Barclay's Review 2014 - Ports

Equity Research
7 January 2014
Asia ex-Japan Infrastructure & Transport
Container ports 2014 themes
INDUSTRY UPDATE
In this report, we explore the key 2014 themes, specifically Chinese overseas
expansion and Chinese export competitiveness.
NEUTRAL
China overseas expansion: Overseas expansion of Chinese port operators is driven by

slower Chinese volume growth and limited domestic takeover targets. China Merchants
has recently invested over US$1bn overseas and we expect COSCO Pacific to expand
overseas in 2014 with the US$1.2bn proceeds from the CIMC disposal.
Unchanged
Jon Windham, CFA

+852 2903 4672
jon.windham@barclays.com
Barclays Bank, Hong Kong
Chinas eroding export competitiveness: We take a deep dive into the Chinese market
share of US imports by individual product and find stagnant or declining market share
for Chinas exports of lower value manufacturing, such as apparel, toys and furniture
all key container cargos and a driver of slower Chinese container volume growth.
Gain from others pain: Chinas move to invest internationally coincides with deep
distress in the container shipping industry, which we expect to continue in 2014E. AEJ
container liners under our coverage have increased net debt by US$23bn and disposed
of US$13bn in non-core assets in 2009-13E to fund their core shipping businesses. We
estimate that container liners globally still own 74mn teu of terminal capacity and see
2014 as a buyers market.
Stock views and risks: Our top pick is COSCO Pacific, which we believe is best
positioned to capitalize on expansion opportunities and trades at just 11x 2014E P/E
compared to the peer average of 14x. Fed tapering denting US consumption is a key
risk to volume growth and port profitability in 2014.
Voting has begun for the 2014 Institutional Investor All-Asia Research Team survey. Barclays
welcomes your support. To request a ballot, please go to the II Ranking Assistance page.
0
FIGURE 1
Change in Chinas market share of US imports by product year-end Oct-13
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
Source: US customs, Barclays Research.
Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies
covered in its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
This research report has been prepared in whole or in part by equity research analysts based outside
the US who are not registered/qualified as research analysts with FINRA.
PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 20.
Saurabh Mishra
+91 22 6719 6386
saurabh.c.mishra@barclays.com
BSIPL, Mumbai
Esme Pau
+852 2903 4363
esme.pau@barclays.com
Barclays Bank, Hong Kong
Barclays | Asia ex-Japan Infrastructure & Transport
CONTENTS
INVESTMENT SUMMARY ................................................................................ 3
CHINESE EXPORT COMPETITIVENESS ........................................................ 7
CONTAINER SHIPPING UNDER PRESSURE ...............................................17
7 January 2014
INVESTMENT SUMMARY
2014 container port themes
We expect global container volumes to grow by 3.4% in 2014 compared to +2.9% y/y in
2013E. However, even with depressed growth rates, we expect the container terminal
operators to continue to show resilient earnings growth due to their strong monopoly-like
position in origin and destination terminals. We expect 2014E EPS for our AEJ ports
coverage to grow 3% y/y. This is in contrast to the container shipping industry, which we
expect to face another difficult year in 2014.
Key trends
We identify the following key trends: 1) Chinese operators investing globally; 2) pressure on
container shipping lines; and 3) China export competitiveness.
Chinese operators investing globally

Strong domestic cash flow, slower organic Chinese container volume growth and limited
opportunities for domestic acquisitions should continue to motivate the Chinese container
operators to invest internationally in 2014. We identify US$26bn in potential container
terminal assets held by container shipping lines.
COSCO Pacific: We expect COSCO Pacific to be actively looking for international container
terminal and leasing fleet acquisitions funded from the US$1.2bn in proceeds from the
selling of its stake in CIMC, as per a recent management update.
China Merchants: The company has deployed over US$1bn in recent years, broadening its
international footprint with large investments in Europe through its Terminal link
investment and in South Asia with an 85% stake in a US$500mn greenfield project in Sri
Lanka. We expect 2014 to be a year of integration rather than further expansion.
In this report, we identify 74mn teu of capacity that is currently owned by container
shipping lines that might be potential acquisition targets.
Pressure on container shipping lines

We expect continuing weakness in container shipping to drive further pressure on container
trans-shipment pricing as container lines look to consolidate cargos through alliance and
reduce trans-shipment expenses, potentially negatively impacting HPH Trust and
Westports. Alternatively, balance sheet pressure on the container lines could provide the
opportunity for further asset purchases by the expanding Chinese port operators, COSCO
Pacific and China Merchants.
FIGURE 2
Revenue trans-shipment vs O/D
FY2013E
Trans-shipment
Import / export
Westports
China Mer
COSCO Pac
DPW
HPHT
ICTS
Xiamen
Adani
57%
43%
40%
60%
30%
70%
55%
45%
25%
75%
35%
65%
15%
85%
0%
100%
Source: Company data, Barclays Research estimates
China export competitiveness

We provide a detailed analysis of Chinas market share for US imported manufactured
goods and see clear trends that Chinas share of low-end manufactured goods trade is
starting to, at worst, decline and, at best, stagnate after rapidly increasing for 15 years. Low
value, but bulky goods are the life blood of container shipping and China is losing market
share of US imports in apparel, shoes and furniture. A detailed analysis of shoes indicates
that Chinas market share declines are coincidental with a relative decline Chinas pricing
advantage. We view this as a long-term trend that will increasingly focus port investment
outside of China.
7 January 2014

FIGURE 3
Chinas market share of US imports
YE Oct 2013
Total endmarket
growth
Total US
imports from
China
Product
China's market share
Notable market share gainers
US$ bn
y/y
Current
Chg 1-yr
Chg 3-yr
Chg 5-yr
From peak
Chg 5-yr
Shoes
24
4.5%
69.1%
-3.0%
-7.2%
-5.1%
-7.2%
Vietnam +5.4%; Indonesia +2.6%
Apparel
58
3.4%
39.0%
-0.6%
-2.1%
5.3%
-2.1%
Vietnam +2.7%; Bangladesh +1.4%
Toys
17
-2.0%
87.6%
1.1%
-1.4%
-3.3%
-3.5%
Mexico +2.3%; Canada +1.3%
Furniture
29
6.3%
57.9%
-0.4%
-1.1%
2.2%
-1.4%
Vietnam +3.4%; Mexico +1.5%
128
3.5%
55.4%
-0.8%
-2.7%
1.5%
-3.1%
Lower-end manufacturing
Household Appliances
23
5.4%
54.6%
3.2%
6.1%
7.3%
0.0%
Thailand: +0.3%; Mexico: +0.2%
HVAC equip
10
5.1%
30.1%
-1.7%
0.5%
1.3%
-2.1%
Mexico: +5.7%; Korea: +0.8%
Construction machinery
16
-12.4%
7.2%
0.9%
0.8%
2.5%
0.0%
Japan: +6.1%; Korea: +1.2%
Auto parts
94
5.0%
10.8%
0.5%
0.8%
2.7%
0.0%
Mexico +6.1%; Korea +3.0%
143
3.1%
18.8%
0.8%
1.6%
3.3%
-0.1%
Higher-end manufacturing
Computers
26
-2.5%
63.8%
0.9%
3.3%
10.6%
0.0%
Mexico +6.7%; Vietnam +1.1%
Audio Visual
32
-7.1%
39.3%
-1.1%
-4.0%
-1.8%
-4.9%
Mexico: +2.0%; Thailand +1.7%

