Singamas Container Surges 2.8% Amid Buy Rating By BOA-ML
Bank of America – Merrill Lynch rates Singamas Container (Hong Kong stock code 0716), the world’s second largest container-box maker, at Buy with a price target of HK$2.94, implying P/E of 11.7X and P/B of 1.4X for 2013. “It is a pure play for the expected sequential demand improvement in the container manufacturing industry.” The house expects the Singamas to deliver 37%/49% earnings growth in FY13/14 on its high operating leverage. “We believe Singamas will benefit from a steadily improving container manufacturing industry, thanks to disciplined capacity growth, high industry entry barriers, and volume increases on low 2012 base.” Singamas ended the session 2.8% higher at HK$2.20.
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Shipping: Singamas Container Holdings, the world’s 2nd biggest maker of container boxes, commented prices will rise as much as 9% by end-2010 as shippers struggle for containers amid rebounding global trade. The price of a standard TEU has already risen 50% YTD and it may climb to approx US$3,000 as early as Dec 10. It believes that the global dearth of containers may persist for as long as 2 years as box-makers have to reactivate plants idled during the global recession. The market is quite tight right now and shipping lines have to bring back empty containers from Europe and the US to meet Asia’s export demand.