The Goldman Sachs Group says the earnings outlook for the container shipping sector in the Asia Pacific region looks "less certain" than the bulker freight market which is expected to see earnings growth accelerate in the fourth quarter of the 2007 calendar year.
To underline the group's view it pointed to the strong third quarter results in the bulker freight market reported by U-Ming Marine and China Shipping.
By comparison, its forecast for the container shipping market was less rosy, saying: "While container freight rates have rebounded, we believe there is a risk that persistently high operating costs may dampen the anticipated recovery in earnings," Goldman's Global Investment Research report said.
The group said in the report, which it released in October, that it was "more concerned about the likelihood of a (freight) rate correction by 2H" in the container shipping market.
With regard to the performance of airlines serving Asia Pacific trade routes, the Goldman report gave a more upbeat forecast, saying: "In our view, earnings growth should be fairly robust, given the strong passenger traffic in Asia on the back of a robust regional economy."
It attributed its positive outlook for airlines serving the market to its belief that airlines were likely "able to pass on higher costs (mainly jet fuel) through higher fuel surcharges. We believe a non-consensus stabilisation in cargo yields could provide upside earnings surprise".
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