Company Reports

United States East Coast and Gulf Coast ports went on strike the morning of Oct. 1, 2024, threatening significant trade and economic disruption ahead of the busy holiday shopping season. While Maersk and Hapag-Lloyd’s stock prices are heavily tied to the price of container shipping and potential short-term increases will benefit the stocks, we do not change our long-term view.

We have lowered our Maersk fair value estimate by 25% to DKK 12,700 per share following a transfer of coverage. Lower profit margin assumptions in the shipping and logistics segments and lower revenue growth in logistics are the major drivers of our revised valuation. We retain our High Morningstar Uncertainty and Standard Capital Allocation ratings. Although Maersk is the second-largest global shipping company, we assign it a no-moat rating, given its inability to leverage that position to create a meaningful cost advantage and consistently earn returns on capital greater than its cost of capital.

Maersk is now a focused global shipper and logistics company after divesting its energy and drilling, banking, and towage businesses in recent years. It is investing heavily to build the logistics and solutions segment, hoping to see equal revenue as the core maritime shipping business in the future. The shipping business, oceans, remains the largest division, contributing 75% of group EBITDA, but capacity is not expected to grow further. As a result, we expect its EBITDA contribution to fall to 65% by 2028.

No-moat Maersk's operating profit fell 40% from the prior year as increases in operating costs due to attacks in the Red Sea more than offset growth in freight rates and volumes. However, the outlook is trending upward after the firm struggled for the last three quarters. Management increased guidance for the third time this year at the beginning of August, increasing EBIT to a range of $3 billion-$5 billion, a far cry from negative EBIT guided at the beginning of the year. Management also raised capital expenditure guidance to $10-$11 billion for 2024 and 2025. Our DKK 16,935 fair value estimate is unchanged.

Last month, when digesting Maersk’s first-quarter update, we spoke about how the ongoing disruptions in the Red Sea were offsetting the oversupply in container shipping markets, but that this offset was just papering over the cracks and would not last forever. Although we still know this to be the case, the Red Sea disruptions are going on long enough for Maersk to issue a guidance raise, with EBITDA now expected to be USD 8 billion at the midpoint for the full year, up from USD 5 billion. We reiterate our DKK 16,900 fair value estimate and see attractive upside potential from the prevailing share price.

It's difficult to say that shipping giant Maersk had a "good" first quarter when profits have fallen more than 90% year over year, but relative to previous expectations, that is indeed the case. Ongoing Red Sea disruptions have papered over the cracks caused by oversupply in container shipping markets, leading to a better than expected result for the period. Management has tightened its guidance for the full year, raising the lower end of the range, but this points to at best zero EBIT for 2024. We maintain our DKK 16,935 fair value estimate and believe the shares offer attractive upside for investors willing to look past the current malaise.

2023 was a difficult year for Maersk and indeed the entire shipping industry. The no-moat company reported full-year revenue down more than a third from 2022 levels and EBITDA down a whopping three fourths. This was well flagged before the earnings release, however, so if you’re wondering why the shares are trading down heavily today, this is not the reason. We believe the wide guidance range for 2024 and the pause on share buybacks are the cause, with investors fearing the high level of uncertainty. We maintain our DKK 17,600 fair value estimate and believe that a lot of negativity is baked into the share price at this point.

Shipping giant Maersk delivered a disappointing third-quarter update on Nov. 3. While nobody expected blowout numbers, it was the language and downbeat tone of the statement that has taken the wind out of investors’ sails, with the shares down more than 10% at time of writing. We maintain our DKK 17,600 fair value estimate for the stock, believing that a whole lot of negativity is baked into the share price at this point. That being said, investors hoping for a quick turnaround might be disappointed.

A.P. Moller-Maersk is a Denmark-listed transport-based company. Over the last decade, the company has made material changes to its structure and focus, divesting assets in peripheral areas such as supermarkets, banks, and oil and gas. The business is now slimmed down to four divisions, Ocean, Logistics, Terminals, and Towage. The company has been aggressively expanding its logistics business in an effort to diversify away from the asset-heavy Ocean business, taking advantage of the ready-made customer base that comes with the Ocean business.

For investors wanting good news from the no-moat shipping company Maersk, the Aug. 4 second-quarter results were not it. The company downgraded it's full-year outlook for container shipping volumes to negative 3.5% on 2022 levels at the midpoint. This is downbeat, but not disastrous. At current share price levels we believe much of this negativity is already baked in and we see very attractive upside to our DKK 20,000 fair value estimate.