Vietnam +0.6%
48
10.8%
69.6%
6.7%
26.7%
31.0%
0.0%
Electronics
Wireless equip
106
2.1%
59.0%
2.9%
11.7%
16.1%
-1.5%
Total China exports
443
2.3%
23.1%
0.3%
0.0%
2.7%
-0.6%
Mexico +1.5%; Vietnam+0.5%
Source: US Census, CEIC, Barclays Research
Stock views
We remain positive on Chinese container terminal operators and expect continuing
weakness in the container shipping space to offer further opportunities to expand their
international footprints at reasonable entry points. Our top pick is COSOC Pacific. We also
expect further news flow on expansion of Free Trade Zones (FTZ) in China to be positive for
property valuations and investor sentiment for Chinese port stocks.
FIGURE 4
Asia ex-Japan ports valuations comparison
Ports
1
2
3
4
5
6
7
8
Industry
Rating view
Price Pot. up/

P/E (x)
P/B (x)
ROE (%)
Price target
down 2013E 2014E 2013E 2014E 2013E 2014E
Div yield
(%)
2013E
Company Name
Ticker
China Merchants
COSCO Pacific
Hutchison Port Holdings
International Container
Terminal Services
Westports
Adani Ports and SEZ
Essar Ports
Gujarat Pipavav Port
0144.HK
1199.HK
HPHT.SI
ICT.PS
OW
OW
EW
EW
Neu
Neu
Neu
Neu
27.65
10.40
0.68
101.90
28.62
15.15
0.78
90.00
3
45
15
-11
14.1
5.4
24.1
29.3
12.9
11.0
24.1
22.5
1.4
0.9
0.7
5.5
1.4
0.8
0.7
4.7
10.5
16.7
2.9
20.3
10.8
7.7
2.9
22.6
3.2
7.5
7.6
0.9
WPHB.KL
APSE.NS
ESRS.NS
GPPL.NS
UW
OW
OW
EW
Neu
Neu
Neu
Neu
2.53
2.20
149.90 173.00
59.20 83.00
64.70 55.00
-13
15
40
-14
Average:
20.7
19.5
7.6
22.0
13.2
22.6
16.0
6.7
19.8
14.3
5.4
4.6
0.9
2.3
1.5
5.1
3.8
0.8
2.1
1.4
26.9
23.5
12.2
10.5
15.4
23.3
23.8
12.2
10.4
14.2
0.0
0.7
0.9
0.0
2.6
Source: Company data, Barclays Research estimates. Share prices and target prices are shown in the price target currency. Priced as of end 3 Jan 2014. Stock ratings:
OW: Overweight; EW: Equal Weight; UW: Underweight. Industry view: Pos: Positive; Neu: Neutral; Neg: Negative. For full disclosures on each covered company,
including details of our company-specific valuation methodology and risks, please refer to http://publicresearch.barcap.com.
5
7 January 2014

China Merchants (144 HK; OW): We expect 2014 to likely be a year of integration rather
than further expansion for China Merchants, following its US$1bn capex spent on overseas
ports, namely Terminal Link in 2013. In addition, we believe the company also offers
exposure to Chinas FTZ policy through its land bank in Qianhai and 24.5% interest in SIPG
(600018 CH; not rated) and expect further news flow on expansion of FTZs in China to
serve as catalysts. The stock is currently trading at 12.9x 2014E P/E, vs the China peer
average of 13.0x.
COSCO Pacific (1199 HK; OW): Our top pick is COSCO Pacific, which we view as being best
positioned to capitalize on expansion opportunities and reasonably valued at 11.0x 2014E
P/E, vs the China peer average of 13.0x. We expect COSCO Pacific to be actively looking for
international terminal acquisitions from the US$1.2bn cash proceeds raised from the
disposal of CIMC stake, based on a recent management update.
HPHT (HPHT SP; EW): Given the maturity of its port assets, limited expansion opportunities
and cost squeeze, 2014 should be a year of trials for HPHT, as it attempts to maintain its
stature as a yield play. The share price has declined 13% in the past three months, and is
currently trading at 15.9x 2014E P/E, after adjusting for depreciation. Our current 2014 DPU
forecast of HK$0.37 implies 7.0% yield based on the current share price.
ICTS (ICT PM; EW): We believe ICTS will continue to be a growth story in 2014, given its
existing global footprint and ramp-up of ports in emerging markets such as Mexico,
Honduras and Argentina. Currently trading at 22.5x 2014E P/E, valuations appear rich, as
growth expectations have likely been built in, making any slip-up in the delivery of EPS
growth disappointing.
Westports (WPRTS MK; UW): Depending on how the formation of the P3 network plays out
in 1H 2014, Westports may either make or break in 2014. Our main concern for the
company in 2014 is the potential diversion of container volumes under the P3 networks
proposed route schedule changes should the network be formed. The stock is flat from its
October 2013 IPO price and is currently trading at 22.6x 2014E P/E.
Adani Ports (ADSEZ IN; OW): Adani Ports is our preferred pick in Indian ports. We believe it
provides sufficient visibility in volume growth and cash flows (c2x FY14E debt-to-EBITDA
coverage) in the current adverse macro environment. We expect the domestic coal deficit to
continue (India's coal traffic to increase from 198MMT in FY13 to 314MMT in FY17E;
Mundra c15% market share), benefitting Mundra, while the JV with MSC for container
terminal 3 (trans-shipment) should help it partially de-link from India growth dynamics.
Stock currently trades at 12.2x 2014E EV/EBITDA, which is close to its historical mean.
Essar Ports (ESRS IN; OW): We believe that the honouring of group take or pay (T/P)
contracts despite actual lower volumes is a positive; however, a turnaround in the
performance of group companies (specifically Essar Steel) is essential to maintaining the longterm viability of the T/P arrangement. Lack of third-party volume and potential delays in
commissioning of Paradip coal and Vizag iron ore terminal are overhangs on the stock. The
stock currently trades at 7.0x 2014E EV/EBITDA, which is at a 43% discount to Adani Ports.
Gujarat Pipavav Port (GPPV IN; EW): We believe that successful resolution of environmental
issues regarding its expansion is positive for the stock. We believe Pipavav has successfully
added new lines to offset the impact of departure of Maersk's ME1 line and expect its
container traffic to grow at c15% in CY14E. Nearby Hazira port (of Adani Ports) could pose
a challenge to Pipavav post the commissioning of a dedicated freight corridor. The stock
currently trades at 11.9x 2014E EV/EBITDA, which is at a 3% discount to Adani Ports.
7 January 2014
Key risks
The key risk to our positive view on the Chinese container terminal operators is the risk
associated with their international expansions. Specifically, this expansion opens them up to
a degree of foreign political risk they have not had to deal with historically. There is also the
risk that they over-pay for assets. However, this risk is mitigated to some degree by the
stress on container shipping lines in need of cash.
Our generally neutral view on the Ex-China container terminal operators is driven largely by
valuation, with these stocks trading at a large premium to the Chinese names on a 2014E
P/E basis. We view the risk of Fed tapering reducing emerging market P/Es is the key
downside risks to these names. On the upside, container volume growth rates should
continue to be stronger in ASEAN than in China, which might continue to attract investors
regardless of valuation.
7 January 2014
CHINESE EXPORT COMPETITIVENESS

