Drewry Maritime Equity Research downgrades Maersk to 'Unattractive'
DREWRY Maritime Equity Research (DMER) in a note of warning to investors, downgraded APMoller-Maersk - the entire Maersk group of companies, as 'Unattractive'.
Drewry analysts spoke of "shockingly low freight rates and current oil prices have caused great distress to companies, such as APMM, until recently considered a safe bet by investors".
APMM's stock has recovered 20 per cent since the lows touched in early February as risk assets and oil complex rallied, said the Drewry research note.
"DMER is a seller into this rally as the underlying fundamentals for mainstay container shipping have continued to deteriorate through the quarter," said the note.
"Spot rates are quoting virtually at a nadir and Drewry's channel checks suggest that contract rates have been signed at significantly lower levels than last year, severely undermining any prospects for Maersk Line to return to profitability anytime soon while also posing a threat of an impending dividend cut," it said.
Drewry said it believes container shipping is "staring at a terrible 2016" with a structural slowdown in global trade volumes, historical low freight rates and ever increasing capacity could result in an industry losses of US$6 billion.
"We expect a very challenging two-year period for Maersk Line as the industry navigates through a chronic overcapacity and structural slowdown in global container demand," said DMER analysts Rahul Kapoor and Nilesh Tiwary.
"If bunker prices were not supportive, we believe Maersk line, would be in dire straits financially. Consensus is building in a minor rate recovery this year, however, we remain sceptical and expect the consensus estimates to downgrade significantly through the year for both FY16 and FY17," the analysts said.
DREWRY Maritime Equity Research (DMER) in a note of warning to investors, downgraded APMoller-Maersk - the entire Maersk group of companies, as 'Unattractive'.
Drewry analysts spoke of "shockingly low freight rates and current oil prices have caused great distress to companies, such as APMM, until recently considered a safe bet by investors".
APMM's stock has recovered 20 per cent since the lows touched in early February as risk assets and oil complex rallied, said the Drewry research note.
"DMER is a seller into this rally as the underlying fundamentals for mainstay container shipping have continued to deteriorate through the quarter," said the note.
"Spot rates are quoting virtually at a nadir and Drewry's channel checks suggest that contract rates have been signed at significantly lower levels than last year, severely undermining any prospects for Maersk Line to return to profitability anytime soon while also posing a threat of an impending dividend cut," it said.
Drewry said it believes container shipping is "staring at a terrible 2016" with a structural slowdown in global trade volumes, historical low freight rates and ever increasing capacity could result in an industry losses of US$6 billion.
"We expect a very challenging two-year period for Maersk Line as the industry navigates through a chronic overcapacity and structural slowdown in global container demand," said DMER analysts Rahul Kapoor and Nilesh Tiwary.
"If bunker prices were not supportive, we believe Maersk line, would be in dire straits financially. Consensus is building in a minor rate recovery this year, however, we remain sceptical and expect the consensus estimates to downgrade significantly through the year for both FY16 and FY17," the analysts said.