Even though Latin American stock exchanges boast hundreds of traded companies, only a handful of them have any exposure to maritime activities. A few big names have shipowning subsidiaries. Others operate marine terminals. Usually, such companies are commodity producers or offshore service providers, such as Grupo México, Petrobras, Vale or YPF. However, any maritime business is but a small fraction of said companies’ operations. For this reason, they cannot be viewed as marine investment vehicles.
Nonetheless, a few listed players can still be described as “marine companies”. Those are GEN, CSAV and SAAM (Chile), TMM (Mexico), Wilson Sons, Santos Brasil and Log-In (Brazil).
GEN, or Grupo Empresas Navieras (ticker NAVIERA at the Santiago Stock Exchange), was up 10,6% year-to-date by market close on October 15. The company has seen its business reduce in size after selling CCNI to Hamburg Süd in 2015, losing the lucrative Asian car carrier business last year and facing continuing losses from their smallest 3,100-TEU vessels jointly owned with Peter Döhle. Yet, after falling 12% in 2018, GEN’s stock is breathing again this year based on a successful portfolio management and brighter prospects for its terminal and logistics businesses.
Image credits: Log-in stock photos.
The other two Chilean players are controlled by one of the country’s largest conglomerates: Quiñenco Group, majority-owned by the Luksic family. CSAV (VAPORES) is up 30,8% YTD and SAAM (SMSAAM), 6,3%. Although CSAV’s car carrier business has been far from exciting, its 27,5% stake in Hapag-Lloyd is paying off handsomely in 2019. The German container carrier has been posting industry-leading results on the back of higher freight rates and bigger volumes. On top of that, the appetite of CSAV and Mr. Klaus-Michael Kühne to buy more and more fleet float shares have driven Hapag-Lloyd’s share price to incredible highs, closing on October 15 at 60 Euro, or 168% YTD. Having its focus oriented towards more stable markets such as port terminals, towage and logistics, SAAM usually doesn’t benefit from such wild variations. However, when things go wrong, it helps balancing Quiñenco’s portfolio: in 2018, while CSAV fell 40,58%, SAAM shed ‘only’ 9,36%.
Grupo TMM (TMMA at the Mexican Stock Exchange) and Brazilian Wilson Sons (WSON33) are the two companies being punished by the market. While the former has lost 10,4% in value this year, the latter is down 14,4%. Wilson Sons, like SAAM, is heavily exposed to the container terminals and towage businesses. Still, its JV with Chile’s Ultratug, Wilson Sons Ultratug Offshore, had 7 of its 23 PSVs in lay up at the end of June. The depressed worldwide offshore market, incapable of short-term recovery by overcapacity and discouraging oil prices, is taking its toll. Brazil offers some hope with the oil majors’ currently extensive project pipelines, but any substantial change in rates for support vessels will take some time. The same may be said of TMM, whose large non-performing offshore fleet is anchoring improvements made in the towage, product tanker and logistics segments.
The last two companies, however, have nothing to complain about. Riding on solid management, a slow but steady recovery of Brazilian trade volumes and above all, on the demise of a relevant competitor (Libra Terminais), Santos Brasil’s (STBP3) shares have climbed 24,8% in 2018 and 58,9% this year.
Log-In, which is almost a pure-play cabotage container shipping company despite also having shore investments, is Latin America’s current stellar success story. After suffering for years by a depressed market, low fleet utilization and a disastrous newbuilding program, it all changed in May 2018, when truckers brought the country to a standstill through an unprecedented strike. The events had many economic implications, including a table fixing road freight values, a distortion that justifiably has been attacked by almost all supply chain operators. But the main implication for Log-In was that the cabotage market has been booming ever since. Previously hesitant shippers have added ‘strike risk hedging’ to their reasons for using coastal shipping services, together with cost analysis and avoiding Brazilian still precarious and unsafe roads. Competitors Mercosul Line (owned by CMA CGM) and Aliança Navegação (owned by Hamburg Süd) are also benefiting from the upsurge, but the effect is most visible at Log-in shares: they jumped 167,4% in 2018 and again by 149,7% so far this year.
The affluent scenario for marine stocks shall not be taken for granted, since regional benchmarks show less exuberance: although Brazil’s Ibovespa is up 18,9% YTD, Mexico’s IPC is up a thin 4,4% and Chile’s IPSA, just 1,0%.
Marine listed companies are scarce in Latin America. Maybe some of them have problems with too little liquidity or too much volatility. But when things go right, they reward whoever was patient enough to wait. Isn’t that the same story in shipping as a whole? After falling 28,4% in 2018, the MSCI World Marine index is up 12,96 this year, while the Dow Jones Global Shipping index in up 15,6%, following the 29,2% slump in 2018.
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