In this section, we provide an analysis of Chinas market share for US imports by various
products. In our view, the data supports the notion that China is no longer gaining
market share in US imports trade market and appears to be losing market share on the
low-end of the value chain, the core of container volume flows.
Export product shift

Chinas overall share of US imports, excluding fuel, was 23.1% as of year-end Oct 2013.
After increasing dramatically over the previous decade after joining the WTO, China market
share gains have stalled. In this report look product by product to see how Chinas export
mix is changing. We use the US market as a proxy for a static consumption only end market.
FIGURE 5
Chinas share of US imports, ex- fuel
FIGURE 6
2014E share of manufactured goods exports
25%
23%
China
20%
Other
24%
21%
19%
17%
15%
13%
11%
9%
7%
5%
Taiwan
2%
Canada
2%
Mexico
2%
Germany
10%
Singapore
Belgium
2%
3%
UK
3%
Netherlands
3%
Italy
3%
Source: US customs, Barclays Research.
US
10%
France Korea
4%
4%
Japan
6%
Source: WTO, Barclays Research estimates.
We review market share trends for 11 different product categories that represent half of
total US imports from China. In our view, the data shows a clear trend towards declining
market share for Chinas lower value manufactured goods. We use apparel, toys, shoes and
furniture as examples of lower labour-value-added product categories. There have been
market share loses to other low cost countries in Asia such as Vietnam and Bangladesh, but
also to Mexico. Alternatively, China continues to gain market share in other categories such
as auto parts and household appliances.
Low-end export manufacturing does seem be migrating away from coastal China. This
is essentially a good problem. We believe the total labour value add in shoe
manufacturing is too limited an opportunity for labour productivity on a mass scale to
support rising incomes and living standards beyond the level already achieved in coastal
China.
However, low-end manufacturing seems likely to move to where the oceans enable the
interface of cheap labour with the quick, reliable global containerized transport system.
Prohibitive in-land transport cost relative to labour total value added relegates those
areas to production for domestic (local) consumption or for higher-end goods that can
by shipped via air. We note that Vietnam has been gaining market share in lower valueadded manufacturing over the past five years.
7 January 2014
FIGURE 7
Export of manufactured goods as a percentage of global GDP (%)
1950s80s:
Postwarconvergence
Interwar
BoomBust
30
US
Germany
Japan
China
WorldWarI
WorldWarII
25
20
% 15
10
1990s current
China'srise
2015E
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
1925
1920
1915
1910
1905
1900
Source: UN, WTO, IMF, World Bank, CEIC, US BEA, Bloomberg, Barclays Research estimates.
Dispersion of production and consumption

The most significant long-term trend in global trade is greater geographic dispersion of
global goods production and, consequently, consumption. In our view, this will have a
substantial impact on the shape of global trade and the assets that are need to be deployed
to meet more dispersed trade flows.
FIGURE 8
Concentration of global manufactured goods trade
96%
Top 20 exporters (LHS)

Top 20 importers (RHS)
94%
85%
Concentration of
consumption peaked in
2000 at 81%
80%
92%
70%
today
90%
75%
88%
70%
86%
Concentration of
production peaked in
1992 at 91%
84%
65%
82%
2014E
2012
60%
2010
2008
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
80%
2006
83% today
(LHS)
Source: WTO, CEIC, Barclays Research estimates.
US shoe imports
The shoe market is a strong demonstration of the changing dynamics in export
competiveness and Chinas relative decline in low-end manufacturing. Since peaking in
2010 at 76% of US shoe imports, Chinas share has declined consistently. This appears to be
driven by increasing cost of Chinese shoes relative to shoe imports from other countries.
Chinas cost advantage peaked in 2007 when the average pair of shoes imported into
the US from China was only 40% of the average price for shoes imported from nonChinese producers. China pricing advantage has declined to only 50% the cost of nonChinese imports.
7 January 2014
FIGURE 9
US imports of Chinese manufactured shoes market share and relative price
China price is the average cost
of US shoe imports from China
as a percentage of the average
cost of imports from all other
countries
China price (LHS)
52%
Chinese market share (RHS)
78%
2003-08 relative
price decline driver
higher market share
50%
48%
76%
74%
46%
72%
Rising costs from

2008 drives
market share
decline
44%
42%
70%
68%
40%
Oct-13
Apr-13
Oct-12
Apr-12
Oct-11
Apr-11
Oct-10
Apr-10
Oct-09
Apr-09
Oct-08
Apr-08
Oct-07
Oct-06
Apr-07
Oct-05
Apr-06
Oct-04
Apr-05
Oct-03
Apr-04
Oct-02
Apr-03
66%
Source: US Census, CEIC, Barclays Research. Trailing 12-month average
The price gap has narrowed specifically between China and Vietnam, the largest
market-share gainer in recent years. In 2008, the average pair of shoes imported from
Vietnam into the US was US$11 vs US$7 from China putting Chinas cost at 64% of
Vietnams. For the year-end Oct 2013 the Chinas cost was only 71%.
Why look at US shoe imports

Shoe manufacturing is the quintessential low-end manufacturing and could be an early
indicator that pricing pressure in China is eroding its export competitiveness compared with
its neighbours across a larger spectrum of goods. One of the complexities of answering the
question about relative trade competitiveness is the vastness of global trade.
Here we have narrowed it to one item (shoes) and narrowed the data set to one country
(the US), Shoes serve as a proxy for low-end manufacturing, and the US serves as a
proxy for the Western world and has the advantage of being the largest single market
and having excellent government statistics on imports.
Market share declined driving down growth

