31. db dry bulk shipping 2013 outlook

Deutsche Bank Markets Research

North America United States Industrials Marine

Industry

DB 2013 Shipping Outlook

Date 30 January 2013

Recommendation Change

Challenges Remain In 2013; 2014 Showing Some Promise Still Defensive In 2013 As Recovery Remains At Least A Year Away

________________________________________________________________________________________________________________

Deutsche Bank Securities Inc.

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, 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. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 072/04/2012.

Justin Yagerman

Research Analyst (+1) 212 250-5191 [email protected]

Joshua Katzeff

Research Associate (+1) 212 250-8389 [email protected]

Robert Salmon, CFA

Research Associate (+1) 212 250-2812 [email protected]

Top picks

Diana Shipping Inc (DSX.N),USD8.79 Buy

Teekay Corporation (TK.N),USD35.78 Buy

Navios Acquisition Corp. (NNA.N),USD2.56

Buy

Companies Featured

Capital Product Prtns. (CPLP.OQ),USD8.12 HoldDryShips Inc (DRYS.OQ),USD2.18 HoldDiana Shipping Inc (DSX.N),USD8.79 BuyFrontline Ltd. (FRO.N),USD3.52 SellGenco Shipping (GNK.N),USD3.69 SellNavios Partners L.P. (NMM.N),USD14.84 HoldNavios Acquisition Corp. (NNA.N),USD2.56

Buy

Seaspan Corp (SSW.N),USD18.77 HoldTextainer Group Holdings (TGH.N),USD41.43

Hold

Teekay Corporation (TK.N),USD35.78 BuyTeekay Tankers Ltd. (TNK.N),USD3.06 Hold

In 2012, the dry bulk and tanker markets faced substantial fleet growth and lackluster demand. Last year, our shipping universe declined an average of 16.8%, underperforming the S&P 500's 13.4% gain. In 2013, fleet growth is set to moderate, but not enough to make a significant impact on rates. We prefer contract coverage and clean balance sheets once again as debt restructurings and volatile rates will be an issue for many companies. We have largely kept our universe unchanged into 2013, with only one upgrade outlined below and a downgrade earlier this week.

Not Ready To Call 2014 A Dry Bulk Recovery, But Likely Better Than 2013 Our dry bulk supply and demand model shows recovering fleet utilization levels from 2012 in the coming years. However, we estimate fleet utilization of 85.2% and 93.5% in 2013 and 2014 respectively. This puts 2014 roughly inline with 2001 and 2002. During that period, the dry bulk market saw modest earnings (Capes at roughly $12,500/day). We are therefore looking past 2014 for a more meaningful recovery. The key risk to a dry bulk recovery remains the orderbook. Increased ordering for the largely non-existent 2015 orderbook could delay any recovery.

Tankers Set To See A Lackluster Year As Demand Weight On The Sector A small demand boost by China and emerging market Asia are the sole source for the tanker sector’s modest demand growth outlook (1.0% y/y) in 2013. Despite nominal fleet growth, we expect tanker utilization to remain at weak levels with only modest ton-mile demand expansion. Ton-mile demand should modestly improve as we expect US long-haul imports from the Middle East to remain flat, coupled with a modest increase in long-haul West African exports (to Asia).

Swapping The Navios’: Upgrading NNA to Buy In our outlook we have upgraded NNA to Buy-rated from Hold based on its exposure to product tankers and the potential for dividend raises in 2013 and 2014. We have also recently downgraded NMM to Hold-rated from Buy, in our note published on January 28, as the company will face declining distribution coverage in 2013 and 2014 and further capital raises.

Shipping Cheat Sheet Provides A Basic Overview Of The Shipping Segments Included in our 2013 outlook (starting on Page 32) is what we are calling our “Shipping Cheat Sheet”. This is designed as a mini-primer for the dry bulk, tanker and container industries. Included are basics on each sector’s cargos, routes travelled and ship type as well as the primary demand drivers for each segment.

Introducing Quarterly 2013 And FY2014 Estimates And Updated Price Targets We are introducing our quarterly 2013 and FY2014 EPS estimates. While our rate assumptions are up modestly from last year, expiring above-market time charters, declining asset values and limited spot rate improvement should weigh on corporate earnings. Our new price targets are derived using either an EV/EBITDA multiple applied to our 2014 EBITDA estimate or NAV. Please see Figure 1 and 2 on Page 7 for more details on our estimate revisions and rating changes.

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Table Of Contents

2013 Outlook & Positioning .......................................................... 4 Investment Summary ......................................................................................................... 4 Although The Dry Bulk Sector Is Poised For A Modest 2014 Recovery, It Is Still Too Soon To Own The Stocks ................................................................................................... 4 Tankers Plagued By Lack Of Demand, Not Fleet Growth .................................................. 5 Containership Deliveries Continue Amidst Weak Demand Growth .................................. 6 Overview Of Our Estimates, Price Targets & Ratings ........................................................ 7

Summary Of Ratings Changes ...................................................... 9 Upgrading NNA To Buy From Hold .................................................................................... 9 Downgrading NMM To Hold From Buy ............................................................................. 9

Our Top Picks .............................................................................. 10 Positioning Ourselves In Top Tier Defensive Names ....................................................... 10

Dry Bulk Outlook ......................................................................... 12 A Turnaround Is In Sight, But Not Here Yet ..................................................................... 12 Dry Bulk Supply And Demand Model .............................................................................. 12

Tanker Outlook ............................................................................ 19 Weak Global Demand Delays Tanker Recovery ............................................................... 19 Tanker Supply And Demand Model ................................................................................. 20

Container Outlook ....................................................................... 25 Liners Maintain Better Pricing Discipline Amidst Oversupply ......................................... 25 Container Demand Outlook .............................................................................................. 26 World Trade Growth Forecasts ........................................................................................ 26 Container Supply Outlook ................................................................................................ 27

Shipping Cheat Sheet .................................................................. 31 DB’s Shipping “Cheat Sheet” ........................................................................................... 31 Dry Bulk Basics ................................................................................................................. 32 Tanker Basics .................................................................................................................... 36 Container Basics ............................................................................................................... 40

Valuation & Risks ........................................................................ 43 Dry Bulk Valuation & Risks ............................................................................................... 43 Tanker Valuation & Risks .................................................................................................. 43 Container Valuation & Risks ............................................................................................. 44

Dry Bulk Financials ...................................................................... 45 Diana Shipping (DSX) ....................................................................................................... 45 Dryships (DRYS) ............................................................................................................... 45 Genco Shipping & Trading (GNK) ..................................................................................... 45 Navios Maritime Partners (NMM) .................................................................................... 45

Tanker Financials ........................................................................ 50 Capital Product Partners (CPLP) ....................................................................................... 50 Frontline (FRO) .................................................................................................................. 50 Navios Maritime Acquisition (NNA) ................................................................................. 50 Teekay Corp (TK) .............................................................................................................. 50 Teekay Tankers (TNK) ....................................................................................................... 50

Container Financials .................................................................... 56 Seaspan (SSW) ................................................................................................................. 56 Textainer (TGH) ................................................................................................................. 56

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Table of Exhibits

Figure 1: Overview Of Our Dry Bulk & Tanker Estimates, Price Targets And Ratings ...... 7 Figure 2: Overview Of Our Dry Bulk & Tanker Valuations ................................................. 7 Figure 3: An Overview Of DB Estimates Vs. Consensus ................................................... 8 Figure 4: Overview Of TK’s NAV ...................................................................................... 11 Figure 5: Dry Bulk Supply And Demand Outlook Overview ............................................ 13 Figure 6: Dry Bulk Contracted Orderbook Overview ....................................................... 14 Figure 7: DB Dry Bulk Demand Growth By Cargo Segment............................................ 15 Figure 8: Fleet Orderbook Delivery And Growth Assumptions ........................................ 15 Figure 9: Dry Bulk Fleet By DWT ...................................................................................... 16 Figure 10: Dry Bulk Fleet By Vessel Count ....................................................................... 16 Figure 11: Current Vessel Orderbook As % Of Delivered Fleet & Delivery Time ............. 16 Figure 12: Historic And Projected Dry Bulk Orderbook Non-Deliveries .......................... 17 Figure 13: Dry Bulk Fleet Age Profile ............................................................................... 18 Figure 14: Dry Bulk Scrap Prices (2000-Current) ............................................................. 18 Figure 15: Four-Week Rolling Average Of US Crude Imports (2010-Present) ................. 19 Figure 16: Tanker Supply And Demand Outlook Overview ............................................. 20 Figure 17: Tanker Contracted Orderbook Overview ........................................................ 21 Figure 18: DB Seaborne Crude Transportation Volume Growth By Region .................... 21 Figure 19: DB Commodities Global Oil Demand Outlook ................................................ 22 Figure 20: Current Vessel Orderbook As % Of Delivered Fleet & Delivery Time ............. 23 Figure 21: Historic And Projected Total Crude Tanker Order Non-Deliveries .................. 23 Figure 22: Tanker Fleet Age Profile .................................................................................. 24 Figure 23: Tanker Scrap Pricing (2000-Current) ............................................................... 24 Figure 24: Current Spot Container Freight Rates ............................................................. 25 Figure 25: World GDP Vs. Container Trade (2000-2012) ................................................. 26 Figure 26: DB Worldwide GDP Growth Forecasts ........................................................... 27 Figure 27: Current Orderbook Composition By Vessel Size ............................................. 27 Figure 28: Current Containership Orderbook Profile (% of Current Fleet) ....................... 28 Figure 29: Contracted Containership Fleet Growth (Gross) ............................................. 28 Figure 30: Current Fleet Profile By Size ............................................................................ 29 Figure 31: Fleet Age By Sub-Panamax and Larger Ships ................................................ 29 Figure 32: Historical Containership Scrappage (1996-2012) ........................................... 30 Figure 33: Dry Bulk Cargoes By Commodity Type ........................................................... 32 Figure 34: Major Dry Bulk Import Market Share By Region ............................................ 33 Figure 35: Major Dry Bulk Trading Patterns ..................................................................... 35 Figure 36: Crude Seaborne Import Market Share ............................................................ 36 Figure 37: Crude Seaborne Export Market Share ............................................................ 36 Figure 38: Major Crude Tanker Trade Routes .................................................................. 38 Figure 39: Global Container Trading Patterns .................................................................. 41

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2013 Outlook & Positioning

Investment Summary

Sidelined For Another Year From The Oversupply In The Shipping Markets We expect 2013 to look much like 2012 across our shipping universe, although the addition of another year of weak rates and asset prices will test the resolve of both owners and banks. Perhaps we could see heightened activity ahead of 2014 when fundamentals appear to begin a road to recovery. While we expect modest improvements in both our dry bulk and tanker segments, it will not be enough to cause a meaningful market rally. In container shipping, an oversupply of tonnage set for delivery and modest demand growth should keep ordering in check and pressure spot container freight rates. Therefore, as we look across our shipping universe, we continue to favor the higher quality names; companies with low-leverage, fixed coverage or exposure to more favorable segments (offshore, LNG and product tankers).

We have adjusted two of our ratings, upgrading NNA to BUY in this report and downgrading NMM to HOLD (on January 28) as a result of our introduced 2014 estimates. NMM, a dry bulk synthetic MLP, will realize the expiry of several of its above-market time charters in 2013 and 2014, calling into question the long-term viability of the distribution.

We have upgraded NNA to a Buy given its longer-term crude tanker coverage (generally expiring post-2014), and increasing exposure to the product tanker segment. NNA’s non-amortizing long-term debt allows for positive cash flow generation and the potential for a distribution increase in 2013-2014.

Although The Dry Bulk Sector Is Poised For A Modest 2014 Recovery, It Is Still Too Soon To Own The Stocks

Holding Off Buying The Sector, But H2 May Offer An Entry Point While establishing a position prior to a market recovery is the key to the most successful shipping investments, we still feel it is too soon to own spot-exposed and higher-leverage owners. Our supply and demand outlook for 2013 implies only a modest improvement off of an abysmal 2012. We expect rates to remain below cash break-even levels and breach operating expense levels at points during the year. Given this rate outlook, bank led forced sales should continue as will scrapping, placing a downward bias on asset values in 2013. However, shares of more speculative shipping stocks may become more interesting in late-Q3, prior to the seasonal increase in spot earnings into the Fall/Winter months, especially as we gain more clarity on a potential 2014 recovery.

Limited Orderbook & Demand Growth Sets Stage For Rate Recovery In 2014 & Beyond We believe 2014 is set to be the beginning of a dry bulk market recovery. However, we emphasize that this is just a start, and not a sustained rally back to historical averages. The primary driver of our recovery expectations are the negligible orderbook after 2013 and the continued strength of expected iron ore and coal export growth (primarily to Asia). We are fundamentally bullish on China, and DB expects 2013 and 2014 Chinese GDP growth of 8.2% and 8.9%. Further, we expect steel restocking in China to help seaborne iron ore and coking coal volumes, key dry bulk cargoes. We caution investors that the strength of trajectory of this recovery will be highly dependent on minimal vessel ordering.

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In 2014, our dry bulk fleet utilization level of less than 94% implies a market similar to 2001 or 2002, when rates average roughly $12,400/day for Capes and $8,300/day for Panamaxes. We expect 2014 to modestly outperform 2002, but still expect spot Cape and Panamax rates to average $13,000/day and $11,000/day, a far cry from the 10-year historical averages of $52,000/day and $29,000/day. With little-to-no orderbook in 2014 and 2015, and our estimated mid-single digit demand growth outlook, we would expect a more meaningful recovery in 2015.

Key Dry Bulk Stocks To Watch In 2013 With our outlook only showing modest recovery in 2014 and a more constructive recovery post-2014, we do not believe investors need to position themselves this early for a potential recovery. Many companies still need to negotiate with their lenders, a task that has proven to be more difficult as the downturn has continued. Such lender difficulty is likely to plague GNK as its current debt amortization waivers are set to expire at the end of 2013, and renegotiations should occur prior to year-end. We expect lenders to be less accommodating to GNK, and the rest of the dry bulk owners than we have seen in past negotiations absent a turn in the market. Owners in similar positions have seen varying results such as capital raises, issuance of warrants to lenders, or more extensive in and out of court restructurings.

Tankers Plagued By Lack Of Demand, Not Fleet Growth

Any Bullish Outlook Is Clouded By Weak OECD Crude Demand Unlike the dry bulk sector, where we can point to decent demand growth, we have difficulty finding positive demand catalysts for the crude tanker sector. We do not believe that the growth in Chinese and Emerging Asian demand will be enough to push seaborne crude trade above 2% p.a. over the next three years. With mid-single digit fleet growth this year, we see little reason to expect material rate improvement. Outside of declining valuations and/or a material improvement in demand, we see little in the way of upside catalysts from current levels near-term. However, the product tanker sector may outperform given the potential for demand spikes, arbitrage opportunities, increased refinery capacity and growing ton-mile demand.

US Near-Sourcing Is Priced-In, Where Will West African Crude Go? We expect US imports of Middle Eastern crude to be flat with 2012, implying much of the lost ton-mile demand from long-haul Middle East–US cargoes has played-out. Most of the lost Middle Eastern barrels have found a home in Asia, but what will be key to watch is where West African output goes. Declining US and European imports from West Africa should provide an opportunity for increased ton-mile demand as more West African barrels are exported to Asia on VLCCs and Suezmaxes. This may be one of the few positives for seaborne crude demand in 2013.

Key Tanker Stocks To Watch In 2013 With increased refinery capacity in Asia, and European refineries becoming less competitive, the US and Asia have increased their product exports. We are therefore increasingly improving our outlook for product tankers, especially relative to their crude counterparts. Our top pick in the tanker sector remains TK. However, this is largely a result of its expansion out of the traditional tanker sector. For more direct crude and product tanker exposure we recommend, NNA, which we are upgrading to Buy-rated from Hold. NNA’s product tanker fleet (delivered and newbuilding) should be able to take advantage of rate improvement, but generally has a floor on earnings with its profit-sharing contracts. NNA’s seven VLCCs, with long-term contracts, provide stable cash flow for its distribution and de-leveraging.

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FRO remains our lone Sell-rated tanker stock due to its aging fleet of VLCC and Suezmax tankers generally employed on the spot market. The company maintains a negative NAV, and has a profit share with its charterors, whereby when rates improve, the company must give much of the upside to its charterors. We do not expect any fleet renewal in FRO, as its Chairman and major shareholder, John Fredriksen, has been using Frontline 2012 (FRNT.OL, NOK39.00) as his tanker and dry bulk investment vehicle.

