European Container Shipping: Container quotes show a mixed picture w/w

Research evidence excerpt

European Container Shipping: Container quotes show a mixed picture w/w

Valuation Method and Risk Statement

Our estimates which play an important role in our valuation and stock price targets are

subject to a high degree of error. The forecast error is primarily driven by revenue volatility, a

function of unpredictable ordering of capacity or unforeseen demand factors impacting

freight rates, combined with significant operating leverage. Ocean container volumes can be

meaningfully impacted by economic recessions. Cyber-attacks have historically targeted

ocean carriers with consequences in terms of increased cost and headwinds to the capacity of

serve clients. Increased emphasis globally on emissions reductions could lead to incremental

costs for the company to comply with regulation which may not be fully passed through to

customers. Increases in ocean carriers' profitability could trigger increased scrutiny and

intervention from regulators.

Upside risks to our valuations could come from meaningful disruption in shipping schedules

caused by port congestion, terrorist attacks or other factors. This could move the industry

from over capacity to under capacity and lead to meaningful increases in freight rates and

profitability. Valuation methods in the sector include DCF analysis.

A.P. Moller-Maersk:

ocean carriers (including Maersk) with consequences in terms of increased cost and

headwinds to the capacity of serve clients. Maersk has exposure to developing countries via

its Terminal business leaving its operations exposed to political instability. Increased emphasis

globally on emissions reductions could lead to incremental costs for the company to comply

with regulation which may not be fully passed through to customers. Increases in ocean