Morgan Stanley yesterday lowered its recommendation and earning estimates of four Asia-based shipping lines, including Evergreen Marine Corp
The investment house slashed its profit estimate for China Shipping Container Lines Co (
"The significant fall in freight rates in recent months, despite continued robust demand growth, suggests a multi-year downturn for container shipping has just begun," said company analyst Jim Lam, one of the report's four authors.
Container shipping rates may drop 6 percent this year on average, as demand growth fails to match an increase in capacity, according to Drewry Shipping Consultants Ltd of London.
China Shipping's shares fell 1.8 percent yesterday to HK$2.75 on the Hong Kong exchange. The stock's price may fall 35 percent to HK$1.80 in 12 months, Morgan Stanley said.
Orient Overseas International Ltd (東方海外國際) had its earnings forecast cut by 48 percent to US$310 million this year. The shipping firm may report a loss of US$10 million next year, Morgan Stanley said.
The investment bank lowered the 12-month target price of the stock to HK$27.2 from HK$41.8, while its recommendation was changed to "equal weight" from "overweight."
Orient Overseas' shares rose 0.2 percent to HK$28.65 in Hong Kong.
Morgan Stanley said it reduced its earnings estimate this year for Evergreen Marine, Asia's biggest shipping line, by 20 percent to NT$2.03 a share and cut the stock's 12-month target price to NT$15 from NT$22.
The company's forecast earnings per share for next year was also slashed by 80 percent to NT$0.39, and its rating was changed to "underweight" from "equal-weight," Morgan Stanley said.
Evergreen's shares fell 0.2 percent yesterday to NT$22.1 in Taipei.
China Cosco Holdings Co, owner of Asia's fourth-largest container shipping line, may report 3.29 billion yuan in profit this year, Morgan Stanley said.
That's 17 percent less than the previous outlook. The Beijing-based company's net income outlook next year was cut by 36 percent to 1.79 billion yuan.
China Cosco's shares fell 0.7 percent in Hong Kong.
Taiwan's Yangming Marine Transport Corp (
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