Containership Deliveries Continue Amidst Weak Demand Growth

Oversupply Persists, But Liners Have Been Able To Increase Pricing The container market faces a greater oversupply of tonnage this year with contracted fleet growth in excess of 11% and modest demand growth of 4.5% expected in 2013. Despite the oversupply of tonnage, the liners have been highly disciplined with pricing this year compared to the 2011 and early 2012 fight for market share. This discipline, along with reducing service offerings and increasing the idle fleet led to material rate increases through much of 2012. The continued rate discipline and redelivery of chartered-in tonnage could help the liners maintain profitability in 2013.

Liner Discipline Comes At The Charter Market’s Expense Given the liners’ general oversupply of available capacity in their fleets and continued newbuilding deliveries, ship lessors continue to face weak time charter rates. Owners with near-term market exposure will likely see rates below cash break-even levels, but above operating expense levels. Panamax and smaller sized containerships will likely suffer more than the fuel-efficient larger vessels. Despite the near-term headwinds, Hold-rated SSW has little near-term market exposure. SSW has also recently announced newbuilding orders, which should help increase its contracted revenue backlog and sustain earnings growth.

Container Box Lessors Keep Buying Boxes (New & Old) As the liners remain focused on their own liquidity issues (debt and newbuilding obligations), container box lessors have increased their share of new box purchases to roughly 70% of the market from 60%-66% at the beginning of last year. We believe this trend will persist in 2013, coupled with further acquisitions of secondhand box portfolios. The increased market share and acquisitions should help fuel continued strong capex growth.

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Overview Of Our Estimates, Price Targets & Ratings

Figure 1: Overview Of Our Dry Bulk & Tanker Estimates, Price Targets And Ratings Rating Price Target Q4 2012E EPS 2013E EPS 2014E EPS

Current Rating Upgrade/Downgrade New Old Old New Old New New

CPLP Hold $8.00 $8.00 $0.09 $0.08 $0.44 $0.50 $0.62

FRO Sell $2.00 $2.00 ($0.51) ($0.51) ($1.50) ($1.38) ($1.34)

NNA Buy Upgrade $5.00 $3.00 ($0.01) ($0.01) $0.60 $0.54 $0.45

TK Buy $43.00 $41.00 $0.18 $0.09 $0.73 $0.57 $1.17

TNK Hold $3.00 $3.00 ($0.04) ($0.05) ($0.07) ($0.20) ($0.09)

DRYS Hold $2.00 $1.50 ($0.09) ($0.24) ($0.39) $0.12 $0.69

DSX Buy $11.00 $9.00 $0.10 $0.10 $0.10 ($0.02) $0.24

GNK Sell $1.00 $1.00 ($0.86) ($0.86) ($2.78) ($4.27) ($2.95)

NMM Hold Downgrade1 $14.00 $14.00 N/A N/A $0.87 N/A $0.80

TGH Hold $40.00 $35.00 $0.96 $0.96 $3.78 $4.03 $4.49

SSW Hold $18.00 $14.00 $0.29 $0.29 $1.24 $1.06 $1.37

1. NMM was downgraded in a note published on January 28,

Company

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Source: Deutsche Bank

Figure 2: Overview Of Our Dry Bulk & Tanker Valuations Current Price EBITDA Estimates Target Forward Historic Average Price Target NTM Dividend

1/29/2013 Q4 2012E 2013E 2014E EV/EBITDA Multiple1 EV/EBITDA Multiple Old New Yield2

CPLP $8.15 $26.5 $115.9 $128.2 9.5x 9.3x $8.00 $8.00 11.4% 9.6% Hold

FRO $3.52 $11.0 $60.3 $84.4 1.2x Asset Premium3 12.8x $2.00 $2.00 N/A -43.2% Sell

NNA $2.56 $25.4 $139.6 $139.7 9.0x 8.1x $3.00 $5.00 7.8% 103.1% Buy

TK $35.78 $211.9 $805.7 $957.7 0.95x NAV 10.9x $41.00 $43.00 3.5% 23.7% Buy

TNK $3.06 $21.0 $81.8 $90.2 9.0x 10.3x $3.00 $3.00 9.8% 7.8% Hold

DRYS $2.28 $58.2 $443.9 $943.2 0.8x NAV 5.8x $1.50 $2.00 N/A -12.3% Hold

DSX $8.79 $25.1 $65.9 $86.5 9.0x 6.9x $9.00 $11.00 N/A 25.1% Buy

GNK $3.69 $18.0 $46.1 $100.1 1.3x Asset Premium3 16.8x $1.00 $1.00 N/A -72.9% Sell

NMM $14.84 $39.4 $135.9 $117.6 9.0x 7.8x $14.00 $14.00 11.9% 6.3% Hold

SSW $18.77 $123.9 $487.4 $506.2 10.5x 14.7x $14 $18 5.3% 1.2% Hold

Current Price EPS Estimates Target Forward Historic Average Price Target NTM Dividend1/29/2013 Q4 2012E 2013E 2014E P/E Multiple1 P/E Multiple Old New Yield2

TGH $41.43 $0.96 $4.03 $4.49 9.0x 9.1x $35 $40 4.6% 1.1% Hold

(1) Target forward P/E and EV/EBITDA multiples are applied to our 2014 EPS and EBITDA estimates. (2) Assumes DB dividend estimates for FY2013.(3) We have based FRO and GNK's valuation based on 1.0x NAV, but have inflated asset values by 20%-30% to reflect optionality to a recovering market.

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Company Total Return

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Company RatingTotal Return

Rating

Source: Deutsche Bank, Factset

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Figure 3: An Overview Of DB Estimates Vs. Consensus

Q4 2012E CY2013E CY2014EUs Consensus1 Delta Us Consensus1 Delta Us Consensus1 Delta

CPLP $0.08 $0.06 $0.02 $0.50 $0.39 $0.11 $0.62 $0.48 $0.14FRO ($0.51) ($0.54) $0.03 ($1.38) ($1.43) $0.05 ($1.34) ($1.29) ($0.05)NNA ($0.01) ($0.02) $0.01 $0.54 $0.14 $0.40 $0.45 $0.44 $0.01TK $0.09 $0.10 ($0.01) $0.57 $0.17 $0.40 $1.17 $1.04 $0.13TNK ($0.05) ($0.04) ($0.01) ($0.20) ($0.14) ($0.06) ($0.09) $0.20 ($0.29)

DRYS ($0.24) ($0.12) ($0.12) $0.12 $0.00 $0.12 $0.69 $0.58 $0.11

DSX $0.10 $0.09 $0.01 ($0.02) ($0.12) $0.10 $0.24 $0.03 $0.21

GNK ($0.86) ($0.81) ($0.05) ($4.27) ($2.72) ($1.55) ($2.95) ($1.35) ($1.60)

NMM N/A N/A N/A $0.87 $0.92 ($0.05) $0.80 $0.62 $0.18

TGH $0.96 $0.94 $0.02 $4.03 $4.04 ($0.01) $4.49 $4.60 ($0.11)

SSW $0.29 $0.28 $0.01 $1.06 $1.09 ($0.03) $1.19 $1.28 ($0.09)

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1. Consensus provided by Factset.

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Source: Deutsche Bank, Factset

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Summary Of Ratings Changes

Upgrading NNA To Buy From Hold

We are upgrading NNA to Buy from Hold given its contracted charter coverage, exposure to product tankers (which we now see as relatively favorable) and the possibility for distribution growth. With its orderbook largely delivering in 2013, NNA is set for profitability in 2013 and 2014. NNA has employed a mixture of fixed-rate and profit sharing time charters that provide solid earnings generation and the potential for a distribution increase in 2013 or 2014. We estimate NNA could nearly double its distribution by the end of 2014 to $2/share from $1/share.

While leverage remains a concern for NNA with an estimated total debt to capitalization ratio of 75% at year-end 2012, fixed contract coverage and minimal debt amortization reduce NNA’s leverage risk. Currently, the company has 88.2% of its fleet on covered with time charters for 2013, declining to 55.2% in 2014. However, much of the uncovered fleet in 2014 is product tanker exposure. NNA has a fully-funded capex program with senior secured debt already fixed for its newbuildings. Further, the company has $505 million of secured notes with no amortization until maturity in November 2017.

NNA, and NNA’s CEO, have a solid history of making acquisitions and engaging in the buy-side of distressed transactions. We would not be surprised by further fleet expansion, particularly in the product tanker segment.

Valuation: We are raising our price target to $5, which is based on a 9.0x EV/EBITDA multiple and 2014 EBTIDA estimates. Our multiple is modestly ahead of NNA’s historical average, which we believe reflects its undelivered fleet and leverage to a recovering product market.

Risks: Downside risks include spot product tanker rates, leverage, limited share liquidity and reliance on Navios Maritime (NM, $3.71).

Downgrading NMM To Hold From Buy

On January 28, we downgraded NMM to Hold from Buy as its long-term dividend sustainability comes into question in our newly issued 2014 earnings estimates. NMM has historically maintained a 1.2x distribution coverage ratio, providing ample headroom for its payout. However, we expect the coverage to drop to 1.0x in 2013 and 0.8x in 2014. This would imply a distribution drop to $0.36/unit from the current $0.4425/unit. Although NMM’s distribution would still imply a current distribution yield of 9.7% at the lowered rate, NMM has historically traded at a high distribution yield and has declining contract coverage. We therefore see little upside to shares of NMM at current levels.

Valuation: We are maintaining our price target at $14, which is based on a 9.0x EV/EBITDA multiple and 2014 EBTIDA estimates. Our premium multiple takes into account NNM’s current contract coverage and high distribution payout.

Risks: Upside risks include a recovering time charter rate environment and accretive acquisitions. Downside risks include dilution, weaker rates and reduced distributions.

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Our Top Picks

Positioning Ourselves In Top Tier Defensive Names

Low-Leverage DSX Is Our Top Pick To Take Advantage Of Opportunistic Acquisitions DSX’s cash position of $423 million at the end of Q3 2012 and potential dry powder (assumes increased leverage) of nearly $1 billion, positions the company as a leading beneficiary of historically weak asset prices. The company’s net cash position results in a low cash break-even rate of roughly $13,000/day and strong contract coverage of 84% in 2013 and 40% in 2014.

While we are not expecting any large-scale acquisitions, DSX should continue to deploy its capital, acquiring one-to-three ships every quarter through this likely low-point of the cycle. DSX has also maintained its chartering strategy, fixing each vessel as it comes offhire on one-to-two year time charters at prevailing rates with top tier counterparties. Although recent time charter rates have garnered negative criticism (from us included) due to their below market pricing, the company is willing to take a discounted rates in order to gain creditworthy counterparties and feels it maintains ample market exposure should the rate environment improve, (60% of DSX’s book remains open).

Valuation: We are raising our price target to $11, which is based on a 9.0x EV/EBITDA multiple and 2014 EBTIDA estimates. Our multiple represents a 29% premium to its 5-year historical average of 6.6x, given current weak earnings as above market charters roll-off and an industry leading balance sheet.

Risks: Downside risks include lower-than-expected rechartering rates, declining asset values, lack of acquisition targets and continued global macroeconomic weakness.

TK’s Provides Balanced Exposure To Tankers, Offshore and LNG Sectors With Growth Potential TK remains our top pick in the tanker sector, based on its solid acquisitions and diversification away from the traditional tanker segments. TK has increased its offshore energy (FPSO and shuttle tankers) a well as LNG tanker exposure. These are market segments with longer-term fixed-rate contracts, offering attractive risk adjusted returns.

TK’s recent growth has recently been facilitated directly at the daughter company level, allowing TK Parent to focus on continuing to reduce its asset base. Further dropdowns in 2013 of its FPSOs should help TK de-lever its balance sheet. As TK’s daughters grow, we expect to see further distribution increases from the daughters, which are currently at or near 50% profit share hurdles on their distributions increasing cash flow to the parent-owned GP.

Valuation: We are raising our price target to $43, which is based on 0.95x our estimated NAV.

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Figure 4: Overview Of TK’s NAV

Closing Date 1/29/2013Vessels (incl. newbuildings) $1,254Estimated Value Of Voyageur1 210VLCC Loan & Sevan Marine Investment 122.4Charter-in Commitments (72)Estimated Asset Value $1,514Net Debt ($MM)2 $907Daughter Equity $1,829GP Interest (20x multiple)3 $728NAV $3,165Diluted Shares Outstanding (MM) 69.4Net Asset Value per share $45.62Current Share Price $35.78Current Price/NAV 0.78x1. Estimated incremental inv estment in Voy ageur plus the sale premium of $90 million.

3. We assume 20x as our GP cash flow multiple giv en TK daughter's higher distribution y ield to the MLP sector.

2. TK Parent net debt, ex cluding the Voy ageur VIE.


Risks: Downside risks include operating leverage, spot market rates, newbuilding projects, access to capital and LNG and offshore project demand.

NNA Remains Our Top Pure-Play Tanker Exposure With contract coverage, a solid yield and increasing exposure to the product tanker market, NNA remains our top pure-play tanker stock. See Page 9 for further details.

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Dry Bulk Outlook

A Turnaround Is In Sight, But Not Here Yet

Expect Continued Dry Bulk Rate Weakness In 2013, But An Improvement From 2012 Although we have moved past the 10%+ annual fleet growth seen over the past four years, 2013 demand growth (ton-mile adjusted) is forecasted to slightly outpace supply (7.7% vs. 6.6%). As a result, we would expect average 2013 spot earnings to be modestly ahead of 2012 averages, with significant volatility throughout the year. Inline with normal seasonality, we expect weak Q1 and summer spot rates with improving rates in the Spring and Fall/Winter. With rates remaining in the doldrums, owners will generally face earnings below cash break-evens and lenders will continue to “get tough” with ship owners. These factors result in a downward bias for asset values and our belief that it is still too soon to upgrade the sector. Our sole Buy-rated name in the dry bulk sector, DSX, has strong contract coverage and a conservative balance sheet, providing protection through the cyclical trough.

2014 Will Be Better, But Don’t’ Expect The Strong Rates Seen In The 2010 Recovery With our 2014 fleet growth projection of only 2.5% fleet growth and demand growth in excess of 4%, 2014 should result in continued improved rates. However, our utilization level of 93.5% puts the industry at 2002 levels, when Capes averaged just above $12,000/day ($18,000/day adjusted for inflation). This is long way from dry bulk sector’s last decent year in 2010 when average cape rates were nearly $34,000/day. The supply and demand dynamic should continue to improve post-2014 as long as ordering is muted. Increased ordering is the key risk to a dry bulk recovery.

Not Buying The Sector On Uncertain Recovery And Negative Asset Trends It is difficult for us to become more bullish on the sector amidst what we expect will be further restructurings and lower asset prices. Many of the dry bulk owners are still over-leveraged and negotiating covenant breaches and amortization restructurings, which has become much more difficult with lenders. We view this as a catalyst for further forced secondhand sales.

Dry Bulk Supply And Demand Model

2013 Will Look Similar To 2012, But A Recovery Is Set For 2014 And Beyond Our current supply and demand model for the dry bulk sector suggests a continued oversupply in 2013. However, we expect the balance to begin to shift in 2014 as limited deliveries should allow demand growth to begin to absorb the excess tonnage that has delivered over the past five years. Our outlook calls for modest net fleet growth of 6.2% and 2.5% in 2013 and 2014, respectively with demand growth of 4.5% and 4.3%. This growth assumes continued slippage and cancellation of vessels in the published orderbook of 30% in 2013 and 15% in 2014. We expect scrapping to continue in the sector although at a more modest pace of 3.75% than the 5.3% realized in 2012. The modest increase in cargo exports is being driven by strong iron ore and coking coal growth, which should also help expand ton-mile demand as a result of the long-haul nature of the cargoes.