Despite total US imports of shoes growing 4.5% y/y YE October 2013, imports from China
were flat as market share losses completely off-set the growth in end demand.
FIGURE 10
Growth in US imports of Chinese manufactured shoes trailing 12-month average
Market share gain (loss)
25%
End demand growth
20%
China's growth
15%
10%
5%
0%
-5%
-10%
Oct-13
Apr-13
Oct-12
Apr-12
Oct-11
Apr-11
Oct-10
Apr-10
Oct-09
Apr-09
Oct-08
Apr-08
Oct-07
Apr-07
Oct-06
Apr-06
Oct-05
-15%
7 January 2014

Due to Chinas size and high concentration of production in low cost manufacturing,
declines in market share can seem modest. However, the impact on smaller countries that
gains share is multiplied.
For example, Chinas share of US shoe imports has declined by 5.1% in the past five
years to 69% currently. Over the same time, Vietnams market share grown by 5.4% to
11.4%. In other words, Vietnams market share doubled in five years and as a result, it
has achieved a 19% five-year CAGR YE Oct 2013 growth rates. This is compared to
Chinas 4% five-year CAGR.
FIGURE 11
Market share of US shoe imports YE Oct 2013
Country
China
Vietnam
Italy
Indonesia
Mexico
Brazil
India
Dominican Republic
Others
Current
market share
69.1%
11.4%
5.2%
4.7%
2.2%
0.8%
1.1%
1.1%
4.2%
Change in market share as of YE Oct 2013

3yr
5yr
-7.2%
-5.1%
3.6%
5.4%
0.9%
-0.9%
1.9%
2.6%
0.9%
1.2%
-1.1%
-2.1%
0.3%
0.2%
0.4%
0.5%
0.2%
-1.8%
1yr
-3.0%
1.5%
0.3%
0.8%
0.2%
-0.1%
0.1%
0.1%
0.1%
10yr
0.7%
9.4%
-2.6%
0.8%
0.7%
-5.8%
0.4%
0.7%
-4.2%
Peak
-7.2%
0.0%
-2.9%
-0.7%
0.0%
-7.1%
0.0%
0.0%
-5.2%
In our view, Chinas absolute attractiveness as a manufacturing source is not in question

as the country maintains a dominant market position.
However, the data does suggest that the relative attractiveness of in-land China as an
export manufacturing locations might be less attractive than other Asian countries, such
as Vietnam and Indonesia.
FIGURE 12
Market share of US shoe imports YE Oct 2013
YE October 2013 US shoe
imports were US$25bn
Vietnam
12%
Italy
5%
Indonesia
5%
China
69%
Others
4%
Mexico
2% Brazil
India
1%
1%
Dominican
1%
FIGURE 13
Market share of US shoe imports trailing 12-months
16%
77%
China (RHS)
Other
14%
76%
12%
75%
74%
10%
73%
8%
72%
6%
Vietnam
71%
4%
70%
Italy
2%
69%
Brazil
68%
Oct-13
Apr-13
Oct-12
Apr-12
Oct-11
Apr-11
Oct-10
Apr-10
Oct-09
Apr-09
Oct-08
Apr-08
Oct-07
Apr-07
Oct-06
Apr-06
Oct-05
Apr-05
Oct-04
Apr-04
Oct-03
0%
7 January 2014
10
US apparel imports
Chinas market share for US apparel imports for the YE Oct 2013 was 39% compared to just
16% 10 years earlier.
The apparel market is relatively slow growing with growth in Chinese apparel exports to
the US coming primarily from market-share gains. However, Chinas market share has
stagnated over the past three years.
Overall, market share for apparel import has remained stable over the past three years.
FIGURE 14
Growth in US imports of Chinese apparel trailing 12-month average
50%
Compounding deceleration: Declining end-demand

growth & declining market share
End demand growth
40%
China's growth
30%
End demand growth rate

declining back to normal
20%
10%
0%
-10%
Oct-13
Oct-12
Oct-10
Oct-09
Oct-08
Oct-07
Oct-06
Oct-05
Oct-04
Oct-03
Oct-02
Oct-01
Oct-11
Drag from market

share loss
-20%
FIGURE 15
Market share of US apparel imports YE Oct 2013
Current
Country
China
Change in market share YE Oct 2013
market share
1 yr
3 yr
5 yr
10 yr
From peak
39.0%
-0.6%
-2.1%
5.3%
22.6%
-2.1%
9.5%
0.8%
1.8%
2.7%
5.8%
0.0%
Vietnam
Other
9.2%
0.0%
0.1%
-3.9%
-15.5%
-15.6%
Indonesia
6.0%
-0.1%
0.2%
0.8%
2.8%
-0.2%
Bangladesh
5.8%
0.4%
0.8%
1.4%
3.1%
0.0%
Mexico
4.6%
-0.3%
-0.4%
-0.9%
-6.2%
-6.2%
-0.6%
India
4.0%
0.1%
-0.2%
-0.1%
0.8%
Honduras
3.1%
-0.2%
-0.2%
-0.4%
-0.8%
-0.9%
Cambodia
3.0%
-0.1%
0.2%
-0.1%
1.2%
-0.2%
El Salvador
2.2%
0.0%
0.1%
0.2%
-0.4%
-0.4%
7 January 2014
11
FIGURE 16
Market share of US apparel imports YE Oct 2013
Other
13%
Other C. America
8%
China
39%
Mexico
5%
Other S. Asia
8%
Bangladesh
6%
Other ASEAN
6%
Indonesia
6%
Vietnam
9%
US auto imports
Chinas market share for auto parts was just 10.8% for the year ending Oct 2013, up from
8.1% five years ago.
FIGURE 17
Growth in US imports of Chinese auto parts trailing 12-month average
50%
40%
30%
20%
10%
0%
-10%
-20%
End demand growth
-30%
China's growth
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
Jun-05
Dec-04
Jun-04
Dec-03
-40%
Mexico remains the largest supplier of US auto parts imports with 37.4% of the market
as of YE Oct 2013. Mexico is also the largest market share gainer in the past five years.
7 January 2014
12

