Share spike suggests bets on OOCL sale

Affinity Shipping believes market is convinced that OOIL will cash in boxship chips.

A surge in OOCL’s share price means the market is convinced Hong Kong boxship line OOCL will be sold, according to Affinity Shipping.

Speculation has been mounting about a deal following Maersk’s purchase of Hamburg Sud and other consolidation moves in the sector.

The UK broker’s boxship analyst Fotios Katsoulas said: “The market looks rather convinced that Orient Overseas (International) Limited (OOIL) is considering liquefying its liner shipping arm, OOCL, following the container shipping industry’s consolidation wave.”

He pointed out that the company’s share price has risen by more than a fifth since the beginning of 2017, and by almost a half since 2016’s lowest levels last July.

He tips CoscoCS and Evergreen as among the potential buyers.

“However, none of them has so far publicly expressed any interest in taking part in another round of container acquisitions,” he added.

Katsoulas said OOCL still looks “rather attractive, mainly [due] to its consistently profitable container shipping operations and strong yield management.

“It is true that the company will most probably report a full year net loss for 2016, as it could not just remain unaffected by the huge liner market downturn.

“However, this will be the first negative annual performance, at least since 2009.”

The line is controlled 69% by the Tung family and now could be a good time to sell, he added, with its relatively small fleet likely to find it tough to compete against bigger rivals.

The company has consistently denied it is looking to sell, however.