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Figure 5: Dry Bulk Supply And Demand Outlook Overview

2013E 2014E 2015E

Orderbook Slippage 15% 5% 5%

Orderbook Cancellations

15% 10% 10%

Dry Bulk Demand Growth (Millions of Tons)

% Year/Year Growth Global Fleet (Millions of

DWT) 1% Net Change

Year/YearDemand In Terms Of

Vessels Supply In Terms Of

Vessels Implied Utilization

2000 2,134 11.3% 275.2 2.9% 4,353 4,587 94.9%2001 2,191 2.7% 287.0 4.3% 4,470 4,783 93.5%2002 2,258 3.0% 294.4 2.6% 4,606 4,906 93.9%2003 2,385 5.6% 301.7 2.5% 4,918 5,028 97.8%2004 2,577 8.1% 320.7 6.3% 5,314 5,346 99.4%2005 2,722 5.6% 343.9 7.2% 5,613 5,732 97.9%2006 2,903 6.6% 366.0 6.4% 6,086 6,101 99.8%2007 3,111 7.2% 390.2 6.6% 6,708 6,503 103.2%2008 3,209 3.2% 418.1 7.2% 6,841 6,969 98.2%2009 3,126 -2.6% 458.6 9.7% 6,741 7,644 88.2%2010 3,519 12.6% 536.6 17.0% 7,904 8,255 95.8%2011 3,716 5.6% 615.5 14.7% 8,499 9,469 89.8%

2012E 2, 3, 4, 5 3,877 4.3% 679.2 10.3% 8,811 10,449 84.3%

2013E 3, 4, 5 4,045 4.4% 723.7 6.6% 9,490 11,135 85.2%

2014E 3, 4, 5, 4,220 4.3% 739.6 2.2% 10,230 10,957 93.4%

2015E 3, 4, 5, 4,429 5.0% 725.8 -1.9% 10,736 10,752 99.8%

(1) Based on the Clarksons orderbook and Deustche Bank scrapping, slippage, and cancellation estimates. Scrapping estimates call for 3-4% of the 2012 global fleet on an annual basis(2) 2012 Dry bulk fleet growth and demand is based on Clarksons' reported figures as of January 8, 2012 and DB estimates(3) Supply and demand growth broken down by Panamax equivalents. Demand growth converted based on 55,000 ton cargos multiplied by trips per year. Supply growth converted by dividing fleet by 65,000 dwt(4) A deficit of vessels indicates a positive supply and demand imbalance, which typically acts as a positive catalyst for day rates(5) Seaborne trade estimates post-2012 based on Deutsche Bank estimates

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Figure 6: Dry Bulk Contracted Orderbook Overview

Type of Vessel 2007 2008 2009 2010 2011Current World Fleet

(December 31, 2012) 3,4 2013E 5 2014E 5 2015E 5

Capesize Vessels Global Fleet 1 771 825 956 1,165 1,366 1,505 1,682 1,738 1,747 (# of Vessels) Y/Y Growth 7.0% 15.9% 21.9% 17.3% 10.2% 11.8% 3.3% 0.5%

Orderbook 2 177 56 9Orderbook/Fleet 11.8% 3.3% 0.5%

Panamax Vessels Global Fleet 1 1,477 1,556 1,629 1,814 2,028 2,266 2,753 2,914 2,928 (# of Vessels) Y/Y Growth 5.3% 4.7% 11.4% 11.8% 11.7% 21.5% 5.8% 0.5%


Handymax Global Fleet 1 1,595 1,704 1,863 2,169 2,478 2,682 3,008 3,086 3,095 (# of Vessels) Y/Y Growth 6.8% 9.3% 16.4% 14.2% 8.2% 12.2% 2.6% 0.3%


Handysize Global Fleet 1 2,812 2,859 2,821 2,996 3,030 3,037 3,314 3,401 3,429 (# of Vessels) Y/Y Growth 1.7% (1.3%) 6.2% 1.1% 0.2% 9.1% 2.6% 0.8%


Total Vessels Global Fleet (Vessels) 6,655 6,944 7,269 8,144 8,902 9,490 10,757 11,139 11,199Y/Y Growth 4.3% 9.2% 12.0% 9.3% 6.6% 13.4% 3.6% 0.5%Orderbook 2 1267 382 60

Orderbook/Fleet 13.4% 3.6% 0.5%

Total DWT (millions) Global Fleet DWT (millions)

392.0 417.6 458.6 536.6 615.5 679.2 715.5 746.7 751.1

Y/Y Growth 6.5% 17.0% 16.6% 14.7% 10.3% 16.3% 4.4% 0.6%Global Orderbook DWT

(millions) 2100.1 31.1 4.4

Orderbook DWT/ Fleet DWT (Millions) 16.3% 4.4% 0.6%

(1) Global fleet as of the end of the year. (2) Orderbook data reflects deliveries during the year specified. (3) Year/Year growth rates under 'Current World Fleet' are estimated from YE 2011. (4) As of January 8, 2012. (5) Based on Clarksons's Orderbook assumes no slippage, cancellation or scrapping. Source: Clarksons Research Services; Deutsche Bank estimates

Dry Bulk Demand Assumption Overview Dry bulk demand will be driven by growth in iron ore as well as a material increase in coking coal cargoes. A key change from our previous estimated demand is our reduced thermal coal and grain growth expectations to 3.0% and 2.5% respectively in 2013, below our average 2013 dry bulk growth rate of 4.4%.

Iron ore growth of 6.9% is driven by DB’s expectation for increased production in Australia and Brazil, particularly in H2 2013; this will be driven by Chinese steel restocking

Increased thermal coal exports from Indonesia and Australia will likely be mitigated by declining US exports; increased export prices could provide upside to our thermal coal demand scenario

Coking coal exports are expected to improve by 8% on the back of increased steel production and iron ore volumes

Grains exports are only expected to grow by 2.5% on the back of a weak 2012 crop, as US corn exports continue to disappoint early in 2013

Key risks to the upside or downside of our demand model are Chinese steel restocking, improved Chinese GDP (8.2% in 2013 and 8.9% in 2014) and limited weather disruptions. Figure 7 below provides an overview of our demand growth assumptions.

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Figure 7: DB Dry Bulk Demand Growth By Cargo Segment

2013E 2014E 2015EIron ore growth Rate 6.9% 6.4% 9.0%Thermal coal 3.0% 4.0% 4.0%Coking coal 8.3% 5.6% 3.5%Grain 2.5% 3.0% 3.0%Minor bulk growth rate 3.0% 3.0% 3.0%Cumulative dry bulk growth 4.4% 4.3% 5.0%

Source: Deutsche Bank, Clarksons Research Service

Dry Bulk Supply Overview After the dry bulk fleet doubled between 2006 and 2012 (10.2% CAGR), growth is finally expected to moderate in 2013 and beyond. We still expect significant slippage and cancellation in 2013, but these figures should decline with the negligible orderbook in 2014 and 2015. Record scrapping in 2012 (5.3% of the fleet) was higher than we expected, but should moderate in 2013 as the age profile of the fleet becomes younger. The key risk to the supply side of our model is the possibility of a growing orderbook in 2014 and beyond. Increased orders into what we believe is a recovery in 2014 and 2015 could postpone or reduce any rate recovery and possibly send the market into another crisis post-2015. Mitigating this risk is the lack of bank financing and limited investment from outside capital sources. With banks unwilling to lend, or exiting shipping altogether, it is unclear that owners will be able to finance new orders, decreasing the risk of speculative newbuidlings. However, some high quality owners will still be able to gain credit, but this may not be enough to spur another overbuilding “super cycle”. Figure 8 below summarizes our growth, slippage, cancellation and scrapping estimates in our model.

Figure 8: Fleet Orderbook Delivery And Growth Assumptions

Published Orderbook Growth1 Slippage2 Cancellation2

Scrapping (% of Fleet) Net Growth

2013 14.7% 15.0% 15.0% 3.8% 6.6%2014 4.0% 5.0% 10.0% 3.0% 2.2%2015 0.5% 5.0% 10.0% 2.5% -1.9%

1. Implied fleet growth assuming the unadjusted Clarksons orderbook.2. Slippage and cancellation as a percentage of the published orderbook.

Source: Deutsche Bank, Clarksons

Overview Of The Existing Fleet Capes and Panamaxes have dominated ordering over the past decade. As a result, these vessel classes’ proportionate composition of the current fleet has grown. However, the growth of the larger vessels has been led by iron ore and coal cargo demand, which is most efficiently handled by the larger dry bulk vessels. Capesize ships make up 41% of the total fleet on a carrying capacity (DWT) basis, but only 16% of the fleet by actual number of ships.

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Figure 9: Dry Bulk Fleet By DWT Figure 10: Dry Bulk Fleet By Vessel Count

Capesize41%

Panamax26%

Handymax21%

Handysize13%

Capesize16%

Panamax24%

Handymax28%

Handysize32%

Source: Clarksons Research Service Source: Clarksons Research Service

Declining Orderbook Paves Way For Uncertain Future . . . The current contracted orderbook (excluding any slippage, cancellation or scrapping) is currently at 20% of the existing fleet, and largely expected to deliver in the next two years (see Figure 11 below). Panamaxes have the highest orderbook with 29% of the fleet expected to deliver through 2015, while Capes are at a more modest 18%. The 2015 orderbook is negligible, but this could change rapidly, particularly if owners become more bullish about 2014 and 2015 prospects or banks begin to increase credit to the sector. The uncertain orderbook visibility past 2014 places a glaring question mark on any longer-term supply outlook.

Figure 11: Current Vessel Orderbook As % Of Delivered Fleet & Delivery Time

13%

4%

1%

18%

22%

7%

1%

29%

12%

3%0%

16%

11%

3%1%

15%15%

5%

1%

20%

0%

5%

10%

15%

20%

25%

30%

35%

2013E 2014E 2015E Total Ordebook

Capesize Panamax Handymax Handysize Dry Bulk Fleet

Source: Clarksons Research Service

Non-Deliveries Expected To Remain Flat In 2013 Before Declining in 2014 We expect non-deliveries (slippage and cancellations) to remain relatively flat at 30% in 2013 before declining in 2014. Over the past two years we have seen roughly 30% non-deliveries based on Clarksons data. This was calculated by comparing the contracted orderbook at the beginning of each calendar year compared to actual deliveries for that

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year. However, while we can track non-deliveries from past years, we still do not know what is just slippage (i.e. delayed to future years) or cancellations which will never deliver. In 2013, we expect to see 30% of the current contracted orderbook not deliver as a result of either (i) order overstatement – out of the money vessel options counted as firm orders by the brokers; (ii) unreported contract cancellations – many orders are placed by private owners who do not disclose cancellations; (iii) contract defaults – due in part to lack of debt funding; and (iv) delays – either initiated by the yard or the owners due to market weakness. Our non-delivery estimate drops in 2014 and 2015 based on what we believe will be a more modest nominal orderbook, more rationally priced vessels (for today’s market), and perhaps some rate recovery.

Figure 12: Historic And Projected Dry Bulk Orderbook Non-Deliveries

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

2008 2009 2010 2011 2012 2013E 2014E

19.5%

39.4%36.1%

28.3% 29.6% 30.0%

15%

Source: Clarksons Research Service, Deutsche Bank

Continued Scrapping Expected, But The Fleet Is Relatively Modern We expect scrapping to remain elevated in 2013, although lower than record 2013 levels. In 2012, 5.3% of the dry bulk fleet or 32.9 million DWT were scrapped. Capes and Panamaxes accounted for nearly two thirds of the demolition (on a DWT basis) while the more modern Handymax fleet saw the least scrapping. Given the weak spot rates expected, we expect to see continued scrapping in 2013, albeit at a more modest pace. This is due to our belief that the easier scrapping decisions have already been made by owners, shedding their older tonnage that was burning cash. The remaining fleet in the target scrapping range (over 20 years) is only 11%, of which the smaller Handysize and Handymax vessels, which have outperformed, account for over half of the aged fleet.

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Figure 13: Dry Bulk Fleet Age Profile

11% 12% 11%15%

51%

0%

10%

20%

30%

40%

50%

60%

>20 15-19 10-14 5-9 0-4

Vessel Age (Years)

Handysize Handymax Panamax Capesize Dry Bulk Fleet


Figure 14: Dry Bulk Scrap Prices (2000-Current)

0

50

100

150

200

250

300

350

400

450

500

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

$/LDT

Ves

sel S

crap

Val

ue ($

, Mill

ions

)

Capesize Scrap Value Panamax Bulker Scrap Value

Handysize Bulker Scrap Value Far East Demolition Prices


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Tanker Outlook

Weak Global Demand Delays Tanker Recovery

Limited Demand Growth Suggests Only Modest Rate Improvement In 2013 After a fairly lackluster 2012, 2013 is not expected to be much better for the crude tanker market as global seaborne crude demand is forecasted to grow at 1.0% y/y. Despite 2013 fleet growth of 3.3%, we see few catalysts for a tanker rate rally this year. Once again, the market will look for a seasonal rally in late-Q1 and early Q2 as Chinese crude demand increases. With limited global demand growth, seasonal trends and external factors (weather, geopolitical events) will likely have an outsized impact for brief periods, in what should be another lackluster year.

Ton-Mile Demand Expansion Likely As West African Exports Shift To Asia A key theme, which we are counting on for our modestly improved forecast is for US imports from the Middle East (primarily Saudi Arabia) to remain flat at 2012 levels. While increased Canadian and US production have flooded the domestic market with cheap light crude, we expect continued imports (in the US Gulf) of Middle Eastern heavy crude. Figure 15 below outlines weekly imports to the US from the major exporting regions.

Figure 15: Four-Week Rolling Average Of US Crude Imports (2010-Present)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Jun 04,

2010

Aug 04,

2010

Oct 04,

2010

Dec 04,

2010

Feb 04,

2011

Apr 04,

2011

Jun 04,

2011

Aug 04,

2011

Oct 04,

2011

Dec 04,

2011

Feb 04,

2012

Apr 04,

2012

Jun 04,

2012

Aug 04,

2012

Oct 04,

2012

Dec 04,

2012

1,00

0 Bb

l/D

ay

Latin America Middle East Africa Canada

Source: Deutsche Bank, EIA

We expect Middle Eastern imports to remain flat given Saudi Arabia’s own political interest as well as the eventual start-up of the Motiva refinery. The Motiva refinery expansion (part owned by Saudi interests) is expected to provide an incremental 325,000 bbl/day of production, which should be sourced primarily from the Middle East.

With AG-US volumes flat, what will drive the expected ton-mile expansion is increased West African exports to Asia, given the declining US and European import volumes. We believe North American crude production has displaced the light sweet West African crude, which will likely find a home in China and other Asian destinations. The longer-haul voyages on VLCCs and Suezmaxes should help increase total ton-mile demand helping to offset flat-to-down US long-haul demand.

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Tanker Supply And Demand Model

Gloomy Demand Outlook Clouds Crude Tanker Recovery Despite Supply Moderating Our current supply and demand model for the crude tanker sector suggests only modest improvement from 2012. While we believe we have seen a bottom in the market, lackluster demand has resulted in an uncertain recovery horizon. With demand growth of only 1.0% y/y, we rely on ton-mile demand expansion for the modest increased utilization in 2013. The biggest positive is the limited fleet growth of 3.3% in 2013, which further declines through 2015. Similar to the dry bulk sector, orderbook growth remains the key risk to the sector.

Figure 16: Tanker Supply And Demand Outlook Overview

2013E 2014E 2015E

Orderbook Slippage 15.0% 5.0% 5.0%

Orderbook Cancellations 15.0% 5.0% 5.0%

Increased Crude Storage (Million DWT) 1.00 1.00 1.00

5

Total Seaborne Crude (Millions Of Barrels/Day)

% Year/Year Growth Global Fleet (Millions

of DWT) 1% Net Change

Year/YearDemand In Terms

Of Vessels 2Supply In Terms

Of Vessels 2Implied

Utilization

2000 33.4 221.6 2029 2110 96.2%2001 33.5 0.4% 215.9 -2.5% 1940 2056 94.3%2002 33.5 0.0% 219.9 1.8% 1940 2094 92.7%2003 35.3 5.5% 226.3 2.9% 2096 2156 97.2%2004 37.1 5.1% 236.7 4.6% 2258 2254 100.2%2005 37.7 1.6% 253.0 6.9% 2354 2410 97.7%2006 38.0 0.7% 264.5 4.5% 2371 2519 94.1%2007 38.6 1.6% 277.4 4.8% 2410 2641 91.2%2008 38.2 -1.1% 287.2 3.6% 2513 2735 91.9%2009 36.2 -5.3% 306.6 6.7% 2407 2920 82.4%2010 37.4 3.3% 319.3 4.2% 2529 3041 83.1%2011 36.7 -2.0% 341.2 6.8% 2477 3250 76.2%

2012E 1,2 37.3 1.7% 356.9 4.6% 2668 3399 78.5%2013E 1,2 37.6 1.0% 368.7 3.3% 2862 3512 81.5%2014E 1,2 38.3 1.7% 373.9 1.4% 3005 3561 84.4%2015E 1,2 39.0 1.8% 368.0 -1.6% 3060 3505 87.3%

(2) Supply/Demand broken down in Aframax equivalents. Demand growth converted using an average laden volume of 600,000 barrels and an average of about 8.5 voyages/year. Supply growth converted by dividing fleet by 105,000 dwt.

(1) Based on Clarkson's Orderbook and Deutsche Bank scrapping, slippage, and cancellation estimates. Excludes clean trading tankers. Total Crude Production data represents IEA, Clarksons and DB estimates.