FIGURE 18
Market share of US Auto part imports YE Oct 2013
Current
Country
market share
1 yr
3 yr
5 yr
10 yr
From peak
Mexico
37.4%
0.8%
3.1%
6.1%
9.2%
0.0%
Canada
14.2%
-1.1%
-3.5%
-6.8%
-13.6%
-13.8%
-7.1%
Japan
13.4%
-1.0%
-1.7%
-3.1%
-6.6%
China
10.8%
0.5%
0.8%
2.7%
7.9%
0.0%
Others
8.7%
0.4%
0.3%
0.1%
1.6%
-0.4%
Korea
6.2%
0.3%
1.9%
3.0%
4.7%
0.0%
Germany
4.5%
0.2%
-0.1%
-0.6%
-1.4%
-1.4%
Taiwan
2.3%
-0.1%
-0.3%
-0.3%
0.3%
-0.9%
UK
1.4%
0.2%
0.3%
0.1%
-0.2%
-0.4%
France
0.7%
0.0%
-0.6%
-0.7%
-1.3%
-1.4%
Brazil
0.5%
-0.2%
-0.3%
-0.6%
-0.6%
-1.0%
US toy imports
The US imported US$17bn in toys for the year ending October 2013, China maintains a
dominant market share, accounting for over 87% of total US toy imports.
FIGURE 19
Market share of US toy imports YE Oct 2013
Current
Country
China
Mexico
Others
Canada
Indonesia
Japan
Taiwan
Vietnam
Germany
Malaysia
market share
1 yr
3 yr
5 yr
10 yr
From 10yr peak
87.6%
3.6%
2.1%
1.8%
1.3%
1.3%
0.9%
0.7%
0.4%
0.3%
1.1%
0.4%
-0.2%
0.5%
0.2%
-1.8%
-0.3%
0.1%
0.1%
0.1%
-1.4%
2.1%
-0.6%
0.7%
0.6%
-2.1%
0.1%
0.3%
0.1%
0.0%
-3.3%
2.3%
0.1%
1.3%
0.9%
-2.0%
0.1%
0.5%
0.1%
0.1%
5.9%
0.0%
-1.9%
0.7%
0.6%
-5.0%
-0.5%
0.7%
-0.2%
-0.4%
-3.5%
-0.2%
-2.1%
-0.1%
-6.9%
-0.5%
-0.2%
-0.4%
US furniture imports
The US imported US$29bn in furniture for the year ending October 2013. Chinas market
share for the YE Oct 2013 was 57.9%. Chinese exports of furniture to the US grew by 5.6%
y/y compared to +6.3% y/y for total US imports as of YE Oct 2013.
FIGURE 20
Market share of US furniture imports YE Oct 2013
Current
Country
China
Vietnam
Canada
Mexico
Taiwan
Italy
Malaysia
Indonesia
market share
1 yr
3 yr
5 yr
10 yr
From 10 yr peak
57.9%
8.6%
8.0%
6.3%
2.7%
2.5%
2.4%
2.3%
-0.4%
0.6%
-0.5%
0.2%
-0.3%
0.2%
-0.3%
0.1%
-1.1%
1.5%
-1.0%
1.2%
-0.4%
0.3%
-0.7%
0.1%
2.2%
3.4%
-4.3%
1.5%
-0.5%
-0.6%
-0.4%
0.1%
15.0%
7.8%
-11.5%
0.5%
-1.6%
-4.3%
-0.4%
-0.5%
-1.4%
0.0%
-11.5%
0.0%
-1.6%
-4.3%
-0.9%
-0.5%
7 January 2014
13
US household appliance imports

The US imported US$21bn in house hold appliances for the year ending October 2013.
Chinas market share for the YE Oct 2013 was 54.6%. Chinese exports of house hold
appliances to the US grew by 12.0% y/y compared to +5.4% y/y for total US imports as of
YE Oct 2013. China has been able to consistently gains market share of US imports of
household appliances. This remains a key growth driver for Chinese exports.
FIGURE 21
Market share of US household appliance imports YE Oct 2013
Current
Country
market share
1 yr
3 yr
5 yr
10 yr
From 10yr peak
China
Mexico
Korea
Canada
Thailand
Germany
Japan
Malaysia
Other
54.6%
21.3%
8.4%
3.6%
1.1%
1.9%
1.4%
1.0%
6.7%
3.2%
-1.6%
-1.6%
-0.4%
0.2%
-0.2%
0.1%
0.2%
0.1%
6.1%
-1.4%
-3.0%
-1.0%
0.2%
-1.1%
-0.1%
-0.1%
0.3%
7.3%
0.2%
-0.7%
-1.5%
0.3%
-3.0%
-0.2%
-0.1%
-2.3%
11.2%
3.2%
1.3%
-4.1%
-0.5%
-3.7%
0.5%
-0.3%
-7.6%
0.0%
-2.5%
-3.1%
-4.3%
-0.5%
-4.2%
-0.2%
-1.4%
-7.6%
US computer imports
The US imported US$106bn in computers for the year ending October 2013. Chinas market
share for the YE Oct 2013 was 63.8%. Chinese exports of computers to the US fell by 1.1%
y/y compared to -2.5% y/y for total US imports as of YE Oct 2013. China has been able to
consistently gains market share of US imports of computers. This remains a key growth
driver for Chinese exports.
FIGURE 22
Market share of US computer imports YE Oct 2013
Current
Country
China
Mexico
Thailand
Japan
Malaysia
Taiwan
Other
Singapore
Vietnam
Korea
market share
1 yr
3 yr
5 yr
10 yr
From peak
63.8%
13.9%
4.4%
4.1%
2.4%
2.1%
2.1%
1.9%
1.4%
1.3%
0.9%
-1.3%
0.7%
-0.4%
0.4%
0.1%
0.1%
-0.9%
0.9%
-0.2%
3.3%
0.5%
0.6%
-1.8%
-1.3%
0.5%
-0.2%
-1.9%
1.0%
0.1%
10.6%
6.7%
0.1%
-3.6%
-9.0%
0.2%
-1.5%
-2.7%
1.1%
0.0%
36.5%
2.7%
1.5%
-6.5%
-9.7%
-6.8%
-3.3%
-8.8%
1.3%
-2.6%
-0.4%
-1.4%
0.0%
-6.5%
-10.7%
-6.8%
-3.3%
-8.8%
0.0%
-2.6%
7 January 2014
14
Audio Visual Equipment imports

The US imported US$36bn in audio visual equipment for the year ending October 2013.
Chinas market share for the YE Oct 2013 was 39.3%. Chinese exports of audio visual
equipment to the US fell by -9.7% y/y compared to -7.1% y/y for total US imports as of YE
Oct 2013.
FIGURE 23
Market share of audio visual equipment imports YE Oct 2013
Country
China
Mexico
Japan
Thailand
Malaysia
Taiwan
Other
Korea
Indonesia
Germany
Current
market share
39.3%
38.9%
6.2%
4.5%
2.2%
2.0%
1.6%
1.4%
1.1%
0.6%
1 yr
-1.1%
2.8%
-2.3%
0.0%
-0.1%
0.2%
0.2%
0.2%
0.1%
0.0%

3 yr
5 yr
-4.0%
-1.8%
1.8%
2.0%
-0.7%
-3.0%
1.1%
1.7%
-0.3%
-0.7%
0.8%
0.3%
0.4%
0.3%
0.5%
0.3%
-0.3%
-0.1%
0.2%
0.2%
10 yr
8.7%
17.1%
-14.2%
0.8%
-6.0%
-0.3%
-1.2%
-3.8%
-1.7%
0.1%
From peak
-4.9%
0.0%
-14.2%
-0.4%
-6.0%
-1.3%
-1.2%
-3.9%
-1.7%
0.0%
Wireless equipment imports

