sector avg of 30%.However,the share price has fallen 9%since its peak in Sep17 compared to 17%rise for HSI index.We expect the share price to remain rangebound as the current valuations at 1x stdev above historical average presents a cap while downside protection to freight rates from limited supply growth in 2018E provides a support to the share price.Table 1:Global Dry Bulk Shipping Demand Old vs NewSource:J.P.Morgan estimates.Table 2:Global Dry Bulk Shipping Supply Old vs NewSource:J.P.Morgan estimates.Completed 31 Jan 2018 08:37 PM HKTDisseminated 31 Jan 2018 08:39 PM HKT3Asia Pacific Equity Research31 January 2018Karen Li,CFA(852)2800- Figure 2:Global Dry Bulk Deliveries vs New Order ContractsDWT in MMSource:Clarksons and J.P.MorganStill attractive secondhand vessel values to keep the new vessel ordering activity mutedNew ship orders peaked in 2014 post which they fell 55%y/y in 2015 and 87%y/y in 2016.However,new contracts have picked up recently with 2017 witnessing a growth of 134%y/y,although from a low base(2016 contracts were the lowest since 2002).For instance,2017 monthly new contracts signed averaged 2.75MM DWT,68%lower vs monthly average in 2013 when new contracts peaked.Among different segments,activity has picked up mainly in larger vessel segments like Capesize and Panamax as smaller vessel segments 2017 monthly average is 91%below 2013 monthly average,much higher than sector average.Figure 3:Global Dry Bulk Shipping ContractingDWT in MMSource:Clarksons and J.P.Morgan.Looking ahead,we do not expect shipowners to return to the newbuild market aggressively soon given secondhand vessel values are still attractive and discount to newbuild prices is still below 2013 levels when the new contracts picked up.05101520Jan-10Jun-10Nov-10Apr-11Sep-11Feb-12Jul-12Dec-12May-13Oct-13Mar-14Aug-14Jan-15Jun-15Nov-15Apr-16Sep-16Feb-17Jul-17Dec-17New order contractsNewbuild deliveries024681012141618Jan-10Jun-10Nov-10Apr-11Sep-11Feb-12Jul-12Dec-12May-13Oct-13Mar-14Aug-14Jan-15Jun-15Nov-15Apr-16Sep-16Feb-17Jul-17Dec-174Asia Pacific Equity Research31 January 2018Karen Li,CFA(852)2800- Figure 4:Secondhand Vessel Value As%Of Newbuild Vessel Value-CapesizeSource:Clarksons and J.P.Morgan.Figure 5:Secondhand Vessel Value As%Of Newbuild Vessel Value-PanamaxSource:Clarksons and J.P.Morgan.Figure 6:Secondhand Vessel Value As%Of Newbuild Vessel Value-HandymaxSource:Clarksons and J.P.Morgan.Figure 7:Secondhand Vessel Value As%Of Newbuild Vessel Value-HandysizeSource:Clarksons and J.P.Morgan.Low delivery schedule result in much lower slippage rate in 2018E vs recent historical trendsSlippage rate was 34%in 2017 but we expect the same to moderate significantly to c11%in 2018E and further to c5%in 2019E,lowest slippage rate post GFC,as 2018E delivery schedule is already light(average monthly deliveries in 2018E at 1.35MM DWT vs 3.17MM DWT in 2017).This is a sharp moderation from average of 35%slippage rate in 2010-17 when delivery schedule was elevated.Among the different vessel segments,we assume the slippage rate to be the highest for the Handysize segment at c15%in 2018E while other segments are assumed at c10%.-60%-50%-40%-30%-20%-10%0%10%20%Jan-10May-10Sep-10Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18CapesizeAverage-60%-50%-40%-30%-20%-10%0%10%20%30%Jan-10May-10Sep-10Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18PanamaxAverage-60%-50%-40%-30%-20%-10%0%10%20%Jan-10May-10Sep-10Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18HandymaxAverage-60%-50%-40%-30%-20%-10%0%10%20%30%Jan-10May-10Sep-10Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18HandysizeAverage5Asia Pacific Equity Research31 January 2018Karen Li,CFA(852)2800- Figure 8:Newbuild Dry Bulk Vessel Deliveries(Actual vs Expected)Source:Clarksons and J.P.Morgan estimatesFigure 9:Historical Newbuild Bulk carrier DeliverySlippagesSource:Clarksons and J.P.Morgan estimatesScrapping would continue but at a slower paceScrapping fell 50%Y/Y in 2017 implying a scrapping rate of c1.8%,much lower than 3.8%in 2016 and lowest scrapping rate since 2011.Looking ahead,we assume scrapping rate of 1%in 2018E moderating further to 0.8%in 2019E as demand-supply balance remains favorable lowering the need for aggressive scrapping.Figure 10:Global Dry Bulk Shipping Scrapping RateSource:Clarksons and J.P.Morgan.That said,scrapping would still continue nonetheless as 7%of current capacity is still 20 years old with Handysize segment having the highest proportion at 12%.Scrapping age has increased to 24.4 years in 2017 vs 23.3 years in 2016,first such instance since 2011,but remains below the psychological level of 25 years.020406080100120140160200620072008200920102011201220132014201520162017Actual deliveriesExpected deliveries at the start of the year-50%-40%-30%-20%-10%0%10%020406080100120200620072008200920102011201220132014201520162017Actual deliveries(LHS)Delivery(Shortfall)/Surplus(RHS)0%1%2%3%4%5%6%7%197019721974197619781980198219841986198819901992199419961998200020022004200620082010201220142016Global Dry Bulk Shipping Scrapping Rate6Asia Pacific Equity Research31 January 2018Karen Li,CFA(852)2800- Figure 11:Global Dry Bulk Shipping Capacity Breakdown By AgeBased on DWTSource:Clarksons and J.P.Morgan.Figure 