Evergreen Marine Corp (長榮海運), Asia's largest container shipper, may have its eighth straight quarterly profit on higher demand for the transport of Asia-made goods from US retailers such as Wal-Mart Stores Inc.
Second-quarter net income probably rose 19 percent from a year earlier to NT$3.21 billion (US$99.5 million), according to the median estimate of six analysts surveyed by Bloomberg News. Taipei-based Evergreen must report earnings by Aug. 31.
Evergreen, Nippon Yusen K.K. and other shipping lines have boosted sales by transporting more toys, home appliances and garments made in Asia to the US and Europe.
Demand for sea freight and congestion at ports have pushed rates higher. About 80 percent of global trade is carried by sea.
"International trade in general was solid" and helped push up demand for transport, said Sophie Fan, an analyst at Capital Securities Corp (群益證券) in Taipei. "Freight rates were high and sales volume increased." She recommends buying the stock now and holding it for about two months.
US imports soared to an all-time high of US$165.7 billion in June as a strengthening economy prompted companies to import more crude oil and a record amount of goods from China, the US Commerce Department said on Aug. 12.
Taiwan's exports increased 6 percent from a year earlier to US$46.8 billion in the second quarter, as companies such as chipmaker Nanya Technology Corp (南亞科技) sold more products to overseas customers.
Rising demand will probably increase freight rates for routes to the US and Europe by between 3 percent and 5 percent this year and those for Asia by 15 percent, Capital's Fan said.
Shares of Evergreen closed unchanged at NT$23.1 on the Taiwan Stock Exchange. Evergreen's shares have lost 21 percent this year, performing worse than the 0.5 percent decline in the benchmark Taiex index.
Sales, reported earlier, climbed 7.6 percent from the previous year to NT$10.8 billion in the second quarter.
Routes to North America account for about half of the company's revenue, according to Daphne Tsai, public relations manager at Evergreen.
The company and affiliates have a total of 150 vessels, which can carry a combined 440,000 standard 20-foot containers.
As bigger ships come into service, analysts have said capacity may exceed demand. The capacity of ships on order at shipyards is almost 60 percent of the current container ship fleet, Credit Suisse First Boston said in a July 7 research.
"Next year is worrisome" and Evergreen Marine's profit may decline about 40 percent from this year, said D.C. Wang, analyst at Yuanta Core Pacific Capital Management Co (元大京華投顧) in Taipei. He has a "hold" rating on Evergreen Marine stock.
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