AP Moller Maersk’s 2Q results highlight across different businesses in Transport &Logistics segment: AP Moller Maersk (APMM, MAERSKB DC, DKK13,080, Buy, TPDKK15,500; covered by Edward Stanford) announced results on 16 August and we havelooked at the performance of its Transport & Logistics segment, which has a direct impacton Asia Marine coverage. Maersk Line returned to profit (margins improved 7.0ppt q-o-qand 8.5ppt y-o-y to 6.0% in 2Q17) after four consecutive quarters of losses, driven by astrong recovery in East West freight rates and steady improvement in North South routes.    Maersk Container Industry, the container manufacturing arm of APMM, saw a 161% yo-y increase in revenue, driven by higher sales (mostly from Maersk Line) and the marketprice for dry containers. On the other hand, Damco, the freight forwarding arm of APMM,reported only a breakeven given margin pressure as it was not able to fully pass on therising ocean freight rates to customers. APM Terminal, the port operating arm of APMM,has seen volume from Maersk Line grow 7-8% y-o-y in 2Q17, while its effectivethroughput grew by only 4.3%. Consolidation of liner services has also negativelyimpacted volumes and rates, particularly in Latin America. Outlook: Maersk Linereiterated the expectation of an improvement in excess of USD1bn in underlying profit in2017, compared to a loss of USD384m in 2016, mainly driven by improvements in freightrates and partly increasing volumes.    Read-across to Asia Marine coverage: APMM’s results reinforce our thesis for differentsub-sectors in Asia Marine coverage. In container shipping, reading Maersk Line’sresults along with OOIL's, we believe 2H17 will be better than 1H17 and shipping linesexposed to long haul routes will see the biggest improvement. In ports, the resultsconform with our view that shipping lines will divert more volumes to affiliated ports torealize synergies. While this should bode well for companies like CS Ports, it wouldnegatively impact independent port operators like Westports. In containermanufacturing, a rebound in volume and price of containers further reinforces ourpositive view on Singamas' box manufacturing business.    Evergreen, CS Port and Singamas are our key Buys while we remain bearish onWestports. We believe Evergreen will benefit from the improvement in long-haul freightrates driven by higher annual contract rates. Meanwhile, CS Port could see increasingvolume from its bigger shipping parent, COSCO Shipping Holdings, which recentlyoffered to acquire OOIL. Singamas will also benefit from a rebound in container boxprices. However, Westports, as an independent port operator, could continue to losevolume given the container shipping sector consolidation and alliance reshuffle.

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