Orient Overseas Intl Lmt. (OOIL, 东方海外) -- 316 HK

Business

Container shipping players. 董建华家族公司.

Revenue by region: Trans-Pacific 34%, Asia/Europe 20%, Trans-Atlantic 10%, Intra-Asia 36%.

Valuation

August 11, 2015

2015F P/B 0.69X (vs. recent years 0.8X~1.2X), in the low range. Container shipping is in tough time, which will prevent its valuation expansion. Besides, revenue in 1H15 was down yoy, and 2H15 guidance was also not good. It is not a good time to buy, but should wait and see.

Management reiterated that severe overcapacity and a lack of broad-based demand growth are likely to continue to weigh on rates in H215. But mgmt team hold positive view on 2016 demand & supply.π

Updates

2Q15

OOIL reported H115 net profit of US$239m (up 32% YoY), above estimate US$132m. Group revenue was weaker at US$3,044m (down 6% YoY) due to declines in both throughput volume (-2.3% YoY) and freight rates (-4.2% YoY). This was outweighed by a reduction in operating costs and operating profit increased to US$271m (up 29% YoY), representing a 2.4ppt margin expansion to 8.9%.