A. P. Møller Mærsk (Sell, TP: DKK9000.00) - Challenging the deep value...

The Q1 results proved disappointing to buy-side expectations, though reasonably aligned and even bullish compared to near-term consensus. Their market commentary could raise expectations above the upper end of the potentially conservative guidance, but we struggle to see the intrinsic value when facing the bleak container markets for 2025–2026e. We reiterate our SELL and have cut our target price to DKK9,000 (9,600).

Continued strong demand will make a difference

Surprisingly strong container demand makes a big difference. '24e EBITDA of USD 6.2bn. TP of DKK 12,800 (13,260) – BUY.

Better guidance, but within expectations

Q1'24 EBITDA of USD 1,590m (ABGSCe at USD 1,941, cons. at USD 1,604m). Segments - miss for Ocean and Logistics & Services, beat in Terminals and Towage. Lower end of guidance lifted, share slightly up today.

Yard response and dry bulk qualms

Our trip to South Korea and China revealed Chinese shipbuilders are seeking growth to take on Korea’s established yards who are facing constraints. An eagerness to add capacity is one of our takeaways, as well as a gloomy outlook for Chinese real estate, which in our view should inevitably weigh on dry bulk demand.

Too cheap with near-term earnings upside

Underlying demand much better than expected. Guidance upgrade likely - ABGSCe '24 EBITDA +20% vs. cons.. TP of DKK 13,260 (10,700) – BUY (Hold).

A. P. Møller Mærsk (Sell, TP: DKK9600.00) - Loose ends into Q1 results

There is a substantial discrepancy between container liners’ reported and guided revenue for Q1, as the impacts of the Red Sea disruption and resurgent freight rates are revealed. Near-term consensus could be too low, but the 2025–2026 outlook is set to be much worse than the market believes. We reiterate our SELL, but have raised our target price to DKK9,600 (9,500).

A brewing challenge for the yards

Our 17th Annual Energy & Shipping Conference was well attended by investors and industry executives showcasing the still-growing interest for the sectors. Limited yard capacity is fuelling high newbuilding prices and raising freight rate expectations for the vast fleet renewal necessary in the coming decade. Long lead times underpin a bullish supply story for much of shipping in the coming years, albeit exposed to geopolitical risks affecting trade patterns. Our overall impression was general op...

MPC Container Ships (Hold, TP: NOK14.60) - Substantiated sell-off

MPCC’s 2024 guidance disappointed, and we expect the same issues to weigh on 2025 expectations, where we are ~23% below consensus EBITDA. Hence, we have lowered our estimate for the remaining DPS to NOK3.9, leaving material residual risk to a still-unappealing sector outlook. We reiterate our HOLD, but have cut our target price to NOK14.6 (15.0).

A. P. Møller Mærsk (Sell, TP: DKK9500.00) - No relief in sight

Maersk’s 2024 outlook solidified our view that headline spot rate movements should be insufficient to save liners from a challenging market that should soon see a race to the bottom once more. In the ensuing dogfight, someone will have to lose out in order to rebalance a vastly oversupplied market. With such an outlook, current cash buffers are of limited value to investors. We reiterate our SELL, and have cut our target price to DKK9,500 (10,400).

A. P. Møller Mærsk (Sell, TP: DKK10400.00) - Expect the unexpected

The 2024 guidance should be the highlight of the Q4 report and clarify the potential implications for Maersk of Red Sea disruptions in an uncertain container market. Assuming normalisation in H2, we reiterate our SELL but have raised our target price to DKK10,400 (9,600).

MPC Container Ships (Hold, TP: NOK15.00) - Conflict boosting its risk ...

Increasing Red Sea tensions have seen feeder rates and durations improve materially versus pre-conflict levels, which we believe de-risks MPCC’s charter backlog and solidifies the NOK5.7/share we model the company has left in its dividend ‘cannon’. We remain cautious on the long-term fundamentals of the wider container space and subsequent cascading to the intraregional trades, but consider MPCC’s earnings potential improved for the time being. We reiterate our HOLD, but have raised our target p...

MPC Container Ships (Hold, TP: NOK14.70) - Fairly valued after sell-of...

The share price decline in recent weeks now leaves limited downside potential in our view. Rather, the company is leveraging its strong position to navigate the market downturn through contract extensions and vessel sales. Despite sales implying more downside to current broker quotes, we see potential to capitalise on what we view as still-attractive values, in order to bring forward cash flows ahead of a bleak sector outlook. We have upgraded MPC Container Ships to HOLD (SELL), but reiterate ou...

Decisive hit from weaker macro

Deteriorating macroeconomics and concerns about an impending recession have added to an already-grim outlook. The 2023 demand setback is polarising supply and demand as the towering orderbook pushes 2023–2026e supply growth towards 7% p.a. with demand set to be closer to 2%. Hence, utilisation should fall to record-lows, fuelling a race to the bottom for rates. The ensuing industry-wide cash burn looks set to decimate sector balance sheets. With no bright spots on the horizon, we reiterate our S...

A. P. Møller Mærsk (Sell, TP: DKK11500.00) - Set for another near-term...

Based on recent data points, we have raised our Q3e due to a slower rate decline and more cost-cutting potential. We are now 16% above consensus’ Q3 EBITDA, but remain 30% below for 2024e and 2025e. Thus, we forecast a near-term beat, but expect focus to remain on long-term prospects that should continuously deteriorate. We reiterate our SELL and DKK11,500 target price.

MPC Container Ships (Sell, TP: NOK17.00) - Rightfully more cautious

Management has adopted a more cautious approach to a still-deteriorating container market, with no event-driven distributions announced despite the latest sales and redeliveries. Rather, cash proceeds will likely be directed towards reducing debt and its capex programme. With the guidance fundamentally unchanged in the recent update, potentially leaving downside to consensus, we remain reluctant to factor in too much optimism beyond the backlog, and believe remaining recurring DPS should amount ...

MPC Container Ships (Sell, TP: NOK17.00) - Too optimistic at ~NOK20/sh...

MPCC has kept busy with portfolio optimisation measures since Q1, but in our view has been adding exposure in a falling market. TC rates are back to their lowest levels since November 2020, and durations are coming down, while liners are feeling pressure to cut back capacity to slow rate deterioration. In the coming quarters, we expect mass deliveries and cascading effects, unwinding congestion, slow demand, and, eventually, a return of idling – all pressuring the non-operating owners. We believ...

A. P. Møller Mærsk (Sell, TP: DKK11500.00) - No more profits in sight

We find the continued ordering of new vessels at a time of tumbling rates and dwindling profitability concerning for the sector. While Maersk proved it could cut costs efficiently to aid Q2 margins, we expect no net profit in our forecast horizon. We believe the race to the bottom for rates has only just begun as deliveries pick up, and have downgraded the stock to SELL (HOLD) and cut our target price to DKK11,500 (14,200).

Northern Lights

Northern Lights

A. P. Møller Mærsk (Hold, TP: DKK14200.00) - Near-term positives for Q...

Spot rates turned upwards recently, suggesting efficient capacity management by the liners, which are struggling to match higher costs. With fuel costs also improving net economics sequentially, we see near-term positives for Maersk in Q2e. However, with a hefty orderbook and little respite from any resurgent demand, we remain bearish longer-term. We reiterate our HOLD, but have raised our target price to DKK14,200 (12,100).