Taiwan-based liner carriers Wan Hai and Evergreen Line are on firmer financial footing than their compatriot line Yang Ming, according to a report Monday from Drewry Maritime Equity Research.
“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,” Drewry said. “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, said he expects to see mixed profitability for the lines in 2013.
“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. 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 next 6-18 months as unit costs become much more competitive and profitability returns,” Kapoor said.
Kapoor said he doesn’t believe the worst is behind Yang Ming and remains 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,” he said.