The US imported US$60bn in wireless equipment for the year ending October 2013. Chinas
market share for the YE Oct 2013 was 69.6%. Chinese exports of wireless equipment to the
US increased by 22.6% y/y compared to +10.8% y/y for total US imports as of YE Oct 2013.
China has been able to consistently gain market share of US imports of wireless equipment.
This remains a key growth driver for Chinese exports.
FIGURE 24
Market share of wireless equipment imports YE Oct 2013
Country
China
Korea
Mexico
Taiwan
Malaysia
Other
Canada
Japan
Vietnam
India
Current
market share
69.6%
10.3%
7.0%
5.1%
2.1%
2.0%
1.1%
0.8%
0.6%
0.5%
1 yr
6.7%
0.4%
-3.6%
-2.1%
0.0%
-1.0%
-0.3%
-0.2%
0.5%
0.1%

3 yr
5 yr
26.7%
31.0%
-6.5%
-9.8%
-10.3%
-10.1%
-6.0%
-2.2%
0.0%
-0.8%
-1.1%
-4.3%
-1.8%
-2.8%
-0.5%
-1.5%
0.6%
0.6%
-0.5%
0.0%
10 yr
54.1%
-16.6%
-10.8%
1.9%
-4.5%
-17.6%
-3.7%
-4.3%
0.6%
0.5%
From peak
0.0%
-20.9%
-12.1%
-11.1%
-4.9%
-17.6%
-3.9%
-4.3%
0.0%
-0.5%
7 January 2014
15
Construction machinery imports

The US imported US$16bn in construction machinery for the year ending October 2013.
Chinas market share for the YE Oct 2013 was 7.2%. Chinese exports of construction
machinery to the US increased by 0.4% y/y compared to -12.4% y/y for total US imports as
of YE Oct 2013.
FIGURE 25
Market share of construction machinery imports YE Oct 2013
Current
Country
Japan
Germany
Other
Mexico
Canada
China
United Kingdom
Korea
Italy
Sweden
market share
1 yr
3 yr
5 yr
10 yr
From peak
25.1%
12.1%
10.7%
10.4%
10.3%
7.2%
6.9%
4.8%
3.7%
3.7%
-1.0%
1.6%
0.4%
0.8%
0.6%
0.9%
0.1%
-1.5%
-0.1%
-1.2%
8.3%
-2.0%
0.9%
-4.1%
-4.5%
0.8%
1.0%
1.6%
-1.4%
-0.3%
6.1%
-1.1%
-0.7%
1.4%
-5.4%
2.5%
1.2%
1.2%
-2.0%
-0.4%
4.9%
1.8%
2.4%
0.1%
-11.2%
5.2%
-1.2%
1.6%
-1.9%
0.2%
-1.9%
-6.1%
-1.5%
-4.5%
-11.2%
0.0%
-1.2%
-1.5%
-2.2%
-1.7%
HVAC equipment imports

The US imported US$12bn in HVAC (heating, ventilation, air-conditioning and commercial
refrigeration equipment) for the year ending October 2013. Chinas market share for the YE
Oct 2013 was 30.1%. Chinese exports of HVAC equipment to the US slowed by 0.4% y/y
compared to +5.1% y/y for total US imports as of YE Oct 2013.
FIGURE 26
Market share of HVAC equipment imports YE Oct 2013
Current
Country
Mexico
China
Others
Canada
Japan
Germany
Korea
Thailand
Italy
France
market share
32.5%
30.1%
11.2%
7.3%
6.4%
4.0%
3.3%
2.4%
1.7%
1.2%

1 yr
2.4%
-1.7%
-0.1%
-0.7%
-0.3%
-0.3%
0.5%
0.4%
-0.3%
0.0%
3 yr
1.9%
0.5%
-1.5%
-1.0%
0.3%
-0.6%
0.1%
0.2%
0.1%
-0.1%
5 yr
5.7%
1.3%
-3.8%
-3.7%
0.7%
-0.3%
0.8%
-0.2%
-0.4%
0.0%
10 yr
13.7%
4.4%
-7.8%
-5.1%
-0.5%
0.4%
-5.4%
0.4%
-0.4%
0.4%
From peak
0.0%
-2.1%
-7.8%
-5.2%
-1.6%
-0.9%
-5.4%
-0.8%
-0.7%
-0.2%
7 January 2014
16
CONTAINER SHIPPING UNDER PRESSURE

We expect continuing weakness in container shipping to drive further pressure on
transhipments pricing, negatively impacting HPH Trust and Westports. Alternatively,
balance sheet pressure on the container lines could provide the opportunity for further
asset purchases by the expanding Chinese port operators, COSCO Pacific and China
Merchants.
Threat and opportunity from container shipping weakness

The container shipping industry balance sheets have been under stress since the GFC as low
operating cash flow has not been able to match the demand for capital expenditures for
ever larger vessels. Container liners have addressed the situation by a renewed focus on
reducing costs to improve operating performance and have met the cash flow short fall by
raising debt and selling non-core assets including container terminals. Continuing pressure
on container shipping companies will be a key theme in 2014 and provides both a threat
and an opportunity to the container port operators, in our view.
We expect continued pressure on transhipment port pricing as container liners move to

consolidate transhipment at the lowest cost options. The most impacted ports are:
1) HPH Trust, which has seen very weak growth in transhipment volumes in Hong Kong.
Hong Kong terminal volumes were +1.5% for the 3mma Nov 2013. 2) Westport
Terminal, which generates 57% of revenue from transhipment. See our 23 Oct 2013
initiation: Westports Holdings Bhd: Initiate at UW; P3 trouble ahead (link)
6
Pressure on the container liners will likely drive further asset disposals by the container
shipping lines in 2014 and present an opportunity for terminal operators looking to
expand, namely COSCO Pacific and China Merchants.
FIGURE 27
Select container liner operator port assets
2012 Capacity
Potential value
Container line
mn TEU
US$ bn
Key assets
MSC/Terminal
18.0
6.3
Antwerp, Singapore, Valencia
Evergreen
11.6
4.1
Kaohsiung, Colon
Hanjin
11.3
4.0
Long Beach, Busan
NOL
6.6
2.3
Los Angeles, Kaohsiung
NYK
5.5
1.9
Long Beach, Tokyo
MOL
4.8
1.7
Los Angeles, Jacksonville, Tokyo
K-Line
3.8
1.3
Long Beach, Tokyo
Hyundai
3.7
1.3
Los Angeles, Tacoma
OOIL
3.5
1.2
Long Beach, Kaohsiung
Yang Ming
3.1
1.1
Los Angeles, Kaohsiung
2.1
0.7
Long Beach Rotterdam
74.4
26.0
COSCO
Total
Source: Drewry, Barclays Research estimates.
7 January 2014
17
Stress on container shipping companies