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Figure 17: Tanker Contracted Orderbook Overview

Type of Vessel 2006 2007 2008 2009 2010 2011Current World Fleet (December 31, 2012) 2013E 5 2014E 5 2015 5

VLCC Global Fleet 1 483 499 510 532 539 578 610 666 689 691(# of Vessels) Orderbook 56 23 2

Y/Y Growth 3.3% 2.2% 4.3% 1.3% 7.2% 5.5% 9.2% 3.5% 0.3%Suezmax Global Fleet 1 341 355 357 386 410 444 470 536 546 553

(# of Vessels) Orderbook . 66 10 7Y/Y Growth 4.1% 0.6% 8.1% 6.2% 8.3% 5.9% 14.0% 1.9% 1.3%

Aframax Global Fleet 1 698 740 779 820 836 909 912 937 958 965(# of Vessels) Orderbook 28 21 7

Y/Y Growth 6.0% 5.3% 5.3% 2.0% 8.7% 0.3% 3.1% 2.2% 0.7%

Total Vessels Global Fleet (Vessels) 1,522 1,594 1,646 1,738 1,839 1,931 1,992 2,139 2,193 2,209Orderbook 150 54 16Y/Y Growth 4.7% 3.3% 5.6% 5.8% 5.0% 3.2% 7.5% 2.5% 0.7%

Total DWT (millions)Global Fleet DWT

(millions) 264.5 277.4 287.2 306.6 319 341 357 388 399 402

Orderbook 31.1 11.1 2.5Y/Y Growth 4.8% 3.6% 6.7% 4.2% 6.8% 4.6% 8.7% 2.9% 0.6%

(1) Global fleet as of the end of the year. (2) Orderbook data reflects deliveries during the year specified. (4) As of January 8, 2013.(5) Vessel orderbook reflects contracted fleet growth net of scrapping, does not include slippage/cancellationSource: Clarksons Research Services; Deutsche Bank estimates

Tanker Demand Assumption Overview Crude tanker cargoes, or seaborne crude, are expected to see a modest improvement in 2013, with higher growth likely in 2014-2015. China and non-OECD Asia are the primary drivers for growth going forward, with a modest increase in Latin America expected. Europe is likely to remain a drag on the sector, which is a key importer of West African crude. Further, we expect flat seaborne imports in the US. In Figure 18 below, we outline the major growth assumptions by region. As a general rule, we assume 95% of the increased imports from these areas will be sourced from the seaborne crude market.

Figure 18: DB Seaborne Crude Transportation Volume Growth By Region

Crude Import Growth By Reg ion (Mbd)

ChinaOECD As ia Europe

Rest of As ia

Latin America Tota l

Seaborne Crude Import Growth (Mbd)

Y/Y Seaborne Crude Growth

2013E 0.4 (0.1) (0.2) 0.2 0.1 0.4 0.4 1.0%2014E 0.4 0.0 (0.1) 0.2 0.1 0.7 0.6 1.7%2015E 0.5 0.0 (0.1) 0.2 0.1 0.7 0.7 1.8%

Note: Seaborne crude is assumed to represent 95% of the selected crude import grow th.Source: Deutsche Bank

In Figure 19 below, we have broken down DB’s current oil consumption estimates by region. While the US is expected to modestly increase, we believe this will be sourced by non-seaborne domestic production and Canadian imports. The continued weak European economy is expected to drive modest consumption declines through 2016. China and other Asia continue to be the source of the majority of crude demand growth.

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Figure 19: DB Commodities Global Oil Demand Outlook Unit: Million bbl/day 2010 2011 2012E 2013E 2014E 2015E 2016ECONSUMPTIONOECD Americas 24.1 24.1 23.8 23.9 23.9 23.9 24.0 USA 19.2 19.0 18.7 18.7 18.8 18.9 18.9OECD Europe 14.7 14.3 13.8 13.6 13.5 13.4 13.3 Germany 2.5 2.4 2.3 2.3 2.3 2.3 2.3OECD Asia-Pacific 8.1 8.1 8.5 8.3 8.3 8.3 8.4 Japan 4.4 4.5 4.7 4.5 4.4 4.4 4.4TOTAL OECD 46.9 46.5 46.0 45.8 45.7 45.6 45.6

FSU 4.2 4.4 4.6 4.7 4.9 5.0 5.1Europe 0.7 0.7 0.7 0.7 0.7 0.7 0.7China 8.8 9.2 9.6 10.0 10.4 10.9 11.4Other Asia 10.9 11.0 11.4 11.6 11.8 12.0 12.2Latin America 6.0 6.3 6.5 6.6 6.7 6.8 7.0Middle East 7.3 7.4 7.6 7.8 8.1 8.3 8.5Africa 3.3 3.3 3.4 3.5 3.6 3.6 3.7TOTAL NON-OECD 41.1 42.4 43.7 44.9 46.2 47.4 48.8

GLOBAL OIL DEMAND 88.0 88.9 89.7 90.6 91.8 93.1 94.3Source: Deutsche Bank

Tanker Supply Overview Despite only modest 6.8% and 4.6% fleet growth in 2011 and 2012, the tanker fleet remains oversupplied. However, declining net growth to 3.3% and 1.4% next year should modestly reduce the vessel overhang. The Suezmax sector is expected to see the highest near-term growth with 17.7% of the fleet on order (vs. 12.5% of the total crude fleet). We expect 30% of the contracted orderbook to not deliver in 2013. Of the 30%, we expect 15% to be driven by order cancellations with the remaining 15% delayed until 2014. Our 2013 non-delivery estimates are inline with 2010-2012 non-delivery figures (although the actual breakdown between historical cancellations and slippage is unknown). After modest scrapping of 2.7% of the fleet in 2012, we are expecting slightly lower tanker demolition of 2.5% in 2013, declining to 2.0% in 2014.

Crude Tanker Fleet Orderbook Overview Excluding slippage, cancellation and scrapping, only 12.5% of the total crude tanker fleet is currently on order. The largest orderbook is in the already oversupplied Suezmax and VLCC markets with 18% and 14% of their respective operating fleets due for delivery by 2015. However, the majority of the orderbook is due for delivery in 2013, leaving negligible fleet growth in 2014 and beyond.

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Figure 20: Current Vessel Orderbook As % Of Delivered Fleet & Delivery Time

10%

4%

0%

14%14%

2% 2%

18%

3%2%

1%

6%

9%

3%

1%

13%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2013E 2014E 2015E Total Ordebook

VLCC Suezmax Aframax Tanker Fleet

Excludes slippage, cancellation and scrapping Source: Clarksons Research Services

Non-Deliveries Expected To Keep Pace In 2013 We are forecasting fairly consistent y/y non-deliveries in 2013 vs. 2012. Similar to the dry bulk sector (see Page 17), orderbook overstatement as well as defaulting owners are the primary driver for our cancellation estimates. Further, owners with negotiating leverage have been successful in delaying order deliveries, resulting in our continued high (15%) slippage estimate.

Figure 21: Historic And Projected Total Crude Tanker Order Non-Deliveries

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2009 2010 2011 2012 2013E 2014E

22.1%

32.9%30.3%

32.2%30.0%

10%

Source: Deutsche Bank, Clarksons Research Services

Age Discrimination Continues, But We Do Not Expect A Scrapping Surge Unlike the dry bulk sector, the tanker market is generally a young fleet. The 2010 phase-out of single hull tankers has led to the vast majority of tankers aged less than 20 years. Despite the modern fleet age, charterers are seeking more fuel efficient and better-designed tankers (and in a weak market they can be selective). As a result, tankers older than 15-years old will likely realize lower average spot earnings over the course of the year. However, the discrimination is supply based and if the market rallies, we expect older tankers to be more competitive. Conversely, in the weak summer months, they may incur longer wait times between cargoes or take spot-rate discounts. This should encourage the continued scrapping of the older fleet, but given the small pool, scrapping will likely remain at modest levels. Figure 22 below outlines the current age profile and Figure 23 depicts current scrap values.

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Figure 22: Tanker Fleet Age Profile

0.0%

5.0%

10.0%

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>20 15-19 10-14 5-9 0-4

Vessel Age (Years)

VLCC Suezmax Aframax Total


Figure 23: Tanker Scrap Pricing (2000-Current)

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VLCC Scrap Value Suezmax Scrap Value

Aframax Scrap Value Far East Demolition Prices


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Container Outlook

Liners Maintain Better Pricing Discipline Amidst Oversupply

While 2001 was a tough year for the liner trade, 2012 was the year of liner discipline. Even as containership capacity outweighed increased demand, rates were able to rally. The key difference was the focus on pricing and not market share. Liners decreased active tonnage (through lay-ups and charter roll-offs), reduced service offerings and shifted vessels to different routes all in an effort to increase spot freight rates by keeping capacity artificially tight. The result was average 2012 spot container freight rates up 60% and 38% from Asia to Europe, and to the US West Coast respectively.

In 2013, we expect this strategy to continue as larger vessels continue to hit the water and demand is expected to grow in the mid-single digits. Rates are already up y/y as we near the Chinese New Year (Figure 24 below). However, it is unclear if rates will sustain current high levels and the options market is pricing modest downside for Q1 before a peak season rally.

Figure 24: Current Spot Container Freight Rates

Absolute % Absolute % Absolute %

SCFI 1,228 1,246 (18) (1.5% ) 1,147 81 7.1% 983 245 25.0%

Europe 1,326 1,349 (23) (1.7% ) 1,237 89 7.2% 737 589 79.9%

Med 1,301 1,311 (10) (0.8% ) 1,130 171 15.1% 779 522 67.0%

USWC 2,497 2,520 (23) (0.9% ) 2,231 266 11.9% 1,825 672 36.8%

USEC 3,657 3,670 (13) (0.4% ) 3,387 270 8.0% 2,961 696 23.5%

Last YearY/Y Variance

SCFI 1/25/2013 1/18/2013W/W Variance M/M Variance

Last Month

Source: Deutsche Bank, GFI

USWC and USEC rates continue to outperform the more volatile European and Mediterranean routes. Better demand, more long-term freight contracts and better route rationalization have helped maintain a firmer market. Key risks to the route are port strikes and US economic growth.

Container Fleet Should Outpace Demand In 2013 Contracted fleet growth of 11.3% in 2013 will not be able to keep up with our forecasted container demand growth of 4.5% (1.4x world GDP). As with last year, we expect weak economic growth in Europe and modest US economic growth. These two regions account for the majority of long haul demand due to the high dependency on Asian exports. We expect continued strong growth in emerging Asia, which is generally a short-haul trade (intra-Asia). We therefore believe time charter rates will remain weak (absent continued active supply-side rationalization) and we could see further asset value declines. However, rates may show intra-year volatility as liners could seek short-term charters to augment peak season supply needs or if global GDP estimates prove to be too low. If the US consumer were to materially reaccelerate, increased Asia-US activity would not only boost demand, but also the global trade multiplier.

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Container Demand Outlook

Container Trade Growth Rate Slows Compared To GDP Inline with our 2012 expectation, the global container trade multiple vs. world GDP has materially contracted from 2010-11 levels and historical averages. In 2012, Clarksons estimates container trade growth of 4.0%, which is 1.4x DB’s GDP estimate of 2.9%. This figure is well below the 2011 multiple of 2.2x, the historical average of 2.3x (since 2000, excluding 2009) and relatively inline with our January 2012 estimate of 1.5x. Figure 25 below outlines historical trade growth and GDP multipliers. Given DB’s current 3.2% 2013 GDP estimate we currently forecast growth of 4.5% in 2013 (a 1.4x multiple).

Figure 25: World GDP Vs. Container Trade (2000-2012)

0.0x

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E

World GDP Container Trade Trade Growth Multiplier


Exacerbating the more modest trade growth multiplier is the increase in intra-Asian trade. We expect the majority of growth this year to come from emerging markets, particularly in Asia. Asian demand is largely regional (i.e. China-Singapore), which are short-haul trade routes. The impact of the Asian growth is negative mix-shift for ton-mile demand at the same time as we are set to experience strong fleet growth. However, new North-South trades may provide longer haul demand than intra-Asia as Latin American and African demand increases. These routes are still not as long as the Asia-Europe or Asia-USEC voyages.

Another growing trend that is included in our total trade demand is increasing backhaul volume. Greater volumes of containers are moving from the US and Europe to Asia. These movements require no additional capacity as ships have ample space on return voyages.

World Trade Growth Forecasts

DB is currently forecasting worldwide GDP growth of 3.2% and 4.0% in 2013 and 2014 respectively. This growth is driven by strong emerging market demand in non-OECD Asia, Latin America and EMEA. US and Euroland regions are expecting more modest GDP growth of 2.0% and (0.3%) in 2013 respectively. Figure 26 below outlines DB’s current GDP forecasts for 2012-14.

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Figure 26: DB Worldwide GDP Growth Forecasts

Real GDP (% Growth)

2012E 2013E 2014EUnited States 2.3 2.0 2.9Euroland -0.5 -0.3 1.1United Kingdom -0.1 0.9 1.8Japan 2.0 0.6 0.6Asia (ex Japan) 5.9 6.7 7.5 India 4.6 6.8 7.1 China 7.8 8.2 8.9Latin America 2.7 3.5 3.9 Brazil 1.0 3.5 4.2EMEA 3.0 3.5 3.9 Russia 4.0 4.3 4.2G7 1.5 1.2 2.0World 2.9 3.2 4.0Source: DB EstimatesAs of 1/18/13

Container Supply Outlook

Super Post-Panamax Fleet Deliveries Drive Fleet Growth The current containership orderbook is dominated by the new fuel-efficient super post-Panamaxes favored by the liners (72% of the orderbook on a TEU basis). The ships slower, long-stroke engines as well as greater capacity and can cut fuel costs by 20% reducing total per/TEU transportation costs. The slightly smaller, yet still efficient 5,000 TEU to 8,000 TEU), compose 17% of the fleet with most deliveries set for 2013. These vessels compose over 90% of the orderbook. Overall, the fleet is set to grow by 11.3% and 6.4% in 2013 and 2014 excluding scrapping and non-deliveries.

Figure 27: Current Orderbook Composition By Vessel Size

Handy & Feeder 2.9%

Sub-Panamax

2.3%Panamax

3.0%

Post-Panamax

16.9%

Super Post -Panamax

72.9%


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Figure 28 below outlines the current orderbook profile by ship class and delivery date. Panamax and smaller ships have fairly negligible orderbooks (5.0% or less) while post-Panamax and super post-Panamax ships currently have 19.3% and 53.0% of their fleets on order.

Figure 28: Current Containership Orderbook Profile (% of Current Fleet)

4% 5%3%

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Handy & Feeder Sub-Panamax Panamax Post-Panamax Super Post - Panamax Total

Super Post-Panamax vessels not only make up the vast majoirty of the orderbook, but also imply 53% fleet growth.


Our figures do not include any non-deliveries (slippage or cancellation) nor do they include any scrapping. We have outlined contracted fleet growth by vessel segment in Figure 29 below.

Figure 29: Contracted Containership Fleet Growth (Gross)

Handy & Feeder Sub-Panamax Panamax

Post-Panamax

Super Post - Panamax Total

2013 3.3% 3.4% 2.4% 14.7% 23.5% 11.3%2014 0.7% 1.2% 0.0% 2.8% 19.3% 6.4%2015 0.0% 0.1% 0.1% 1.7% 8.8% 2.9%2016 0.0% 0.0% 0.1% 0.1% 1.3% 0.4%Total 3.9% 4.7% 2.6% 19.3% 53.0% 21.1%


Non Deliveries Could Help Moderate Fleet Growth

Historically, containership non-deliveries have been more modest than typically seen in the tanker and dry bulk sectors. However, last year, with tanker and dry bulk non-deliveries trending near 30%, while the containership sector was closer to 21% of the 2012 orderbook not delivering. Unfortunately there is no precise way to tell how much of the orderbook that did not deliver was a result of delays or actual cancellation/false orders. While shipyard delays are common and often can push off deliveries for months or even years, cancellations are obviously the most beneficial to lowering supply growth.

Current Fleet Profile As in the dry bulk and tanker shipping sectors, the containership fleet is heavily skewed towards larger vessels. Currently, post-Panamaxes and super post- Panamaxes account for over 49.9% of the delivered fleet. Figure 30 below outlines the containership fleet by vessel size.

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Figure 30: Current Fleet Profile By Size

4.4%

10.9% 10.5%

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Feeder (100-999 TEU)

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Panamax (3,000-5,000 TEU)

Post - Panamax (5,000-7,999 TEU)

Super Post -Panamax (8,000 TEU

& Over)

(% o

f Cur

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Vessel SegmentSource: Clarksons Research Service

Scrapping Could Play A More Important Role As Older Ships Age While most vessels have useful lives between 20-30 years, containerships have historically been skewed towards the longer-end (i.e. 25-35 years). Actual vessel age will ultimately be driven by the strength of the market as vessels enter their fourth and fifth special surveys (at age 20 and 25). A poor near-term outlook may cause an owner to scrap a ship rather than potentially invest millions of dollars in new steel and equipment to keep the vessel trading for another five years. Historically, scrapping has had a modest impact in comparison to overall fleet size. However, new fuel efficient designs and the relative inefficiency of aging vessels could lead to higher scrapping rates as these ships find it more difficult to compete for business and/or becomes dilutive. Figure 31 and 32 below outline the current fleet age profile and historical scrapping.