Volumes retreated across the board for Maersk as the anticipated correction arrived in the first quarter. A decline in freight rates as global supply chain blockages are finally relieved, combined with a fall in volumes, driven by lower consumer demand and business spending, drove revenue down by more than a quarter year over year. Guidance for the full year is pointing to volume growth in the ocean business being flat at best, leading to EBITDA of $9.5 billion at the midpoint, roughly a quarter of what the company did last year. However, we see attractive upside to our DKK 20,000 fair value estimate from here.

A.P. Moller-Maersk is a Denmark-listed transport-based company. Over the last decade, the company has made material changes to its structure and focus, divesting assets in peripheral areas such as supermarkets, banks, and oil and gas. The business is now slimmed down to four divisions, Ocean, Logistics, Terminals, and Towage. The company has been aggressively expanding its logistics business in an effort to diversify away from the asset-heavy Ocean business, taking advantage of the ready-made customer base that comes with the Ocean business.

Despite headlines of “profit plunges” for Maersk, reported in media such as the Financial Times, its shares were up a touch on Feb. 8 as investors digested full-year numbers from the shipping giant. After the feast usually comes the famine, and Maersk’s EBITDA guidance for 2023 is certainly a deterioration from the heights of 2022. However, management’s belief that inventory corrections should be complete by the end of first-half 2023 provides an incentive for investors, who may have believed that 2023 was a write-off. With the numbers largely baked into our existing forecasts we do not expect this to alter our contrarian view on the stock. We see recent share price declines as an overreaction, and view the shares as being an attractive proposition on a risk/reward basis. We reiterate our DKK 26,500 fair value estimate.

Maersk’s announcement that it is changing its CEO appears to have taken the market by surprise, with shares down ahead of the market on Dec. 12. Soren Skou, who has been head of the company since 2016, is stepping down and making way for Vincent Clerc, the current CEO of the ocean and logistics business, a natural successor. Coming on the back of a strong third-quarter update, we believe the market will ultimately shrug off any concerns around the change in leader, and we reiterate our DKK 26,500 fair value estimate. With more than 70% upside from the current share price, we see Maersk as a highly attractive opportunity.

Shipping giant Maersk released third-quarter results and was effusive about the uplift in revenue and profits from this time last year. However, the only question on investors’ minds is: what is the trajectory of revenue? Having previously guided to flat container demand for 2022, the company has now lowered this estimate to negative 3% at the midpoint, with our concern being that this trend could continue to worsen. The company maintained full-year guidance around EBITDA and cash flow, as many clients are still locked into contracts based on higher freight rates. While we may tweak our estimates on the back of this update, this will not change our view on the stock, which is currently in 5-star territory with more than 70% upside to our DKK 26,500 fair value estimate.

The supply chain crisis is improving, lockdowns in the West are a thing of the past, employment in transportation is back to precoronavirus levels, and port congestion is, by and large, easing. While all this is occurring, the effects are still working their way through the system. Meanwhile, a firm like Maersk, the world’s largest shipping company, is making the most of the current situation. The company has once again raised full-year guidance, on the back of stronger-than-expected results, primarily in the ocean business. We expect to adjust our near-term forecasts upward, but with our fair value estimate already at DKK 26,500, this won’t have any impact on our view of the stock. With almost 30% potential upside from prevailing levels, we believe the stock is highly attractive.

Having just last week upgraded their full-year guidance on the back of a stronger-than-expected performance in the first quarter, surprises are few and far between on this morning's trading update by A.P. Moller-Maersk, or Maersk. While we may tweak our near-term forecasts in the coming period, we do not expect this to have a material impact on our DKK 26,500 fair value estimate. At these levels, we view the shares as highly attractive.

With Maersk’s share price falling back sharply from its December 2021 highs, the surprise trading announcement on April 26 was just the shot in the arm the shares needed. The company now expects it’s first-quarter numbers to come in ahead of previous guidance, as the supply chain issues that allowed the company to make a profit in 2021 have continued into 2022. Management upgraded their full-year expectations for EBIT and EBITDA by around 25%. While we expect to adjust our forecasts accordingly, this does not change our view on the stock, with our DKK 26,500 fair value estimate sitting comfortably above the current share price level, even with the positive price move on April 26. Therefore, we believe Maersk offers an attractive buying opportunity.

A.P. Moller-Maersk is a Denmark-listed transport-based company. Following divestments of its oil and gas-related operations, the group is now essentially composed of three businesses: ocean, logistics and services, and terminals and towage.

Following weeks of speculation, the news that Russia has officially invaded Ukraine comes as only a semishock for equity markets. Ahead of the attack, the European Union, or EU, approved a range of sanctions against Russia, described as the “harshest ever,” to no real effect in terms of deterrence. For markets generally, we are now in a period of high uncertainty with very limited visibility of how the situation will play out. For the most part, our European coverage list lacks material exposure to Russia or Ukrainian assets, but any prolonged conflict here could have further knock-on effects from a macroeconomic perspective.