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Mixed fortunes for Taiwanese shipping companies

Nov 19, 2013
Taiwanese container shipping companies have experienced mixed fortunes in recent years with varied profitability.

Intra-Asia specialist Wan Hai has seen steady returns and resilient growth whereas long-haul players Evergreen Marine and Yang Ming Marine continue to suffer losses mirroring the wider industry downtrend. Financial health varies markedly for the three companies with Wan Hai and Evergreen Marine on a stronger balance sheet footing than Yang Ming Marine which has a stretched balance sheet.

Rahul Kapoor, Senior Analyst at Drewry Maritime Equity Research stated, “Taiwanese container companies will continue to see mixed profitability as we expect long-haul carriers Evergreen and Yang Ming to see full year losses in 2013 with Wan Hai the only exception. We expect earnings for Wan Hai to be resilient and insulated from volatility in the long haul trades but at the same time any economic recovery in the West is unlikely to reward Wan Hai, corroborating our Neutral outlook on the Company. We are much more positive on Evergreen Marine. We positively view Evergreen’s exceptional timing in judging the investment cycles with cash preservation and strong balance sheet at the core of its strategy. We see Evergreen’s fleet expansion to start bearing fruit in the next 6-18 months as unit costs become much more competitive and profitability returns. We are Negative on Yang Ming as we don’t believe the worst is behind them in terms of continued losses and are concerned with its stretched balance sheet. Even as we see positives from bigger vessels joining the fleet in 2015-16, we see the delivery timing a little too late as unit costs stay elevated near term with full year profitability returning only in 2015.”

Photo: The Yang Ming vessel People at Keelung.

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