Figure 31: Fleet Age By Sub-Panamax and Larger Ships

12%

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Figure 32: Historical Containership Scrappage (1996-2012)

0.7% 0.7%

2.1%

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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

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Total Scrapping Scrapping (% of Fleet)

Source: Deutsche Bank, Clarksons Research Services

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Shipping Cheat Sheet

DB’s Shipping “Cheat Sheet”

Given the potential for shipping markets to turnaround post-2013 as well as increased investor interest, we wanted to provide a cheat sheet or refresher notes, for the major shipping segments, with each sector’s key drivers in this section.

Ocean Shipping Enables Nearly All Global Trade Ocean shipping touches nearly every part of global trade through the transportation of raw and refined commodities and manufactured goods. Ships carry everything from iron ore, coal, grains, oil and oil products to manufactured goods such as furniture, components, clothing and other low-cost or large scale items. Finished goods are most often moved in containers vs. raw materials and commodities which are often moved in bulk (although exceptions exist). Marine shipping is the lowest cost transportation provider and has only one competitor in the intercontinental transportation space (high-cost, low-capacity airfreight). Marine shipping can be separated into four main segments:

Dry Bulk – specializing in break bulk dry cargoes such as coal, iron ore and grains;

Tankers – carrying crude and refined products;

Containers – transport standardized containers (20ft or 40ft), generally filled with manufactured goods and components; and

Specialized Ships– which is a catch-all that includes smaller shipping segments such as LNG, LPG, chemicals, roll-on roll-off ships and others. These vessels are generally non-interchangeable with varied cargo types and sizes.

While demand each sector is generally sensitive to worldwide GDP or trade growth, each individual sector has its own supply and demand fundamentals. In the public market, we focus mostly on the three main segments (dry bulk, tankers and containers), although LNG has become a bigger focus in the specialized segment.

The Industry Has Faced An Oversupply Of Tonnage The key theme that has plagued most shipping markets for the past several years has been vessel oversupply. Underinvestment in new ships leading into the first half of the last decade (2000-2005), coinciding with strong OECD growth and China’s entry into the World Trade Organization, tightened the supply/demand dynamic for shipping commodities (tanker and dry bulk cargoes) as well as manufactured products (containerized cargo). As supply remained constrained and demand firmed, rates materially rallied between 2005-2008. During this period, owners placed orders for new ships to take advantage of the strong market. However, it takes at least 18-36 months to construct a new ship. The rush to order ships and increased yard capacity in Asia (predominately at new yards in China) led to overbuilding in the dry bulk, tanker and containership sectors. These ships began to deliver into a weakening market (post-credit crisis) because a ship ordered in 2005 as demand was heating-up, didn’t deliver until 2008 and by then it was too late. The shipping markets are now finally beginning to see the pace of newbuilding deliveries moderate, and demand is forecasted to outpace supply growth once again in some cases.

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Ton-Mile Demand Remains A Key Focus In shipping, we are not only focused on total demand, or the volume of cargoes transported, but also how far they are moved. Ton-mile demand is the measure the quantity of cargoes and distanced the cargo is transported. Longer-haul voyages will reduce the amount of cargoes a ship will be able to load each year (as it will spend more time on each voyage). Fewer trips per year will reduce the effective carrying capacity, or overall supply of a fleet. Simply, a VLCC (two-million barrel super tanker) moving crude from the Middle East-to-Asia will have a roughly 45 day round trip voyage. The same amount of cargo moved from the Middle East to the US Gulf will take nearly 90 days round trip. The same VLCC moving crude to Asia will be able to transport roughly 16 million barrels per year (two million bbl cargoes x eight trips per year) while the US bound ships will carry only 8 million barrels per year.

Dry Bulk Basics

Dry Bulk Cargoes

Dry bulk vessels carry bulk (typically unpackaged or loose) dry cargoes in the ships’ hulls. The major cargoes are iron ore, coal (thermal and coking), grain, fertilizer and steel products. Figure 33 below outlines the market share of the major dry bulk cargoes:

Figure 33: Dry Bulk Cargoes By Commodity Type

27.6%

19.8%5.7%

8.8%

38.1%

Iron Thermal Coal Coking Coal Grain Minor Bulks*

*Minor Bulks compose the rest of the dry bulk cargo types and include alumina, scrap steel, bauxite, fertilizer, pig iron cement, nickel ore etc. Source: Clarksons Research Services

Iron ore: the largest single dry bulk commodity transported (28% of estimated 2012 dry bulk cargoes)

Exported primarily from Australia, and Brazil (with India, South America and Canada playing more minor roles)

Imported primarily to Asia (85% of seaborne ore) and Europe (10% of seaborne ore), however China alone accounts for 65% of worldwide seaborne iron ore imports

Used in steel production

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Coal: Thermal and coking (metallurgical) coal together accounted for an estimated 26% of the dry bulk trade in 2012, although 77% of all coal transported is thermal coal (used for electricity generation and industrial uses)

Thermal Coal Exports: Thermal coal is primarily exported from Indonesia and Australia (64% of the market), with Colombia, South Africa, Russia and USA exporting minor amounts

Thermal Coal Imports: While 75% of the thermal coal is exported to Asia, China controls less of the trade with only an 18% worldwide market share (India, Japan and South Korea import fairly similar volumes). Europe accounts for 19% of the market, which is primarily sourced from the Atlantic Basin

Coking Coal Exports and Imports: Coking coal or metallurgical coal (used in steel production) is exported from Australia (66% of the market) with the remaining volumes sourced from the US and Canada. Asia imports 68% of the coal (Japan, India, China and South Korea)

Grains: This cargo class accounts for 8% of total dry bulk volumes and has a more diversified trading pattern with a greater number or export and import regions

Grain Exports: Grain is exported from five principal countries/regions consisting of (in order of size): USA, Australia, Canada, Europe/Russia and Argentina

Grain Imports: While Asia is the largest importer of grain (30% of the market), Africa, Central and South America, Middle East and Europe (includes the FSU) all import substantial volumes

Highly seasonal: Grain volumes peak with regional harvests; the Fall for the Northern Hemisphere (North America and Europe) and Spring for the Southern Hemisphere (South America and Australia)

Other Cargoes: The remaining cargo base of the dry bulk sector is more fragmented and less defined in import and export regions. These cargoes include other minerals (nickel ore, alumina, bauxite), steel (scrap and coiled), fertilizers, cement, aggregates and other goods

Figure 34: Major Dry Bulk Import Market Share By Region

China Asia (Incl. China) Europe North AmericaIron Ore 64.9% 85.3% 10.0% 0.1%Thermal Coal 17.5% 75.1% 18.7% 0.8%Coking Coal 14.1% 68.0% 19.6% N/AGrain 3.7% 30.2% 9.1% N/A


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Vessel Types & Cargoes

Capesize: These are generally the largest dry bulk ships in the market with deadweight tonnage (“DWT”, total carrying capacity) ranging between 150,000-220,000 DWT

Given the substantial carrying capacity of the ships, the vessels are limited

to only two types of cargo, coal and iron ore, which trade in the larger lot sizes

Capes are employed on long-haul routes; typically Australia – Asia, South America – Asia, trans-Atlantic

Too big to fit through the Suez and Panama Canals, the ships traverse the Cape of Good Hope or Cape Horn (hence, Capesize)

Capes require substantial port infrastructure including deepwater ports, and efficient loading and unloading systems

This segment also includes Very Large Ore Carriers (VLOCs) which are dedicated to the long-haul iron ore trade and can be in excess of 400,000 DWT

Panamaxes/Kamsarmaxes: Panamax ships and their slightly larger cousin, the Kamsarmax, are between 60,000 – 92,000 DWT

They primarily carry coal, iron ore and grains

The vessel are employed on medium-to-long-haul routes; trans-Atlantic and trans-Pacific, USG/South America – Asia, intra-Asia and Australia – Asia

Largest ships able to transit the Panamax Canal (except Kamsarmaxes)

Panamaxes are the work-horses of the dry bulk fleet, they mostly carry the major bulk cargoes, as well as some smaller diversified cargoes

Supramaxes/Handymaxes: Supramaxes and the smaller Handymaxes are smaller more versatile bulkers generally outfitted with cranes (geared) between 45,000-60,000 DWT.

Transport major bulks, but handle more minor bulks than Panamaxes

Used both for regional trades and longer-haul trades

A shallower draft (how low the ship sits in the water) allows the ships to access shallower, more remote ports, while cranes allow for the vessel to load and unload its own cargoes. As a result, these ships are highly flexible offering near the carrying capacity of a Panamaxes in some cases, but requiring significantly less port infrastructure.

Handysize: Smaller than the Supramaxes, and are similarly versatile. Handysizes are vessels below 45,000 DWT.

In addition to the standard cargoes, Handysize ships will often transport various project cargoes at times (odd-sized items that cannot fit in containers)

These ships will generally travel on shorter regional routes

Access to smaller ports than Supramaxes/Handymaxes

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Figure 35: Major Dry Bulk Trading Patterns


Dry Bulk Demand Drivers

Steel production: Steel production, particularly in Asia and Europe is the key driver to the seaborne iron ore and coking coal trades. The dry bulk sector can largely be driven by Chinese steel production alone

Particularly sensitive to infrastructure spending, construction and manufacturing

US steel production is covered by domestic iron and coal, so it is not a material driver in the segment

Electricity generation: Thermal coal is primarily used for electricity generation and industrial production

Industrial growth: General industrial growth and increased manufacturing will drive minor bulk trade growth (alumina, copper, nickel etc) in addition to coal and iron ore trade

Grain HHarvests: Regional harvest yields can drive seasonal grain trades with the North American season peaking in late-summer to early-Fall and the southern hemisphere in late-winter and Spring

Weather: Storms or flooding can often cause mine production issues (rain season in Q1 for Australia and Brazil) or transportation disruptions. Poor weather can also affect grain harvests and impact total grain and fertilizer trades

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Tanker Basics

Tanker Cargoes

The bulk tanker trade is dominated by the transportation of crude oil and refined petroleum products. However, more specialized tankers are also engaged in the transportation of vegetable oils, chemicals and other liquids (not covered herein).

Crude: Crude is the dominant tanker cargo, and is generally transported in the larger tankers from crude producing regions to refining centers.

Export regions: The Middle East is responsible for 48% of the estimated 37.3 million b/d of seaborne crude. Africa exports roughly 20% while the Former Soviet Union countries and Latin America each export between 10%-15% of global seaborne volumes.

Import destinations: While Asia is the largest import region, it still represents less than half of the market with a 48% share (China alone imports 13.1% of the global seaborne supply). Europe imports nearly 23% of the seaborne supply with North America declining to an 17% share (from 22% in 2009)

Figure 36: Crude Seaborne Import Market Share Figure 37: Crude Seaborne Export Market Share

36%

13%

17%

23%

12%

Asia (ex. China) China US EU Other

48%12%

19%

21%

Middle East Latin America Africa Other

Source: Clarksons Research Service Source: Clarksons Research Service

Products: The product tanker trade consists primarily of refined petroleum products. Gasoline and diesel are the most transported products accounting for roughly 70% of the global trade. Naptha (used in the production of gasoline and plastics), fuel oil (for bunkers [ship fuel], as well as industrial and heating purposes), jet fuel (includes kerosene) and other minor products account for the remainder.

Exports: The export of products will depend on two factors, refinery capacity and demand. The US, Europe and Asia are key refining regions, but local demand factors will help determine exports. For example, the US has become a key exporter of distillates given our weak domestic demand, low cost crude and refinery capacity. However if domestic demand were to

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increase, the exports would drop. Currently, the US, Middle East, Europe and Asia are the major export markets.

Imports: Although China is a large consumer of petroleum products, it largely utilizes its own refining capacity for its consumption. The largest import market for product is developing Asia, accounting for over 25% of the 18.4 million b/d market, while Asia Pacific as a whole accounts for 40%. Europe is the next largest region, with a 30% share, consisting primarily of diesel and other distillates. Latin America, the US and Africa import the remainder.

Vessel Types & Cargoes

Very Large Crude Carrier - VLCC (>200,000 DWT): The largest tankers in operation, generally capable of carrying 2 million bbls of crude in a single voyage.

VLCCs generally transport crude oil, or heavy distillates

Employed on longer-haul routes such as Arabian Gulf (AG)-Asia, AG-Atlantic, West Africa-Asia

Too big to fit through the Suez and Panama Canals fully laden (although a VLCC can fit through the Suez Canal partially loaded)

Requires deep water ports or offshore discharges and onshore storage infrastructure

Suezmax (120,000-200,000 DWT): With roughly half the carrying capacity (1 million barrels), but more modest draft, Suezmaxes are more versatile than the larger VLCCs

Similar to VLCCs, Suezmaxes will generally carry only crude or heavy distillates

Medium-to-long-haul routes; AG-Asia, trans-Atlantic, cross-Mediterranean and West Africa-Europe

Can traverse the Suez Canal fully laden

Aframaxes (LR2 Product Tankers) (80,000-120,000 DWT): Aframaxes are the workhorses of the crude trade with more shallow drafts and 500,000 bbl capacities

Aframaxes predominantly carry crude and heavy distillates, but some tankers have coated tanks (LR2 – Long-Range 2) that allow them to carry petroleum products

When carrying crude, the ships are generally used for more regional trades: cross-Mediterranean, cross-Caribbean, North Sea, intra-Asia and AG-Asia

LR2’s are (for the most part) the largest product tankers in operation and are employed on long-haul voyages such as Europe-Asia, AG-Asia

Aframaxes’ smaller sizes allow the ships to fit into many more ports and the cargo size allows for a more diverse customer base

Panamaxes (LR1 Product Tanker) (60,000-80,000 DWT): Over 75% of Panamaxes are coated, allowing them to trade refined products. With a DWT of roughly 75,000 (300,000 bbls), an LR1’s smaller size favors the carriage of long-haul products or very short-haul crude cargoes.

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Product LR1 trades are more biased towards the Pacific and long-haul markets, AG-Asia or intra-Asia

Crude voyages are focused on the Caribbean and trans-Atlantic markets

Can traverse the Panama Canal fully-laden

Handysize(max) (MR Product Tanker) (30,000-60,000 DWT): The Handysize tankers are generally referred to as MRs, or Medium Range, and are focused on the product trades

Small cargo sizes

Modest vessel sizes allow for access to most ports

Generally employed on regional trades in the Atlantic and Asia

This segment accounts for nearly 70% of all product tankers

Figure 38: Major Crude Tanker Trade Routes


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Crude & Product Demand Drivers

Crude Production: Crude production, offshore or onshore, is the primary driver of the crude and product tanker trades

If crude is being produced, it will generally be shipped (either on land or by tanker) and will most likely be refined into products

Highly Dependent On The Geographic Location Of Demand: The caveat to crude oil production driving tanker demand comes down to where the demand is located and where it is sourced from. Demand needs to be sourced from regions which do not have inland or near-sourced crude access, such as Asia or Europe. The US used to be solidly in this camp as well. Recent trends have shown strong growth in Middle East demand, however, this will not require tankers for transportation. Currently, increased US demand can be served by US and Canadian production, implying a minimal impact to the seaborne trade.

The same holds true for products, if demand for products increases, seaborne demand will be driven by whether the region has its own refining capacity

Not Correlated To Crude Or Gasoline Prices: Crude or gasoline prices are not directly correlated to tanker demand. In general, the only thing that drives tanker demand is the movement of cargoes. Speculation, geopolitical risk and other factors can impact the price of the commodities but not the volume transported. Demand led price increases or declines will affect tanker demand.

While product prices on average will not drive demand, price differentials between regions encourage demand. The product markets will often develop regional price disparities which traders and oil companies will exploit. For example if the cost of gasoline in Singapore is more than the cost of gasoline in Europe plus the cost of transportation, the market will see increased Europe-Singapore voyages to close that arbitrage.

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Container Basics

Containerized Cargoes

Unlike the dry bulk and tanker segments, containerships do not carry bulk goods, rather steel containers that are generally 20 or 40 feet in length (though these containers can sometimes contain bulk goods). Containers can be filled with virtually anything from manufactured goods to scrap metal.

We generally refer to capacity in the container sector on a twenty-foot equivalent (TEU) basis, which is a 20ft box (a 40ft box equals 2 TEU). For example, a 10,000 TEU ship can hold 10,000 20ft containers or 5,000 40ft boxes.