Container shipping downturn that began with the GFC has driven substantial balance sheet
deterioration for the container shipping companies under our coverage in Asia ex-Japan. We
estimate the average net debt to equity for our container shipping coverage will have
increased to 92% as of year-end 2013 from 54% YE 2009. The most intense pressure has
been on cash flows driven by minimal cash generation from operations little operating cash
flow combined with an industry wide push in the industry to purchase larger more cost
efficient vessels.
We believe our coverage universe has experienced cash outflow of US$35bn during 200913E primarily to fund vessel purchases. They have funded this through a US$23bn increase
in net debt and US$13bn of asset disposals. We expect the general over-supply situation in
the industry to continue and for there to be increasing pressure to raise equity due to rising
debt costs from leverage and higher general interest rates. In addition, asset disposals are
not a sustainable way to meet capital expenditure needs.
FIGURE 28
Barclays Research Asia ex-Japan Container Shipping Companies aggregate cash flows for 2009-13E
US$mn
CSCL China COSCO
Capex
Evergreen
Wan Hai Yang Ming
OOIL
Sum
-2,085
-9,504
-4,533
-2,675
-1,156
-4,170
-2,380
-26,501
-567
-134
-158
-122
-1,969
-2,950
-844
-1,254
-128
-134
-51
-1,442
-1,331
-5,184
-2,929
-11,325
-4,796
-2,809
-1,364
-5,734
-5,679
-34,635
1,983
12,646
3,373
1,359
270
1,605
1,387
22,623
718
3,428
781
1,014
278
4,169
2,501
12,888
-208
-1,879
87
649
870
106
1,756
1,381
968
968
2,493
14,195
5,209
3,022
1,417
5,879
5,644
37,860
-435
2,870
413
213
53
146
-35
3,225
Dividends
Others
Total cash outflow
NOL
Net borrowings
Asset disposals & revaluation gains
Operating cash inflow (outflow)
Equity issuance
Others
Total cash inflow

Change in net cash
Note: The seven container shipping companies are China COSCO, CSCL, NOL, OOIL, Yang Ming, Evergreen and Wan Hai.
Source: Bloomberg, Company data, Barclays Research estimates
Container liner companies under our coverage in AEJ have already raised US$1.0b in cash by
disposing terminal assets.
FIGURE 29
Recent disposal of port assets by container lines
Announcement
Seller
Asset disposed
Cash inflow
Profits
date
Acquiror
US$mn
US$mn
Status
CSCL
Yangshan Port (100% stake)
21-Nov-13
35
Effective
Lianyungang Port (55% stake)
05-Nov-13
China Shipping Logistics

Lianyungang Port Group, PSA
China
48
CSCL
116
40
Pending
CSCL
China Shipping Terminal Development
11-Oct-13
China Shipping Group
561
143
Pending
Yang Ming Kao Ming Container Terminal (12.5%)
01-Nov-13
Nippon Container Terminals

19-Dec-12 China Merchants, COSCO Pacific,
China Shipping Group
56
27
Completed
135
62
Completed
Yang Ming Kao Ming Container Terminal (30%)

Yang Ming Kao Ming Container Terminal (10%)
Evergreen Evergreen Container Terminal Thailand
17-Jun-12
Ports America
45
23
Completed
22-Mar-11
Mitsui & Co Ltd
39
11
Completed
Total
1,001
340
Source: Bloomberg, Company data, Barclays Research. *Accounting profits expected to be booked in 2014
7 January 2014
18
Chinese international expansion

In 2014, we expect continued expansion of the Chinese terminal operators, COSCO Pacific
and China Merchants. In our view, the international move is driven by: 1) strategic broader
Chinese policy, encouraging companies to go out to make international terminals
acquisitions; 2) strong domestic cash flow generation from maturing ports; 3) declining
overall Chinese container volumes; and 4) limited opportunities to expand domestically.
FIGURE 30
Chinese container volumes growth and Chinese export growth
50%
Container volumes
40%
Chinese exports
30%
20%
10%
0%
-10%
-20%
Nov-13
Jan-13
Jun-13
Aug-12
Oct-11
Mar-12
Dec-10
May-11
Jul-10
Feb-10
Sep-09
Apr-09
Jun-08
Nov-08
Jan-08
Aug-07
Oct-06
Mar-07
May-06
Jul-05
Dec-05
Feb-05
Apr-04
Sep-04
Nov-03
-30%
Source: CEIC, Barclays Research *On a 3mma basis
COSCO Pacific
COSCO Pacific received cash proceeds of US$1.2bn from the sale of its entire 21.8% stake
in CIMC (2039 HK; not rated) which was announced in May 2013. Given the increased cash
balance, we expect more terminal acquisitions to be consummated in the next two to three
years, as well as for the expansion of its container fleet.
After paying out special dividends of US$160mn, we estimate US$500-600mn will be

used primarily for the terminals expansion and US$300-400mn will be used in
expanding its container leasing business. Management has previously guided that it
would be looking for investment opportunities to further expand its terminals and
leasing fleet.
China Merchants
China Merchants has been active in recent years, spending over US$1bn to broaden its
international footprint. Given, these large purchases we expect 2014 to be a year of
focusing on integrating these new assets rather then large scale further expansion.
US$538 for a 49% stake in Terminal Link, which is a company related to CMA CGM, a
large French Container shipping company. The assets are primarily in Europe.
US$154mn for Lagos, Nigeria

85% stake in a US$500mn Greenfield project in Sri Lanka
US$185mn investment in Djibouti port company
US45mn investment in Kaohsiung, Taiwan
7 January 2014
19
ANALYST(S) CERTIFICATION(S):
I, Jon Windham, CFA, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of
the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly
related to the specific recommendations or views expressed in this research report.
IMPORTANT DISCLOSURES CONTINUED

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Materially Mentioned Stocks (Ticker, Date, Price)
Adani Ports and SEZ Ltd. (APSE.NS, 03-Jan-2014, INR 149.90), Overweight/Neutral, J
China Merchants Holdings (International) Co., Ltd. (0144.HK, 03-Jan-2014, HKD 27.65), Overweight/Neutral, J/K/M/N
COSCO Pacific Limited (1199.HK, 03-Jan-2014, HKD 10.40), Overweight/Neutral, J/K/N
Essar Energy (ESSR.L, 03-Jan-2014, GBp 72.0), Equal Weight/Negative, D/E/J/K/L/M/N
Gujarat Pipavav Port Ltd. (GPPL.NS, 03-Jan-2014, INR 64.70), Equal Weight/Neutral, J
Hutchison Port Holdings Trust (HPHT.SI, 03-Jan-2014, USD 0.68), Equal Weight/Neutral, D/J/K/L/M/N
International Container Terminal Services Inc. (ICT.PS, 03-Jan-2014, PHP 101.90), Equal Weight/Neutral, J/K/M
Westports Holdings Bhd (WPHB.KL, 03-Jan-2014, MYR 2.53), Underweight/Neutral, J
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7 January 2014
20