12:%Capacity 20 Years OldBased on DWTSource:Clarksons and J.P.Morgan.Figure 13:Global Dry Bulk Shipping Demolition AgeSource:Clarksons and J.P.Morgan.We also expect scrapping to be supported by high scrap values in the near term which reached$465/ldt,highest since Nov14 supported by Chinas steel prices.For instance,HRC prices are up 35%from their recent trough in Dec16 while Rebar prices are up 14%driving 29%increase in scrap prices during the same period.That said,our Metals&Mining team expects China steel production growth to moderate to only 0.6%Y/Y in 2018E vs 5.2%Y/Y in 2017 implying steel prices could come under pressure as they expect steel consumption in China to remain flattish in 2018E.Figure 14:Steel prices vs scrap valuesY/Y ChgSource:Clarksons,Bloomberg.20 years and above,7%15-19 years,7%10-14 years,13%5-9 years,43%0-4 years,30%12%6%6%6%7%0%2%4%6%8%10%12%14%HandysizeHandymaxCapesizePanamaxOverall2022242628303234362005200620072008200920102011201220132014201520162017 YTD-100%-50%0%50%100%150%Mar-13Jun-13Sep-13Dec-13Mar-14Jun-14Sep-14Dec-14Mar-15Jun-15Sep-15Dec-15Mar-16Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Indian Subcont HandysizeHRCRebar7Asia Pacific Equity Research31 January 2018Karen Li,CFA(852)2800- Expect global dry bulk shipping demand to moderate as well in 2018E as Chinese imports take a breatherBaltic indices rose significantly in 2017 especially in larger vessel segments withCapesize/Panamax indices up 102%/75%while smaller vessel segments like Handysize/Handymax up 4045%.The primary reason behind strong freight rates performance in 2017 has been higher than expected Chinas steel production and higher steel margins which led to higher iron ore and coal imports driving higher dry bulk shipping demand especially for Capesize and Panamax vessel segments.Figure 15:Baltic Handysize IndexFigure 16:Baltic Handymax IndexSource:Bloomberg.Figure 17:Baltic Panamax IndexFigure 18:Baltic Capesize IndexSource:Bloomberg.Chinas iron ore imports to slow down as demand for low-grade iron ore pick-up once the winter heating season comes to an endChinas iron ore imports have risen 5%Y/Y in 2017 driven by higher steel production(+5%Y/Y)and more importantly significant increase in HRC/rebar prices which led to steel producers to import more iron ore(which is high-grade)to maximize the production efficiency and leverage on higher steel margins.This is also reflected in higher spread for high-grade iron ore vs low-grade.For instance,the spread between high-grade and low-grade iron ore price has risen$19/t in 2017 and to$28/t YTD,much higher than$10/t in 2016 and vs$13/t average since 2012.However,iron ore inventories at Chinese ports have reached record highs to 154.4MM tonnes driven by low-grade ore stockpiling and higher blending.Looking ahead,we expect inventories to remain elevated as the demand moderates post the 02004006008001,0001,2001,4001,600Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-1805001,0001,5002,0002,5003,0003,500Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-1805001,0001,5002,0002,5003,0003,5004,0004,5005,000Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-1801,0002,0003,0004,0005,0006,000Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-188Asia Pacific Equity Research31 January 2018Karen Li,CFA(852)2800- winter season while Chinese mills switch to low-grade iron ore as 2+26 policy comes to an end in Mar18 and as the low-grade iron ore prices are attractive.Figure 19:China Iron Ore ImportsIn 000 tonnesSource:CEIC databaseFigure 20:Iron Ore Price vs China RebarSource:Bloomberg.Figure 21:Iron Ore spot price for different gradesUS$/tonne US$/tonneSource:Bloomberg and J.P.Morgan-30%-10%10%30%50%70%90%-20,000 40,000 60,000 80,000 100,000 120,000Jan-09Aug-09Mar-10Oct-10May-11Dec-11Jul-12Feb-13Sep-13Apr-14Nov-14Jun-15Jan-16Aug-16Mar-17Oct-17China Iron Ore Imports(000 tons)Y/Y change0.01,000.02,000.03,000.04,000.05,000.06,000.0020406080100120140160180Dec-11Mar-12Jun-12Sep-12Dec-12Mar-13Jun-13Sep-13Dec-13Mar-14Jun-14Sep-14Dec-14Mar-15Jun-15Sep-15Dec-15Mar-16Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Iron Ore Price-US$/t-RHSChina Rebar(Rmb/t)-RHS0510152025303530507090110130150170Jan-12Apr-12Jul-12Oct-12Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-1862%ore content58%ore contentSpread-RHSAverage-RHS9Asia Pacific Equity Research31 January 2018Karen Li,CFA(852)2800- Figure 22:Weekly Iron Ore Inventories At Chinese PortsIn MM tonnesSource:BloombergCoal imports to also moderate as demand-supply balance becomes unfavorableChinas coal imports have risen 6%Y/Y in 2017 but the pace has moderated from 20%y/y growth witnessed in early-2017 with Y/Y growth declining for last three consecutive months.Thermal coal inventories at Chinese ports are 10%lower since their recent peak in end-Nov which is in-line with our view of some inventory destocking as coal production in China remained 10%below peak levels in 2014 while demand growth was uplifted driven by power generation demand which rose 6%Y/Y in 2017.Looking ahead,our Metals&Mining team expects power generation demand in China to moderate to 3%Y/Y growth in 2018E(from 6%Y/Y in 2017)while expect steel production to rise only 1%Y/Y in 2018E(from 5%Y/Y rise in 2017).More