Dry Containers: Dry boxes compose the vast majority of containership cargoes and are generally either 20 or 40 feet in length. The versatile boxes can be filled with nearly anything, but are generally focused on lower-value or large-scale manufactured and retail goods such as appliances, clothing, building materials, auto parts (and sometimes cars), scrap steel and other items.

Refrigerated Containers (Reefers): The transportation of perishable cargoes that require refrigeration has been a fast growing trade. Fruits, vegetables and meats used to be carried in pallets or bulk forms in refrigerated ships, but the increase in containerized cargoes and diversification of end-markets has led to a more efficient method through refrigerated “reefer” containers.

Reefers reduce the total cargo size needed for transportation (need to fill a smaller container rather than ship hold)

Direct or close-to-direct access to more end markets with more containership sailings

Can increase backhaul-trades for ships, when they are generally underutilized

Specialized Containers: The smallest container segment is the specialized segment. Included in this segment are tank containers, open tops, flat racks and odd-sized boxes.

Tank containers are used for smaller bulk liquid cargoes (tanks are generally 20 feet in length and can carry up to 26,000 liters depending on its configuration

Open tops and flat racks are containers missing either the top or top and sides which allow for odd-sized cargoes.

Trade Patterns

Unlike the dry bulk and tankers markets which follow a tramp model, the container sector generally operates through dedicated trading routes, with vessels operating in a loop around specific ports. The key trade lanes are Asia-Europe, Asia-US West Coast, and intra-Asia.

Asia-Europe: This is the most important route in the container sector given its 20% market share and the longest distance travelled (high ton-mile demand).

30 January 2013

Marine



Asia-USWC (Transpacific): With roughly the same market share, Asia-US West Coast is another key trade route, but at half the voyage length, has a more modest ton-mile impact than Asia-Europe

Intra-Asia: Container transportation in the Asia-Pacific region is the highest volume region with 40% of all container trade in 2012. However, the voyage lengths in the region are among the shortest.

North–South: Container trade between the Northern and Southern Hemispheres is the last major trading route. This encompasses trades between South America and North America, Africa and Europe and other North-South voyages. It is highly emerging market driven.

Figure 39: Global Container Trading Patterns


Vessel Types & Cargoes Super Post-Panamax / Ultra Large Container Vessels (>8,000 TEU): Ultra Large

Container Vessels (ULCV), are the newest class of containerships focused on the long-haul container trades to the US and Europe.

Large carrying capacity creates cost efficiencies, lowering the transportation costs per TEU when fully utilized

Too large to fit through the Panama Canal (but up to 12,500 TEU can transit the to-be-completed expanded canal)

Requires deeper draft ports and larger cranes to load and unload; the vessels do not have cranes

Post-Panamaxes: (5,000-8,000 TEU): The Post-Panamax segment is the older generation of large containerships, which are too big to fit through the Panama

30 January 2013

Marine



Canal, but not as large or efficient as the ULCV segment. These ships are generally employed on the Asia-Europe and Asia-US trades

Large carrying capacity creates cost efficiencies, lowering the transportation costs per TEU, but not as high as the ULCV’s

Too large to fit through the Panama Canal

Generally do not require the same sized larger cranes as the ULCV segment

Panamax (3,000-5,000 TEU): The most common containerships are the Panamax vessels which can be fitted with or without its own cranes.

Employed on various trade routes from long-haul to regional trades

Able to traverse the Panama Canal

Handysize (1,000-3000 TEU): Sub-Panamax containerships, which generally have their own cranes attached

Used in regional trades, can be used as feeder ships in a spoke and hub model

Shallow draft and gearing allow access to limited ports and emerging markets

Feeder (<1,000 TEU): Smallest containerships which generally have cranes and very shallow drafts

Used for short-haul regional trades to smaller markets (emerging markets or smaller islands

Small sizes allows for navigation up rivers or locations with little-to-no infrastructure

Container Demand Drivers

Global GDP: We view container shipping as the most broadly correlated to worldwide GDP. The container sector has historically grown at a 2.0x-2.5x multiple to world GDP. Given the diverse cargo types and the reliance on both OECD and emerging demand, it is more sensitive to macro growth trends than the other shipping markets. However, we have seen trade growth multiple contraction as US and European GDP has weakened. We expect weaker growth multiples (1.4x in 2013) going forward.

Industrial Production: Since much of the containerized cargoes are manufactured goods or components for goods, industrial production should be a key driver to containerized demand

Retail Spending: Retail goods built overseas from end-markets are often transported on containers. Changes in retail spending or sentiment may impact regional trade volumes.

Emerging Market Growth: Growth in emerging markets and expanding middle classes increases spending on retail and food goods. Emerging markets have also served as key sources for growth in the reefer box trade as fruit and meat imports have increase with wealth.

30 January 2013

Marine



Valuation & Risks

Dry Bulk Valuation & Risks

Genco Shipping & Trading (GNK, Sell, $3.69)

Valuation: Our price target of $1 is based on a 1.3x asset value premium. We have applied a 30% premium to GNK’s current charter-free fleet value in our net asset value calculation. Our premium asset valuation reflects GNK’s negative net asset value on a market basis; as well its current cash-on-hand which combined with a debt renegotiation later this year may provide some optionality to a recovering market.

Risks: Upside risks include improving spot rates, appreciating asset values and a longer-term debt restructuring.

Dryships (DRYS, Hold, $2.28)

Valuation: Our price target of $2 is based on our unchanged 0.8x NAV estimate. The discount to NAV reflects the weak dry bulk and tanker markets as well as capex and related party overhangs.

Risks: Upside risks include improving spot rates, rising asset values and Ocean Rig (ORIG, $17.47) monetization at attractive valuations. Downside risks include limited access to capital, declining shipping rates and values expansion into non-core sectors.

Tanker Valuation & Risks

Capital Product Partners (CPLP, Hold, $8.15)

Valuation: Our price target of $8 is based on a 9.5x EV/EBITDA multiple applied to our 2014 EBITDA estimate of $128 million. While our multiple is inline CPLP’s historical average of 9.3x, driven by CPLP’s maintenance of its $0.93/unit distribution.

Risks: Upside risks include higher-than-expected spot and charter rates and increased dividend distribution. Downside risks include weak vessel charter rates, lower demand for product tankers, a distribution cut and related party transactions.

Frontline Ltd. (FRO, Sell, $3.52)

Valuation: Our price target of $2 is based on a 1.2x asset value premium. We have applied a 20% premium to FRO’s current charter-free fleet value in our net asset value calculation. Our premium asset valuation reflects FRO’s negative net asset value on a market basis, as well its current cash-on-hand which should provide some runway towards a potential recovery.

Risks: Upside risks include higher-than-expected spot and charter rates, asset value appreciation, lower cash break-even levels and accretive acquisitions.

30 January 2013

Marine



Teekay Tankers (TNK, Hold, $3.06)

Valuation: Our price target of $3 is based on a 9.0x EV/EBITDA multiple applied to our 2014 EBITDA estimate of $90 million. Our 9.0x multiple is below TNK’s historic multiple of 10.3x, which reflects the weaker market environment and resulting lower dividend payout. TNK’s multiple also reflects the mixed spot/fixed employment fleet strategy as well as modest leverage with ample liquidity.

Risks: Upside risks include improved spot rates, increased distributions and accretive acquisitions. Downside risks include spot exposure and dependency on TK for vessel operations, asset size concentration, rising operating expenses and dividend cuts.

Container Valuation & Risks

Seaspan Corp (SSW, Hold, $18.77)

Valuation: Our price target of $18 is based on a 10.5x EV/EBITDA multiple applied to our 2014 EBITDA estimate of $506 million. While our multiple is above SSW’s historical average of 9.0x, the company’s increasing newbuilding backlog has resulted in our premium valuation. We would highlight, prior to 2011, when SSW had a larger newbuilding book, the company had an average multiple of 12.6x.

Risks: Upside risks include increasing dividends, accretive fleet growth opportunities and improvement in liner freight rates. Downside risks include SSW's ability to find accretive acquisitions, access to capital markets, increasing operating expenses and time charter renewals.

Textainer (TGH, Hold, $41.43)

Valuation: Our price target of $40 is based on a 9.0x P/E multiple applied to our 2014 EPS estimate of $4.49. Our multiple is inline with historical averages given TGH’s strong capex spending, but uncertain longer ability to sustain such growth.

Risks: Upside risks include increased new container orders, secondhand acquisitions and improved per diems. Downside risks include lower yields, liner defaults, weaker capex spending, declining utilization and access to capital markets.

30 January 2013

Marine



Dry Bulk Financials

Diana Shipping (DSX)

Dryships (DRYS)

Genco Shipping & Trading (GNK)

Navios Maritime Partners (NMM)

30 January 2013

Marine



Model updated:29 January 2013

Running the numbers North America

United States

Marine

Diana Shipping Inc Reuters: DSX.N Bloomberg: DSX UN

Buy Price (29 Jan 13) USD 8.79

Target Price USD 11.00

52 Week range USD 6.31 - 9.87

Market Cap (m) USDm 713

EURm 530

Company Profile Diana Shipping Inc. (DSX) is an Athens based owner of dry bulk vessels used for shipping commodities such as iron ore, coal, and grain. DSX's fleet currently consists of 30 high quality modern Panamax and Capesize vessels, with a portfolio approach to employment.

Price Performance

4

8

12

16

20

Feb 10 Aug 10 Feb 11 Aug 11 Feb 12 Aug 12

Diana Shipping Inc S&P 500 INDEX (Rebased)

Margin Trends

015

3045

6075

09 10 11 12E 13E 14E

EBITDA Margin EBIT Margin

Growth & Profitability

-5

0

5

10

15

-40-30-20-10

0102030

09 10 11 12E 13E 14E

Sales growth (LHS) ROE (RHS)

Solvency

0

10

20

30

40

50

-15

-10

-5

0

5

09 10 11 12E 13E 14E

Net debt/equity (LHS) Net interest cover (RHS)

Justin Yagerman +1 212 250-5191 [email protected]

Fiscal year end 31-Dec 2009 2010 2011 2012E 2013E 2014E

Financial Summary

DB EPS (USD) 1.55 1.59 1.33 0.70 -0.02 0.24Reported EPS (USD) 1.55 1.59 1.33 0.70 -0.02 0.24DPS (USD) 0.00 0.00 0.00 0.00 0.00 0.00BVPS (USD) 12.77 14.50 14.91 15.64 15.62 15.90

Valuation Metrics Price/Sales (x) 4.5 3.8 3.2 3.2 4.2 3.5P/E (DB) (x) 8.8 8.2 7.6 12.5 nm 35.9P/E (Reported) (x) 8.8 8.2 7.6 12.5 nm 35.9P/BV (x) 1.1 0.8 0.5 0.6 0.6 0.6

FCF yield (%) 10.8 nm 11.5 nm 9.2 12.5Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0

EV/Sales 4.4 3.9 3.1 3.1 3.8 2.7EV/EBITDA 6.3 5.8 4.8 5.6 9.7 6.4EV/EBIT 8.6 8.2 7.2 11.1 nm 31.4

Income Statement (USDm)

Sales 239 275 257 224 170 202EBITDA 169 185 166 126 66 87EBIT 124 132 111 64 -1 17Pre-tax profit 121 129 107 57 -1 20Net income 121 129 107 57 -1 20

Cash Flow (USDm)

Cash flow from operations 177 179 157 120 65 89Net Capex -61 -180 -63 -169 0 0Free cash flow 116 -2 93 -49 65 89Equity raised/(bought back) 113 0 0 0 0 0Dividends paid 0 0 0 0 0 0Net inc/(dec) in borrowings -39 29 13 67 -48 -48Other investing/financing cash flows 0 0 -20 0 0 0Net cash flow 190 27 87 18 17 41Change in working capital 6 -3 -6 1 0 0

Balance Sheet (USDm)

Cash and cash equivalents 282 345 417 432 449 490Property, plant & equipment 1,009 1,196 1,110 1,227 1,161 1,092Goodwill 0 0 0 0 0 0Other assets 29 44 78 72 72 72Total assets 1,320 1,585 1,605 1,730 1,681 1,653Debt 276 376 394 425 377 329Other liabilities 45 47 2 37 37 37Total liabilities 321 423 396 462 414 366Total shareholders' equity 999 1,170 1,209 1,268 1,267 1,287Net debt -6 31 -23 -7 -72 -161

Key Company Metrics

Sales growth (%) -29.1 15.1 -6.8 -12.7 -24.2 18.9DB EPS growth (%) -47.5 2.8 -16.9 -46.9 na na

Payout ratio (%) 0.0 0.0 0.0 0.0 nm 0.0

EBITDA Margin (%) 70.4 67.3 64.7 56.2 38.8 42.8EBIT Margin (%) 51.7 48.0 43.1 28.4 -0.4 8.7

ROE (%) 13.7 11.9 9.0 4.6 -0.1 1.6

Net debt/equity (%) -0.6 2.6 -1.9 -0.6 -5.7 -12.5Net interest cover (x) 43.5 25.9 23.3 11.6 nm 10.5

DuPont Analysis

EBIT margin (%) 51.7 48.0 43.1 28.4 -0.4 8.7x Asset turnover (x) 0.2 0.2 0.2 0.1 0.1 0.1x Financial cost ratio (x) 1.0 1.0 1.0 0.9 4.4 0.9x Tax and other effects (x) 1.0 1.0 1.0 1.0 0.4 1.3= ROA (post tax) (%) 10.2 8.9 6.7 3.4 -0.1 1.2x Financial leverage (x) 1.3 1.3 1.3 1.3 1.3 1.3= ROE (%) 13.7 11.9 9.0 4.6 -0.1 1.6annual growth (%) -51.3 -13.3 -23.9 -49.0 na nax NTA/share (avg) (x) 11.3 13.4 14.7 15.3 15.6 15.8

= Reported EPS 1.55 1.59 1.33 0.70 -0.02 0.24annual growth (%) -47.9 2.8 -16.9 -46.9 na na

Source: Company data, Deutsche Bank estimates

30 January 2013

Marine





United States

Marine

DryShips Inc Reuters: DRYS.OQ Bloomberg: DRYS US

Hold Price (28 Jan 13) USD 2.18




EURm 616

Company Profile Dryships Inc. (DRYS) is an Athens based owner of dry bulk, tanker and deep water drilling vessels. DRYS' dry bulk and tanker vessels are largely spot market exposed for 2013, while its ultra deepwater (UDW) drilling rigs are generally employed on mult-year contracts. DRYS maintains a majority ownership stake in Ocean Rig (NSDQ: ORIG) which holds its offshore drilling fleet.

