CSFB cuts Evergreen Marine's rating

Evergreen Marine Corp (長榮海運) and two other Taiwan-based container shipping companies had their stock ratings cut by Credit Suisse First Boston on expectations that freight rates and profit will decline in 2006.

Evergreen Marine, Asia's largest container shipping company by fleet size, had its rating cut to ``underperform'' from "neutral," CSFB analyst Peter Hilton said in a report dated yesterday.

Wan Hai Lines Ltd (萬海航運) and Yang Ming Marine Transport Corp (陽明海運) had their ratings cut to "neutral" from "outperform."

"The strong probability that 2006 will be a year of declining rates and profit requires" a conservative valuation, the report said.

The rating cut by CSFB came after Wan Hai's vice chairman Chen Po-ting (陳柏廷) said that he expects freight rates to start falling in the second half of next year and would continue trending downward into 2007, a Chinese-language business daily reported on Wednesday.

Chen projected rates falling by 15 percent from now to then, the paper said.

In a move to ease market jitters following Chen's bearish guidance, Wan Hai vice president Jason Lee (李炫宏) on Wednesday made an emergency announcement, saying that the company still believed the industry will perform at this year's levels both next year and in 2006, as demand for container shipping capacity is expected to grow 12 percent to 14 percent next year.

Lee, however, said the industry may see a cyclical downswing in 2007.

Still, Hilton said it is "too early to sell" as the "best exit point" is late first quarter next year. Asian container shipping companies may see earnings upgrades next year and the sector traditionally does well late into the first quarter, the report said.