MPC Container Ships (Hold, TP: NOK14.90) - Risk/reward balanced on sel...

Given the recent sell-off in the MPC Container Ships shares, we find the risk/reward balanced, with upside potential on the monetisation of assets given its >NOK30 NAV/share, complemented by a healthy contract backlog supporting dividends, set against our negative view of the container sector on oversupply for the foreseeable future. Hence, we have upgraded to HOLD (SELL), but reduced our target price to NOK14.9 (17.9).

‘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...

MPC Container Ships Minor model adjustments

We have updated our estimates in light of the Q4 report, including an updated charter backlog, and made minor adjustments to costs. We still see the container market as set for a prolonged downturn for the foreseeable future on 30%+ supply growth, versus

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

MPC Container Ships (Sell, TP: NOK17.10) - Facing a lasting container ...

The container market is set for a lasting downturn on 30%+ supply growth since 2019, barely offset by sub-10% volume growth, and with a 27% orderbook yet to be delivered, inevitably affecting charter appetite and rates, in our view. Despite the upside potential from monetising asset values, on our NOK34/share NAV, we believe the risk is tilted towards the downside. We reiterate our SELL and have cut our target price to NOK17.1 (18.6).

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

MPC Container Ships (Sell, TP: NOK18.60) - Firm backlog, too-high valu...

We believe the container market is set for a prolonged downturn on 30%+ supply growth since 2019, hardly offset by sub-10% volume growth, and with a 25% orderbook-to-fleet ratio ahead, inevitably hitting charter appetite and rates. While upside potential exists from monetising asset values, given our NOK33/share NAV, we struggle to defend the valuation and believe the risk is skewed to the downside. We reiterate our SELL, but have raised our target price to NOK18.6 (18.2).

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%.

MPC Container Ships (Sell, TP: NOK18.20) - Early stages of a longer do...

MPC Container Ships has capitalised on recent market strength, raising its 2025–2026 coverage to 81–50%. Although we believe this justifies some share-price appreciation, we find the 115% YTD gain excessive. We believe the 13% decline in rates since July marks only the early stage of a prolonged downturn, with years of oversupply likely ahead. Thus, we believe the valuation reflects an overly optimistic outlook, leaving risk skewed to the downside. We reiterate our SELL but have cut our target p...

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.

MPC Container Ships (Sell, TP: NOK19.00) - High rates, but overinflate...

The strong freight market has allowed for attractive TC fixtures for MPCC, but rates are now slipping. We still believe the container market is set for years with soft markets on only 6% volume growth YTD versus 2019, but with a c30% increase in the fleet capacity. Thus, while we continue to assume solid rates and duration for vessels set to end their contracts until Q3 2025, we find the risk/reward skewed to the downside. We reiterate our SELL, but have raised our target price to NOK19.0 (18.5)...