Hong Kong: By comparing Chinese port volumes, analysts at Jefferies have blasted the likely financial performances of two key subsidiaries of the China Shipping Group.
Domestic container freight rates have corrected by 17% since reaching their peak in end-March, while domestic coal freight rates have also corrected by 14% since mid-March to drop below RMB25 per ton for the Qinhuangdao-Shanghai leg for the second time since March 2010, Jefferies noted in a report yesterday, all of which it said was bad news for China Shipping Container Lines and China Shipping Development. Domestic container volume growth in May “uncharacteristically” contracted by 4% month-on-month, Jefferies noted, and slowed to 12% year-on-year. The last time May saw poorer container volume growth was 2009.
“Moreover, domestic container volume looks exaggerated, in our view,” the report stressed, “because throughput at the three northern Chinese ports grew 1.4m teu or 35% year-on-year for the first five months of the year but their trading partners, the southern Chinese ports, grew only 0.04mn teu or 1% year-on-year during the same period.
Domestic coal, the main commodity for bulk shipping in domestic trades, may have suffered a 3% year-on-year drop based on the Qinhuangdao throughput.
“CSCL and CSD, with a respective 20% and 43% revenue exposure to domestic trade, may be negatively affected,” Jefferies noted. [11/06/13]