Price Performance

2

3

5

6

8

9

Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12

DryShips Inc S&P 500 INDEX (Rebased)

Margin Trends

015

30456075

09 10 11 12E 13E 14E



-10

-5

0

5

10

15

05

1015202530

09 10 11 12E 13E 14E


Solvency

0

2

4

6

8

020406080

100120140

09 10 11 12E 13E 14E




Financial Summary

DB EPS (USD) 1.12 1.09 0.34 -0.41 0.12 0.69Reported EPS (USD) -0.06 0.45 -0.06 -0.70 0.58 1.16DPS (USD) 0.00 0.00 0.00 0.00 0.00 0.00BVPS (USD) 13.46 14.51 11.10 10.12 10.24 10.92

Valuation Metrics Price/Sales (x) 1.7 1.6 1.2 0.7 0.6 0.4P/E (DB) (x) 5.9 4.7 10.9 nm 18.8 3.2P/E (Reported) (x) nm 11.2 nm nm 3.8 1.9P/BV (x) 0.4 0.4 0.2 0.2 0.2 0.2

FCF yield (%) 20.0 31.5 33.3 15.3 68.2 98.8Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0

EV/Sales 4.0 4.3 4.9 3.9 4.0 2.9EV/EBITDA 6.5 6.5 9.2 11.1 8.0 5.4EV/EBIT 10.4 9.9 17.5 55.4 14.8 8.5


Sales 840 860 1,078 1,209 1,487 1,898EBITDA 523 564 578 420 747 1,032EBIT 326 373 304 84 405 657Pre-tax profit 254 323 171 -137 176 397Net income -12 126 -23 -268 220 441

Cash Flow (USDm)

Cash flow from operations 294 411 400 54 566 820Net Capex -18 20 41 73 0 0Free cash flow 277 431 441 127 566 820Equity raised/(bought back) 951 579 0 0 0 0Dividends paid 0 0 0 0 0 0Net inc/(dec) in borrowings -1,128 -157 1,377 187 1,302 -298Other investing/financing cash flows -157 -1,221 -1,913 -453 -1,699 -146Net cash flow -57 -368 -94 -140 168 376Change in working capital -39 33 127 -37 0 0


Cash and cash equivalents 693 392 251 408 401 507Property, plant & equipment 3,388 3,167 6,544 6,676 8,011 7,782Goodwill 0 0 0 0 0 0Other assets 1,718 3,426 1,826 1,790 1,808 1,897Total assets 5,799 6,984 8,622 8,875 10,221 10,186Debt 2,685 2,720 4,242 4,255 5,557 5,258Other liabilities 310 365 441 771 771 771Total liabilities 2,994 3,085 4,683 5,026 6,328 6,030Total shareholders' equity 2,805 3,900 3,939 3,849 3,893 4,156Net debt 1,992 2,328 3,991 3,846 5,155 4,752

Key Company Metrics

Sales growth (%) nm 2.3 25.3 12.2 23.0 27.6DB EPS growth (%) na -3.0 -68.7 na na 495.0

Payout ratio (%) nm 0.0 nm nm 0.0 0.0

EBITDA Margin (%) 62.3 65.6 53.7 34.8 50.2 54.4EBIT Margin (%) 38.8 43.4 28.2 7.0 27.2 34.6

ROE (%) -0.4 3.7 -0.6 -6.9 5.7 11.0

Net debt/equity (%) 71.0 59.7 101.3 99.9 132.4 114.3Net interest cover (x) 3.8 6.8 2.3 0.4 1.8 2.5

DuPont Analysis

EBIT margin (%) 38.8 43.4 28.2 7.0 27.2 34.6x Asset turnover (x) 0.1 0.1 0.1 0.1 0.2 0.2x Financial cost ratio (x) 0.7 0.9 0.6 -1.5 0.4 0.6x Tax and other effects (x) -0.1 0.4 -0.1 2.1 1.2 1.1= ROA (post tax) (%) -0.2 2.0 -0.3 -3.1 2.3 4.3x Financial leverage (x) 2.1 1.9 2.0 2.2 2.5 2.5= ROE (%) -0.4 3.7 -0.6 -6.9 5.7 11.0annual growth (%) na na na -1,085.7 na 93.1x NTA/share (avg) (x) 13.5 12.1 11.0 10.2 10.2 10.6

= Reported EPS -0.06 0.45 -0.06 -0.70 0.58 1.16annual growth (%) na na na -999.8 na 100.5


30 January 2013

Marine





United States

Marine

Genco Shipping Reuters: GNK.N Bloomberg: GNK UN

Sell Price (29 Jan 13) USD 3.69




EURm 114

Company Profile Genco Shipping & Trading Limited (GNK) is U.S.-based owner of a diverse fleet of 49 dry bulk vessels ranging in size from Handysize up to Capesize. GNK typically utilizes staggered long-term charters when employing its vessels.

Price Performance

0

10

20

30


Genco Shipping S&P 500 INDEX (Rebased)

Margin Trends

-80-40

04080

120

09 10 11 12E 13E 14E



-20

-10

0

10

20

30

-60

-40

-20

0

20

40

09 10 11 12E 13E 14E


Solvency

0

1

2

3

4

0

50

100

150

200

09 10 11 12E 13E 14E




Financial Summary

DB EPS (USD) 4.73 4.01 0.70 -3.27 -4.27 -2.95Reported EPS (USD) 4.73 4.01 0.70 -3.27 -4.27 -2.95DPS (USD) 0.00 0.00 0.00 0.00 0.00 0.00BVPS (USD) 29.68 40.93 38.60 29.40 24.30 21.18

Valuation Metrics Price/Sales (x) 1.6 1.3 0.8 0.7 0.8 0.6P/E (DB) (x) 4.2 4.5 12.5 nm nm nmP/E (Reported) (x) 4.2 4.5 12.5 nm nm nmP/BV (x) 0.8 0.4 0.2 0.1 0.2 0.2

FCF yield (%) nm nm 8.2 nm nm 15.4Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0

EV/Sales 4.6 4.6 4.5 6.8 8.3 6.3EV/EBITDA 5.8 6.1 7.1 20.3 40.5 15.7EV/EBIT 8.3 9.3 15.8 nm nm nm


Sales 380 449 392 232 193 250EBITDA 299 337 248 77 40 101EBIT 210 221 112 -62 -110 -49Pre-tax profit 149 152 26 -147 -192 -132Net income 149 144 25 -136 -183 -126

Cash Flow (USDm)

Cash flow from operations 220 283 159 -36 -39 24Net Capex -291 -705 -133 -2 0 0Free cash flow -71 -422 25 -38 -39 24Equity raised/(bought back) 0 55 0 0 0 0Dividends paid 0 0 0 0 0 0Net inc/(dec) in borrowings 112 627 -103 -189 0 0Other investing/financing cash flows 20 -90 0 0 0 0Net cash flow 61 170 -77 -227 -39 24Change in working capital -2 14 -17 -34 -8 -5


Cash and cash equivalents 188 280 228 84 45 70Property, plant & equipment 2,026 2,674 2,800 2,659 2,509 2,360Goodwill 0 0 0 0 0 0Other assets 123 229 91 44 49 41Total assets 2,337 3,183 3,119 2,787 2,604 2,471Debt 1,327 1,746 1,694 1,505 1,505 1,505Other liabilities 81 87 63 56 56 57Total liabilities 1,408 1,833 1,758 1,561 1,561 1,562Total shareholders' equity 929 1,350 1,362 1,225 1,042 909Net debt 1,139 1,466 1,466 1,421 1,460 1,436

Key Company Metrics

Sales growth (%) -6.4 18.2 -12.6 -41.0 -16.7 29.6DB EPS growth (%) -36.1 -15.1 -82.5 na -30.7 31.0

Payout ratio (%) 0.0 0.0 0.0 nm nm nm

EBITDA Margin (%) 78.7 75.1 63.3 33.3 20.6 40.2EBIT Margin (%) 55.5 49.3 28.6 -26.6 -57.1 -19.7

ROE (%) 18.3 12.6 1.8 -10.5 -16.2 -13.0

Net debt/equity (%) 122.6 108.7 107.7 116.0 140.1 158.0Net interest cover (x) 3.4 3.2 1.3 nm nm nm

DuPont Analysis

EBIT margin (%) 55.5 49.3 28.6 -26.6 -57.1 -19.7x Asset turnover (x) 0.2 0.2 0.1 0.1 0.1 0.1x Financial cost ratio (x) 0.7 0.7 0.2 2.4 1.7 2.7x Tax and other effects (x) 1.0 0.9 1.0 0.9 1.0 1.0= ROA (post tax) (%) 6.9 5.2 0.8 -4.6 -6.8 -5.0x Financial leverage (x) 2.7 2.4 2.3 2.3 2.4 2.6= ROE (%) 18.3 12.6 1.8 -10.5 -16.2 -13.0annual growth (%) 31.8 -30.9 -85.5 na -53.3 19.8x NTA/share (avg) (x) 25.8 31.8 38.4 31.0 26.4 22.7

= Reported EPS 4.73 4.01 0.70 -3.27 -4.27 -2.95annual growth (%) 57.2 -15.1 -82.5 na -30.7 31.0


30 January 2013

Marine





United States

Marine

Navios Partners L.P. Reuters: NMM.N Bloomberg: NMM UN



52 Week range USD 11.59 - 16.94


EURm 676

Company Profile Navios Maritime Partners L.P. (NMM) transports iron ore, coal, grain, steel products and other dry bulk cargoes along worldwide shipping routes. Navios Partners currently owns a fleet of 12 dry bulk vessels consisting of eight Panamax vessels, three Capesize vessels, and one Handymax vessel. NMM also charters in two Panamax vessels, creating an operating fleet of 14 dry bulk vessels with a total carrying capacity of 1,331,291 deadweight tons (dwt), with an average age of nearly seven years.

Price Performance

8

12

16

20

24


Navios Partners L.P.S&P 500 INDEX (Rebased)

Margin Trends

3040

50607080

09 10 11 12 13E 14E



051015202530

-20

0

20

40

60

09 10 11 12 13E 14E


Solvency

02468101214

0102030405060

09 10 11 12 13E 14E



Fiscal year end 31-Dec 2009 2010 2011 2012 2013E 2014E

Financial Summary

DB EPS (USD) 1.65 1.51 1.40 1.61 0.87 0.80Reported EPS (USD) 1.32 1.40 1.19 1.61 0.87 0.80DPS (USD) 1.50 1.67 1.74 1.77 1.77 1.44BVPS (USD) 7.98 11.37 10.19 10.41 9.16 8.16

Valuation Metrics Price/Sales (x) 3.0 5.2 5.1 4.3 4.8 5.4P/E (DB) (x) 6.5 11.5 12.4 9.1 17.0 18.6P/E (Reported) (x) 8.1 12.4 14.6 9.1 17.0 18.6P/BV (x) 1.9 1.7 1.4 1.2 1.6 1.8

FCF yield (%) 20.4 nm 5.4 10.4 14.0 12.1Dividend yield (%) 14.0 9.6 10.0 12.0 11.9 9.7



Sales 93 143 187 205 188 170EBITDA 64 107 142 155 136 118EBIT 48 66 78 84 62 56Pre-tax profit 40 61 69 74 53 49Net income 34 61 65 96 53 49

Cash Flow (USDm)

Cash flow from operations 81 95 127 179 128 110Net Capex -24 -292 -76 -89 0 0Free cash flow 57 -197 51 91 128 110Equity raised/(bought back) 117 260 88 70 0 0Dividends paid -39 -72 -95 -107 -110 -110Net inc/(dec) in borrowings -40 137 -4 -48 -22 -22Other investing/financing cash flows -45 -156 -44 -21 0 0Net cash flow 50 -28 -3 -16 -5 -22Change in working capital 23 -6 -7 11 0 0


Cash and cash equivalents 78 51 48 32 27 5Property, plant & equipment 300 612 667 721 647 586Goodwill 0 0 0 0 0 0Other assets 59 177 195 201 201 210Total assets 437 841 910 955 876 801Debt 195 322 326 300 278 256Other liabilities 34 28 24 37 37 45Total liabilities 229 349 350 336 314 300Total shareholders' equity 208 492 560 619 562 500Net debt 117 270 278 268 250 251

Key Company Metrics

Sales growth (%) 23.4 54.6 30.6 9.9 -8.4 -9.7DB EPS growth (%) 15.5 -8.7 -7.5 15.6 -45.9 -8.7

Payout ratio (%) 113.7 119.5 146.1 109.4 202.9 180.9


ROE (%) 24.1 17.3 12.4 16.3 9.1 9.2


DuPont Analysis

EBIT margin (%) 52.0 46.0 41.8 40.7 32.8 33.2x Asset turnover (x) 0.2 0.2 0.2 0.2 0.2 0.2x Financial cost ratio (x) 0.8 0.9 0.9 0.9 0.9 0.9x Tax and other effects (x) 0.8 1.0 0.9 1.3 1.0 1.0= ROA (post tax) (%) 9.0 9.5 7.5 10.3 5.8 5.8x Financial leverage (x) 2.7 1.8 1.7 1.6 1.6 1.6= ROE (%) 24.1 17.3 12.4 16.3 9.1 9.2annual growth (%) -56.6 -28.2 -28.1 30.8 -44.3 1.4x NTA/share (avg) (x) 5.5 8.1 9.6 9.9 9.6 8.7

= Reported EPS 1.32 1.40 1.19 1.61 0.87 0.80annual growth (%) -8.0 6.3 -15.0 35.5 -45.9 -8.7


30 January 2013

Marine



Tanker Financials

Capital Product Partners (CPLP)

Frontline (FRO)

Navios Maritime Acquisition (NNA)

Teekay Corp (TK)

Teekay Tankers (TNK)

30 January 2013

Marine





United States

Marine

Capital Product Prtns. Reuters: CPLP.OQ Bloomberg: CPLP US





EURm 412

Company Profile Capital Product Partners L.P. (CPLP) is an Athens-based owner of product and crude tankers as well of containerships. CPLP owns a total of 25 high-specification modern vessels, generally employed on medium-to-long-term contracts to its sponsor and third parties.

Price Performance

4

6

8

10

12

14

Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12

Capital Product Prtns.S&P 500 INDEX (Rebased)

Margin Trends

3040

50607080

09 10 11 12E 13E 14E



0

5

10

15

20

-10

0

10

20

30

09 10 11 12E 13E 14E


Solvency

0

1

2

3

4

5

050

100150200250300350

09 10 11 12E 13E 14E




Financial Summary







Cash Flow (USDm)

Cash flow from operations 69 45 57 79 113 112Net Capex -26 -100 -27 0 0 0Free cash flow 42 -55 30 78 113 112Equity raised/(bought back) 41 105 1 139 0 0Dividends paid -70 -34 -45 -74 -82 -82Net inc/(dec) in borrowings -24 -3 25 -175 0 0Other investing/financing cash flows -29 10 10 16 0 0Net cash flow -41 24 21 -16 31 30Change in working capital 11 -3 -57 1 8 1


Cash and cash equivalents 4 32 53 36 53 70Property, plant & equipment 639 707 1,074 1,007 959 911Goodwill 0 0 0 0 0 0Other assets 39 14 87 60 44 29Total assets 681 754 1,215 1,104 1,056 1,010Debt 474 474 652 459 459 459Other liabilities 50 47 45 33 33 33Total liabilities 524 521 697 492 492 492Total shareholders' equity 157 233 517 612 565 519Net debt 470 442 599 423 406 388

Key Company Metrics

Sales growth (%) -6.0 -3.5 -0.3 26.2 11.4 5.0DB EPS growth (%) -41.1 -61.2 -69.5 4.6 247.3 24.7

Payout ratio (%) 235.4 198.3 483.2 62.9 130.0 114.1


ROE (%) 17.4 7.4 1.7 15.9 6.0 7.8


DuPont Analysis

EBIT margin (%) 49.1 40.2 33.5 30.8 38.2 41.2x Asset turnover (x) 0.2 0.2 0.1 0.1 0.2 0.2x Financial cost ratio (x) 0.5 0.3 0.2 0.4 0.8 0.8x Tax and other effects (x) 1.0 0.9 0.9 4.5 0.7 0.7= ROA (post tax) (%) 4.1 2.0 0.7 7.8 3.3 4.1x Financial leverage (x) 4.2 3.7 2.6 2.1 1.8 1.9= ROE (%) 17.4 7.4 1.7 15.9 6.0 7.8annual growth (%) -38.7 -57.3 -76.9 828.5 -62.1 29.4x NTA/share (avg) (x) 6.6 5.2 5.5 8.3 8.6 7.9

= Reported EPS 1.15 0.38 0.09 1.32 0.52 0.62annual growth (%) -41.1 -66.8 -75.3 1,295.4 -60.5 19.1


30 January 2013

Marine





United States

Marine

Frontline Ltd. Reuters: FRO.N Bloomberg: FRO UN

Sell Price (29 Jan 13) USD 3.52




EURm 204

Company Profile Frontline Ltd. (FRO) is a leader in the seaborne transportation of oil, with a fleet of more than 80 vessels, including 12 owned VLCCs and 12 owned Suezmaxes, with the remainder chartered-in or leased, and an emphasis on spot employment.

