Contents
Investment Case............................................................................................................................................................. 3
Investment Debates Summary....................................................................................................................................... 4
Debate #1: When will container manufacturing demand recover?............................................................................ 5
Container Manufacturing Demand to Recover from 2010....................................................................................................................................... 5
Earlier the Discipline, Sooner the Recovery............................................................................................................................................................ 5
Declining Container/Fleet Ratio Implies Rebalancing Opportunity During Industry Upturn ..................................................................................... 6
Sustainable Replacement Demand......................................................................................................................................................................... 7
Container Demand Not Fully Determined by Freight Rates .................................................................................................................................... 8
Earnings Recovery Follows Better Volume ............................................................................................................................................................. 8
Seasonal Analysis of Container Demand................................................................................................................................................................ 8
Debate #2: Can CIMC and Singamas survive the downturn?................................................................................... 10
World’s Largest Container Manufacturers............................................................................................................................................................. 10
Well Positioned to Weather the Downturn............................................................................................................................................................. 10
Larger Firms Are Financially Stronger................................................................................................................................................................... 11
Improving Financial Positions................................................................................................................................................................................ 12
CIMC: Strategic Support from Chinese Policy Banks ........................................................................................................................................... 12
Singamas: Rights Issuance to Enhance Liquidity ................................................................................................................................................. 12
Full Mix and Product Diversification Aid Outperformance ..................................................................................................................................... 12
Debate #3: Have the current valuations priced in major negatives?....................................................................... 13
Residual Income – Intrinsic Value Throughout the Cycle...................................................................................................................................... 13
P/B Multiple Looks Attractive Versus Historical Average ...................................................................................................................................... 14
High P/E Multiple A ‘Buy’ Signal............................................................................................................................................................................ 14
Macro Scenario Analysis............................................................................................................................................. 17
Peer Comparison: CIMC Has Outperformed Singamas ............................................................................................ 18
Company Analysis ....................................................................................................................................................... 21
CIMC .............................................................................................................................................................................. 22
Singamas ...................................................................................................................................................................... 43