‘The times they are a-changin’

The recurring theme at our 18th Energy & Shipping Conference was geopolitical uncertainty and a potential trade war, warranting a wait-and-see approach, particularly on the Trump 2.0 effect. The consensus view pointed to high asset values, with no rush to the yards, aligning with below-NAV valuations across most of our coverage. However, panellists generally saw less downside risk than the 25% average discount to steel for our Tanker, Dry Bulk and Gas coverage. Overall, the day highlighted uncer...

A. P. Møller Mærsk (Sell, TP: DKK10800.00) - Just too many ships

We expect Q4 to mark a turning point, with probable distributions announced and clear downside risk. Simply comparing the ratio of ships to cargo, we find there should be a significant number of ships without work versus 2019, and believe the depth of the downturn has yet to be priced in. We have downgraded to SELL (HOLD) and cut our target price to DKK10,800 (11,700).

Red Sea re-opening is well discounted

Q4 beat and '25 guidance better than feared

A playbook on US tariffs

As a response to recent news flow of potential tariffs and countermeasures, we highlight the main implications for the shipping sectors we cover. While the specifics remain uncertain, the below input might assist in gauging potential impacts of the disruptions.

A. P. Møller Mærsk (Hold, TP: DKK11700.00) - Potential for USD4bn–8bn ...

We expect the Q4 results to reflect continued strength in the container freight market, which picked up further over December–January, and have raised our 2025 forecasts. However, our 2025e EBITDA of USD6.0bn remains 17% below Bloomberg consensus. With guidance likely the main focus, we expect it to target underlying EBITDA of USD4bn–8bn. As vessel oversupply is set to continue hampering rates for a dreary long-term outlook, we reiterate our HOLD and DKK11,700 target price.

A final 2024 guidance upgrade in the making

ABGSC Shipping Daily 29 November

Container spot rates up again 3% w-o-w, contract rates flat, HAUTO signs 2-year contract with a "major international car producer", Flex LNG announces 15yr time charter for Flex Constellation

A. P. Møller Mærsk (Hold, TP: DKK11700.00) - Anchored by challenges

We fail to be excited by the largely pre-announced Q3 and recently revised guidance, but concede the valuation in Maersk looks depressed, albeit for a very good reason. More newbuild orders from the latest cash build mean another delivery wave on top of an already structurally overbuilt industry. We remain muted on the sector and reiterate our HOLD, and have lowered our target price to DKK11,700 (11,500).

New guidance already looks conservative

Solid report; FY guidance looks low

Q3'24 as pre-announced last week. Segments - Beat in all segments. Freight rates better than modelled, share up 1-3%.

A. P. Møller Mærsk (Hold, TP: DKK11500.00) - Likely topping out in Q3

While the Q3 results posted a ~USD1bn beat to our and consensus expectations likely due to stronger container shipping markets, we believe the implications for long-term estimates are limited, as its updated guidance indicates a ~USD2bn QOQ decline for Q4. Hence, the Q3 beat on a stand-alone basis would add up to 4% to the market cap, all else equal.

Guidance upgrade equals 5% of market cap

Q3'24 EBITDA of USD 4.8bn (ABGSCe at USD 4.5, cons. at USD 3.6). Increases full year guidance - Not unexpected. Higher guidance warrants a positive share price reaction.

Q3e EBITDA lifted 32%; consensus too low

YTD container demand growth of 18%. Consensus too low for Q3; potential guidance upgrade for '24. TP of DKK 14,300 (14,550) – BUY.

A. P. Møller Mærsk Minor model adjustments

We have updated our estimates for the Q2 report. We do not consider these changes to be material, and we have not changed our HOLD recommendation. We reiterate our DKK11,500 target price. Potential for more buybacks. While we still see a heavy delivery schedule weighing on the fundamental supply/demand balance for the foreseeable future and believe much of the apparent demand to be transitory, we find Maersk’s compounding value generation in today’s inflated freight-rate environment supportive o...

Low visibility, but still too cheap

Beat in Terminals and Logistics, miss for Ocean

Q2'24 as pre-announced. Segments - Beat in Terminal and Logistics, miss for Ocean. Rather neutral report, flat to slight positive share price reaction expected.

A. P. Møller Mærsk (Hold, TP: DKK11500.00) - Gifted an additional ~USD...

We have raised our 2024-26e cash flow by ~USD6bn flow on the surprising tenacity of the container market which adds directly to our valuation. However, the market cap is up less than USD2bn, strengthening the group’s relative value, in our view. We still see a fundamentally oversupplied container shipping market, but acknowledge the current backdrop offers additional upside potential. We have upgraded to HOLD (SELL) and raised our target price to DKK11,500 (9,000).

Q2 miss outweighed by higher guidance

Q2'24 EBITDA of USD 2.1bn (ABGSCe at USD 2.2, cons. at USD 2.3). Increases full year guidance - Not entirely unexpected. Higher guidance warrants a positive share price reaction.

Red Sea closure means no oversupply in '25-26

No oversupply with the Red Sea closed. '24e EBITDA of USD 8.6bn. +9% vs. consensus. TP of DKK 14,550 (12,800) – BUY.