Equity Analysis /
Thailand

Thailand: Shipping - Low season is behind us, high season is approaching

  • RCL—too cheap to ignore and an expected DPS of Bt3 for 1Q22

  • BDI just passed low season

  • Shipping industry remains strong through 2022

Kijapat Wongmetta
Kijapat Wongmetta

Equity Research Analyst

Bualuang Securities
31 March 2022

We regard the recent stock price slides of PSL and RCL as opening a sweet entry point. Container freight rates should resume rallying in May. In dry bulk space, we think the BDI has bottomed out and will rally through 3Q22. Our upcoming Transportation & Logistics Day event next week will offer investors more insights and information. We expect both PSL and RCL to deliver bullish messages at our meetings.

RCL—too cheap to ignore and an expected DPS of Bt3 for 1Q22

The mean Shanghai Containerized Freight Index (SCFI) for March slipped 5.0% MoM, triggering market worries that the rate may have peaked and could fall further. RCL’s stock price has slumped during the past few days. But we view the freight rate slippage as only a hiccup tied to Shenzhen factory closures during a recent COVID-19 lockdown and unfavorable seasonality. SCFI data for the last 11 years show that the index typically declines in Mar and Apr (low season). In 10 of the last 11 years, the SCFI has slipped by an average of 5.2% in Mar—close to the recent dip. The SCFI typically resumes rallying in May through Sep. If history repeats itself this year, the SCFI could set a new record in mid-2022.