O: Barclays Capital Inc., through Barclays Market Makers, is a Designated Market Maker in this issuer's stock, which is listed on the New York
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universe").
In addition to the stock rating, we provide industry views which rate the outlook for the industry coverage universe as Positive, Neutral or
Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors
should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.
Stock Rating
Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month
investment horizon.
Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12month investment horizon.
Underweight - The stock is expected to underperform the unweighted expected total return of the industry coverage universe over a 12-month
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Industry View
Positive - industry coverage universe fundamentals/valuations are improving.
Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
Negative - industry coverage universe fundamentals/valuations are deteriorating.
Below is the list of companies that constitute the "industry coverage universe":
Adani Ports and SEZ Ltd. (APSE.NS)
Air China (0753.HK)
AirAsia Bhd (AIRA.KL)
AirAsia X Bhd (AIRX.KL)
Anhui Expressway Co., Ltd. (0995.HK)
Asia Aviation PCL (AAV.BK)
Beijing Capital International Airport

(0694.HK)
Cathay Pacific Airways (0293.HK)
China COSCO Holdings Co., Ltd. (1919.HK)
China Eastern Airlines (0670.HK)
China Merchants Holdings (International) Co., Ltd.

(0144.HK)
China Rongsheng Heavy Ind. (1101.HK)
China Shipping Container Lines Co., Ltd.

(2866.HK)
China Shipping Development Co., Ltd. (1138.HK)
China Southern Airlines (1055.HK)
ComfortDelGro (CMDG.SI)
COSCO Pacific Limited (1199.HK)
Essar Ports Ltd. (ESRS.NS)
Evergreen Marine Corp Ltd. (2603.TW)
GMR Infrastructure Ltd. (GMRI.NS)
Gujarat Pipavav Port Ltd. (GPPL.NS)
GVK Power & Infrastructure Ltd. (GVKP.NS)
Hopewell Highway Infrastructure Ltd. (0737.HK)
Hutchison Port Holdings Trust (HPHT.SI)
IL&FS Transportation Networks Ltd.

(ILFT.NS)
International Container Terminal Services Inc.

(ICT.PS)
IRB Infrastructure Developers Ltd. (IRBI.NS)
Jaiprakash Associates Ltd. (JAIA.NS)
Jiangsu Expressway Co., Ltd. (0177.HK)
Malaysia Airports Holdings Bhd (MAHB.KL)
Neptune Orient Lines Ltd. (NEPS.SI)
Orient Overseas (International) Ltd. (0316.HK)
Pacific Basin Shipping Ltd. (2343.HK)
Reliance Infrastructure Ltd. (RLIN.NS)
Shenzhen Expressway Co., Ltd. (0548.HK)
Sichuan Expressway Co., Ltd. (0107.HK)
Singamas Container Holdings Ltd. (0716.HK) Sinotrans Shipping Ltd. (0368.HK)
Wan Hai Lines (2615.TW)
Westports Holdings Bhd (WPHB.KL)
Yangzijiang Shipbuilding (Holdings) Ltd.

(YAZG.SI)
Yang Ming Marine Transport (2609.TW)
Zhejiang Expressway Co., Ltd. (0576.HK)

7 January 2014
21

European Refining & Marketing
Essar Energy (ESSR.L)
Grupa Lotos (LTSP.WA)
Hellenic Petroleum (HEPr.AT)
Motor Oil (MORr.AT)
Neste Oil (NES1V.HE)
PKN Orlen (PKN.WA)
Saras (SRS.MI)
Distribution of Ratings:
Barclays Equity Research has 2585 companies under coverage.
44% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 48% of
companies with this rating are investment banking clients of the Firm.
39% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 43% of
14% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 39% of
Guide to the Barclays Research Price Target:
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7 January 2014
22
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Equity Research

Asia ex-Japan Infrastructure & Transport

Container ports 2014 themes

China overseas expansion: Overseas expansion of Chinese port operators is driven by

Asia ex-Japan Infrastructure & Transport

Jon Windham, CFA

Source: US customs, Barclays Research.

Barclays | Asia ex-Japan Infrastructure & Transport

Barclays | Asia ex-Japan Infrastructure & Transport

Chinese operators investing globally

Pressure on container shipping lines

Source: Company data, Barclays Research estimates

China export competitiveness

Barclays | Asia ex-Japan Infrastructure & Transport

China's market share

Notable market share gainers

Vietnam +5.4%; Indonesia +2.6%

Vietnam +2.7%; Bangladesh +1.4%

Mexico +2.3%; Canada +1.3%

Vietnam +3.4%; Mexico +1.5%

Thailand: +0.3%; Mexico: +0.2%

Mexico: +5.7%; Korea: +0.8%

Japan: +6.1%; Korea: +1.2%

Mexico +6.1%; Korea +3.0%

Mexico +6.7%; Vietnam +1.1%

Mexico: +2.0%; Thailand +1.7%

Total China exports

Mexico +1.5%; Vietnam+0.5%

Source: US Census, CEIC, Barclays Research

Price Pot. up/

Barclays | Asia ex-Japan Infrastructure & Transport

Barclays | Asia ex-Japan Infrastructure & Transport

Barclays | Asia ex-Japan Infrastructure & Transport

CHINESE EXPORT COMPETITIVENESS

Export product shift

Source: US customs, Barclays Research.

Source: WTO, Barclays Research estimates.

Barclays | Asia ex-Japan Infrastructure & Transport

Dispersion of production and consumption

Top 20 exporters (LHS)

Source: WTO, CEIC, Barclays Research estimates.

Barclays | Asia ex-Japan Infrastructure & Transport

China price (LHS)

Chinese market share (RHS)

Rising costs from

Source: US Census, CEIC, Barclays Research. Trailing 12-month average

Why look at US shoe imports

Market share declined driving down growth

End demand growth

Source: US Census, CEIC, Barclays Research

Barclays | Asia ex-Japan Infrastructure & Transport

Change in market share as of YE Oct 2013

Source: US Census, CEIC, Barclays Research

In our view, Chinas absolute attractiveness as a manufacturing source is not in question

Source: US Census, CEIC, Barclays Research

Source: US Census, CEIC, Barclays Research

Barclays | Asia ex-Japan Infrastructure & Transport

Compounding deceleration: Declining end-demand

End demand growth

End demand growth rate

Drag from market

Source: US Census, CEIC, Barclays Research

Change in market share YE Oct 2013

Source: US Census, CEIC, Barclays Research

Barclay's Review 2014 - Ports

Barclay's Review 2014 - Ports