JPM says destocking could still hurt logistics volumes, prefers DSV over K+N

Zim Integrated Shipping Services

27/09/2023 13:38

** In a note on European logistics, J.P.Morgan says that if
sales continue to rebase lower across manufacturing, retail and
wholesale, further destocking may be required, delaying any
volume recovery
    ** The inventory to sales ratio across the U.S. economy is
similar to the pre-COVID average of 1.4x, the brokerage says
    ** It sees mid-long run container shipping EBIT of around
zero, translating to freight rates around 10% above the
pre-COVID level
    ** In freight forwarding, JPM expects unit margins to settle
10-30% above the pre-COVID level
    ** The broker upgrades DSV  DSV.CO  to "overweight" from
"neutral" and downgrades Kuehne und Nagel (K+N)  KNIN.S  to
"underweight" from "neutral"
    ** In recent quarters, DSV has been better than K+N at
retaining higher levels of gross profit generated during 2021
and 2022, the broker says
    ** Moreover, 2024 estimates for DSV seem less demanding than
for K+N, it says
    ** Despite K+N's EBIT supported by cost savings, taking out
additional cost will become more challenging, it adds
    ** The broker maintains "overweight" on ZIM Integrated
Shipping  2SV.F  and "neutral" on Maersk  MAERSKb.CO 
    ** It keeps "underweight" on DHL-owner Deutsche Post
 DHLn.DE  and Hapag-Lloyd  HLAG.DE 

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))