SHIPPING RECOVERY

Courage Marine: The price closed at 22.5c today, a high achieved on 29 March. A white candle day on the back of increased volume is reassuring for bulls. OBV has turned up and the MACD is moving higher up away from the signal line.

Thanks AK71. The recent acquisition of MV Constantinoupolis for US$7,850,000 is timely and at a really good price. This will increase their capacity to 530,000 dwt, a 30% increase. i expect it to contribute positively to top and bottomline this year.

Courage Marine: A premature attempt to move higher, it seems. Price ended unchanged. Any retreat in price should find support at 21c. I would accumulate on weakness as improving fundamentals make this counter more promising over the next few months. Hi MacGyver. I feel good about Courage Marine too. singaporeanstocksinvestor.blogspot.com/2...ves-of-recovery.html

One catalyst that many people do not know -- is that the Chairman is a Taiwanese. The Company is a very potential candidate for Taiwan dual listing (TDR) Shipping stocks in Taiwan are doing very well -- Yang Ming, Evergreen etc. If Courage Marine does go for TDR, it is a bonus.

Courage Marine: Although on signifcantly reduced volume, we have another black candle today. With MFI in the overbought region and with OBV turning down, the probability is higher for the counter to retrace to support. I see initial support at 21c. Yes, the company has Taiwanese\' leadership.

Time to load up on the shipping stocks. Asian Shipping Stocks We upgrade CSCL and Yang Ming to Buy Freight rate hikes in 1Q10 have been strong and better than we expected. We raise our earnings forecasts for liners under our coverage, and think there is upside risk to consensus forecasts. Key positive catalysts in 2Q10: (1) rapidly declining loss for the industry in 1H10, and (2) a positive outcome to Transpacific rate negotiations. We recommend investors switch to laggards such as CSCL and Yang Ming and continue to buy quality names such as OOIL and Evergreen Marine. Demand recovery continues to gather pace; stay invested in 2Q Historical data suggest that re-stocking typically lasts for as long as economic expansion continues. This, along with the record inventory burn-off, suggests that inventory rebuilds will remain as a strong driver for volume in next three to four quarters. A 50% delivery slippage in 1Q 2010 has helped the demand/supply situation year to date. Supply headwinds may increase ahead as idle capacity is brought back but, in the meantime, there are likely to be more positive data points than negative ones for the sector over the next three months. Rate hikes in 1Q10 surprised us on the upside; TP rate hike next In our view, annual Transpacific rate negotiations in May should result in a return to profitability for that route. While our earlier theme that the industry will turn around in 2H10 appears increasingly likely, there will probably be a period of rate consolidation after that as the industry absorbs the idle capacity. Earnings, target price and rating changes We significantly raise our 2010-11 earnings estimates across the companies under our coverage as recent industry recovery turned out stronger than we previously expected. We also raise our target prices for all the stocks under our coverage. We upgrade CSCL and Yang Ming to Buy as they lag their peers. We downgrade NOL and Hanjin to Hold from Buy due to their strong performance year to date. P/B is the key valuation metric; freight rate is the major risk We expect a gradual recovery in the industry over the next 12-18 months and believe this warrants a valuation above book. But the substantial latent capacity suggests that the recovery is unlikely to be V-shaped. In this sense, at 1.2x forward PB, or one standard deviation above mid-cycle valuations, we believe the sector is fairly valued, hence our Neutral view. An up/downside risk lies in freight rates: a 1% rise in rates boosts 2010E earnings by 21-146% across the sector. Regards, Sky Hong Deutsche Bank - Equity Research