Price Performance

0

10

20

30

40

50


Frontline Ltd. S&P 500 INDEX (Rebased)

Margin Trends

-150

15304560

09 10 11 12E 13E 14E



-200

-150

-100

-50

0

50

-50-40-30-20-10

01020

09 10 11 12E 13E 14E


Solvency

0

1

1

2

2

3

0100200300400500600700

09 10 11 12E 13E 14E




Financial Summary

DB EPS (USD) 1.32 1.75 -1.39 -1.52 -1.38 -1.34Reported EPS (USD) 1.32 2.07 -6.80 -1.36 -1.38 -1.34DPS (USD) 0.90 2.00 0.22 0.00 0.00 0.00BVPS (USD) 9.52 9.60 2.58 1.24 0.26 -1.08

Valuation Metrics Price/Sales (x) 2.0 2.6 2.2 0.8 1.1 1.0P/E (DB) (x) 18.1 17.1 nm nm nm nmP/E (Reported) (x) 18.1 14.4 nm nm nm nmP/BV (x) 2.9 2.6 1.7 2.8 13.5 nm

FCF yield (%) 8.3 nm 30.9 29.1 nm 3.1Dividend yield (%) 3.8 6.7 1.5 0.0 0.0 0.0

EV/Sales 5.0 5.7 4.7 4.1 5.8 4.8EV/EBITDA 9.5 10.2 10.8 15.8 24.6 15.8EV/EBIT 18.9 18.1 81.8 nm nm nm


Sales 914 883 514 359 254 285EBITDA 477 490 225 92 60 88EBIT 240 277 30 -24 -24 -22Pre-tax profit 106 139 -107 -118 -107 -101Net income 103 161 -530 -106 -107 -104

Cash Flow (USDm)

Cash flow from operations 299 317 57 34 -23 8Net Capex -145 -518 293 45 -117 0Free cash flow 154 -200 351 80 -140 8Equity raised/(bought back) 0 0 0 0 0 0Dividends paid -70 -156 -17 0 0 0Net inc/(dec) in borrowings -268 192 -482 -83 16 16Other investing/financing cash flows 76 258 132 13 26 0Net cash flow -108 94 -16 9 -98 25Change in working capital -18 -35 -41 30 0 0


Cash and cash equivalents 83 177 161 170 72 96Property, plant & equipment 2,833 3,082 1,348 1,199 1,090 926Goodwill 0 0 0 0 0 0Other assets 799 539 332 332 306 315Total assets 3,715 3,798 1,841 1,700 1,467 1,337Debt 2,750 2,895 1,527 1,437 1,361 1,285Other liabilities 214 144 100 156 74 125Total liabilities 2,964 3,039 1,627 1,592 1,435 1,410Total shareholders' equity 751 759 213 108 32 -72Net debt 2,667 2,718 1,366 1,267 1,289 1,189

Key Company Metrics

Sales growth (%) -39.5 -3.4 -41.7 -30.2 -29.3 12.4DB EPS growth (%) -85.3 32.9 na -9.0 9.0 2.9

Payout ratio (%) 68.2 96.5 nm nm nm nm

EBITDA Margin (%) 52.2 55.5 43.8 25.7 23.8 30.7EBIT Margin (%) 26.3 31.4 5.8 -6.7 -9.6 -7.7

ROE (%) 14.2 21.7 -111.7 -71.4 -184.4 nm

Net debt/equity (%) 355.3 358.1 640.0 nm nm nmNet interest cover (x) 1.7 2.0 0.2 nm nm nm

DuPont Analysis

EBIT margin (%) 26.3 31.4 5.8 -6.7 -9.6 -7.7x Asset turnover (x) 0.2 0.2 0.2 0.2 0.2 0.2x Financial cost ratio (x) 0.4 0.5 -3.6 4.9 4.4 4.6x Tax and other effects (x) 1.0 1.1 4.9 0.9 1.0 1.0= ROA (post tax) (%) 2.7 4.3 -18.8 -6.0 -6.8 -7.4x Financial leverage (x) 5.4 5.0 5.9 11.9 27.2 -44.1= ROE (%) 14.2 21.7 -111.7 -71.4 -184.4 328.0annual growth (%) -88.3 52.4 na 36.1 -158.4 nax NTA/share (avg) (x) 9.3 9.6 6.1 1.9 0.7 -0.4

= Reported EPS 1.32 2.07 -6.80 -1.36 -1.38 -1.34annual growth (%) -85.3 57.2 na 80.0 -1.4 2.9


30 January 2013

Marine





United States

Marine

Navios Acquisition Corp. Reuters: NNA.N Bloomberg: NNA UN





EURm 77

Company Profile Navios Maritime Acquisition Corp. is a tanker owner/operator involved in the tranportation of liquid chemicals, crude oil and refined petroleum products. NNA operates its vessels worldwide with a mixture of spot and fixed charter employment.

Price Performance

2

3

5

6

8

9

Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan

Navios Acquisition Corp.S&P 500 INDEX (Rebased)

Margin Trends

2030

40506070

09 10 11 12E 13E 14E



-10

-5

0

5

10

050

100150200250300

09 10 11 12E 13E 14E


Solvency

0

1

1

2

2

0

100

200

300

400

500

09 10 11 12E 13E 14E




Financial Summary

DB EPS (USD) IV -0.01 -0.06 -0.10 0.54 0.45Reported EPS (USD) IV -0.47 -0.08 -0.10 0.54 0.54DPS (USD) IV 0.00 0.24 0.20 0.20 0.20BVPS (USD) IV 8.31 5.76 5.62 6.42 6.63

Valuation Metrics Price/Sales (x) IV 4.9 1.2 0.7 0.5 0.5P/E (DB) (x) IV nm nm nm 4.7 5.7P/E (Reported) (x) IV nm nm nm 4.7 4.7P/BV (x) IV 0.5 0.5 0.5 0.4 0.4

FCF yield (%) IV nm nm nm nm 29,666.9Dividend yield (%) IV 0.0 6.6 7.8 7.8 7.8

EV/Sales IV 23.8 8.0 7.0 5.0 5.1EV/EBITDA IV 41.1 12.4 11.2 7.6 8.1EV/EBIT IV 85.8 24.5 23.5 12.7 13.9


Sales IV 34 120 150 214 225EBITDA IV 19 78 94 140 143EBIT IV 9 39 45 84 83Pre-tax profit IV 0 -3 -5 27 22Net income IV -14 -3 -4 22 22

Cash Flow (USDm)

Cash flow from operations IV 11 68 91 78 30,922Net Capex IV -359 -193 -222 -120 -150Free cash flow IV -347 -125 -131 -42 30,772Equity raised/(bought back) IV 108 0 0 0 0Dividends paid IV 0 -10 -10 -10 -10Net inc/(dec) in borrowings IV 148 153 143 87 106Other investing/financing cash flows IV 152 -38 6 0 0Net cash flow IV 61 -20 8 35 30,868Change in working capital IV 4 29 45 0 0


Cash and cash equivalents IV 76 72 71 111 143Property, plant & equipment IV 846 1,020 1,333 1,271 1,361Goodwill IV 0 0 0 0 0Other assets IV 83 103 6 6 18Total assets IV 1,005 1,195 1,409 1,387 1,521Debt IV 709 885 1,018 1,066 1,194Other liabilities IV 42 71 163 61 59Total liabilities IV 751 957 1,182 1,127 1,253Total shareholders' equity IV 254 239 228 260 268Net debt IV 633 813 948 955 1,051

Key Company Metrics

Sales growth (%) IV nm 257.3 25.0 42.7 5.2DB EPS growth (%) IV 69.6 -880.6 -58.8 na -16.9

Payout ratio (%) IV nm nm nm 36.7 37.1

EBITDA Margin (%) IV 57.9 64.9 62.6 65.3 63.7EBIT Margin (%) IV 27.7 32.7 29.8 39.1 36.9

ROE (%) IV -5.6 -1.4 -1.7 9.0 8.3

Net debt/equity (%) IV 249.5 340.6 416.5 367.0 391.4Net interest cover (x) IV 1.0 0.9 0.9 1.5 1.4

DuPont Analysis

EBIT margin (%) IV 27.7 32.7 29.8 39.1 36.9x Asset turnover (x) IV 0.0 0.1 0.1 0.2 0.2x Financial cost ratio (x) IV -0.1 -0.1 -0.1 0.3 0.3x Tax and other effects (x) IV 30.1 1.4 0.9 0.8 1.0= ROA (post tax) (%) IV -1.4 -0.3 -0.3 1.6 1.5x Financial leverage (x) IV 4.0 4.5 5.6 5.7 5.5= ROE (%) IV -5.6 -1.4 -1.7 9.0 8.3annual growth (%) IV na 75.0 -19.8 na -8.6x NTA/share (avg) (x) IV 8.3 5.9 5.8 6.0 6.5

= Reported EPS IV -0.47 -0.08 -0.10 0.54 0.54annual growth (%) IV na 82.1 -16.0 na -0.9


30 January 2013

Marine





United States

Marine

Teekay Corporation Reuters: TK.N Bloomberg: TK UN



52 Week range USD 25.59 - 36.67

Market Cap (m) USDm 2,476

EURm 1,840

Company Profile Teekay Corporation (TK) is a market leader in global energy transportation services, operating a fleet of nearly 150 vessels, including crude oil tankers, product tankers, LNG, LPG, FSO, and FPSO vessels, utilizing both spot and long-term employment.

Price Performance

20

24

28

32

36

40


Teekay CorporationS&P 500 INDEX (Rebased)

Margin Trends

010

20304050

09 10 11 12E 13E 14E



-25-20-15-10-50510

-25-20-15-10-505

10

09 10 11 12E 13E 14E


Solvency

0

1

1

2

2

0

50

100

150

200

09 10 11 12E 13E 14E




Financial Summary

DB EPS (USD) -1.20 -1.65 -1.46 -0.74 0.57 1.17Reported EPS (USD) 1.57 -3.65 -5.23 -0.67 0.57 1.17DPS (USD) 1.26 3.45 1.27 1.27 1.27 1.27BVPS (USD) 27.58 27.15 20.35 20.06 19.32 19.21

Valuation Metrics Price/Sales (x) 0.7 1.1 1.2 1.4 1.3 1.3P/E (DB) (x) nm nm nm nm 63.0 30.6P/E (Reported) (x) 12.1 nm nm nm 63.0 30.6P/BV (x) 0.8 1.2 1.3 1.8 1.9 1.9

FCF yield (%) 8.1 nm nm nm nm 21.0Dividend yield (%) 6.6 12.7 4.2 3.5 3.5 3.5



Sales 1,873 1,823 1,777 1,787 1,863 1,944EBITDA 604 674 527 762 806 843EBIT 167 233 98 306 405 387Pre-tax profit 133 -274 -365 -46 48 89Net income 114 -267 -369 -47 39 81

Cash Flow (USDm)

Cash flow from operations 388 185 -34 380 424 520Net Capex -275 -272 -671 -397 -717 0Free cash flow 112 -87 -706 -17 -293 520Equity raised/(bought back) -110 2 -122 0 0 0Dividends paid -92 -252 -93 -83 -88 -88Net inc/(dec) in borrowings -619 162 684 40 265 -450Other investing/financing cash flows 366 800 8 377 0 0Net cash flow -342 625 -229 317 -116 -17Change in working capital 130 -380 -157 -18 0 0


Cash and cash equivalents 423 780 692 1,009 880 875Property, plant & equipment 6,655 6,573 7,360 7,248 6,847 6,392Goodwill 203 203 167 167 167 167Other assets 2,219 2,355 2,924 3,338 3,338 3,385Total assets 9,500 9,911 11,143 11,761 11,232 10,819Debt 5,248 5,170 5,871 5,844 5,844 5,844Other liabilities 1,402 1,409 1,978 2,030 1,928 1,423Total liabilities 6,651 6,579 7,849 7,874 7,772 7,267Total shareholders' equity 2,850 3,332 3,293 3,887 3,459 3,553Net debt 4,826 4,390 5,179 4,835 4,964 4,969

Key Company Metrics

Sales growth (%) -23.1 -2.7 -2.5 0.5 4.3 4.3DB EPS growth (%) na -37.8 11.6 49.5 na 105.7

Payout ratio (%) 79.7 nm nm nm 222.8 108.3


ROE (%) 5.6 -13.4 -21.6 -3.3 2.9 6.1


DuPont Analysis

EBIT margin (%) 8.9 12.8 5.5 17.1 21.8 19.9x Asset turnover (x) 0.2 0.2 0.2 0.2 0.2 0.2x Financial cost ratio (x) 0.3 0.5 -0.3 0.4 0.3 0.3x Tax and other effects (x) 2.5 -2.4 12.5 -0.4 0.4 0.7= ROA (post tax) (%) 1.2 -2.8 -3.5 -0.4 0.3 0.7x Financial leverage (x) 4.8 4.9 6.2 8.1 8.4 8.2= ROE (%) 5.6 -13.4 -21.6 -3.3 2.9 6.1annual growth (%) na na -61.2 84.6 na 110.0x NTA/share (avg) (x) 27.9 27.2 24.2 20.3 19.7 19.3

= Reported EPS 1.57 -3.65 -5.23 -0.67 0.57 1.17annual growth (%) na na -43.2 87.1 na 105.7


30 January 2013

Marine





Bermuda

Marine

Teekay Tankers Ltd. Reuters: TNK.N Bloomberg: TNK US




Market Cap (m) EURm 174

USDm 234

Company Profile Teekay Tankers Limited (TNK) owns a fleet of 13 oil tankers, including Aframaxes and Suezmaxes. TNK employs a mix between period charters and spot (pool) employment for its vessels, and pays out all of its distributable cash flow as dividends.

Price Performance

0

4

8

12

16


Teekay Tankers Ltd.S&P 500 INDEX (Rebased)

Margin Trends

015

30456075

09 10 11 12E 13E 14E



-5

0

5

10

15

05

101520253035

09 10 11 12E 13E 14E


Solvency

01234567

0

50

100

150

200

09 10 11 12E 13E 14E




Financial Summary

DB EPS (USD) 0.97 0.53 0.17 -0.10 -0.20 -0.09Reported EPS (USD) 0.86 0.64 -0.15 -0.17 -0.20 -0.09DPS (USD) 1.76 1.31 0.85 0.27 0.34 0.00BVPS (USD) 7.21 10.47 8.05 8.57 7.34 6.76

Valuation Metrics Price/Sales (x) 2.5 4.1 4.0 1.5 1.4 1.3P/E (DB) (x) 10.2 22.0 48.2 nm nm nmP/E (Reported) (x) 11.6 18.4 nm nm nm nmP/BV (x) 1.2 1.2 0.4 0.4 0.4 0.5




Sales 113 119 121 157 185 191EBITDA 70 71 64 70 82 90EBIT 42 33 20 12 6 13Pre-tax profit 28 22 10 -8 -17 -8Net income 24 27 -9 -14 -17 -8

Cash Flow (USDm)

Cash flow from operations 60 77 55 38 70 69Net Capex -4 -96 -2 -5 -20 0Free cash flow 56 -20 53 32 50 69Equity raised/(bought back) 80 331 107 94 0 0Dividends paid -50 -55 -51 -22 -24 -42Net inc/(dec) in borrowings -116 -364 -105 -49 -111 -22Other investing/financing cash flows 12 128 0 0 115 115Net cash flow -19 20 3 56 30 121Change in working capital 23 5 -7 -10 0 0


Cash and cash equivalents 10 12 16 34 64 184Property, plant & equipment 506 757 717 1,248 1,193 1,116Goodwill 0 0 0 0 0 0Other assets 23 167 150 176 60 -32Total assets 540 937 882 1,459 1,317 1,268Debt 305 459 349 727 627 627Other liabilities 28 35 44 77 77 77Total liabilities 334 494 393 804 704 704Total shareholders' equity 206 443 489 655 613 565Net debt 295 446 333 693 563 442

Key Company Metrics

Sales growth (%) nm 5.4 1.3 29.8 17.7 3.5DB EPS growth (%) na -45.3 -68.8 na -112.2 53.8

Payout ratio (%) 205.7 205.5 nm nm nm nm


ROE (%) 11.9 8.3 -1.9 -2.4 -2.7 -1.3


DuPont Analysis

EBIT margin (%) 36.7 27.9 16.9 7.4 3.5 6.8x Asset turnover (x) 0.2 0.2 0.1 0.1 0.1 0.1x Financial cost ratio (x) 0.8 0.8 0.8 -0.1 -2.3 -0.4x Tax and other effects (x) 0.7 1.0 -0.6 11.6 1.1 1.3= ROA (post tax) (%) 4.5 3.6 -1.0 -1.2 -1.2 -0.6x Financial leverage (x) 2.6 2.3 2.0 2.0 2.2 2.2= ROE (%) 11.9 8.3 -1.9 -2.4 -2.7 -1.3annual growth (%) na -30.2 na -23.7 -11.2 50.2x NTA/share (avg) (x) 7.2 7.7 7.7 7.2 7.6 7.0

= Reported EPS 0.86 0.64 -0.15 -0.17 -0.20 -0.09annual growth (%) na -25.7 na -16.0 -17.2 53.8


30 January 2013

Marine



Container Financials

Seaspan (SSW)

Textainer (TGH)

30 January 2013

Marine





United States

Marine

Seaspan Corp Reuters: SSW.N Bloomberg: SSW UN



52 Week range USD 14.95 - 19.48


EURm 874

Company Profile Seaspan Corp. (SSW) is global ocean shipping company that owns containerships which move sea containers for major steamship lines. SSW owns a fleet of 69 (including newbuilds) containerships, which are chartered under long-term contracts.

Price Performance

8

12

16

20

24


Seaspan Corp S&P 500 INDEX (Rebased)

Margin Trends

40

50

60

70

80

09 10 11 12E 13E 14E



-15-10-505101520

0

10

20

30

40

50

09 10 11 12E 13E 14E


Solvency

01122334

050

100150200250300

09 10 11 12E 13E 14E




Financial Summary

DB EPS (USD) 0.85 1.13 1.08 1.24 1.06 1.37Reported EPS (USD) 1.42 -1.38 -1.41 -0.19 1.06 1.37DPS (USD) 0.61 0.45 0.53 0.76 1.00 1.00BVPS (USD) 15.73 14.51 17.11 17.70 18.00 18.04

Valuation Metrics Price/Sales (x) 2.0 1.9 1.8 1.8 1.8 1.7P/E (DB) (x) 9.9 10.1 13.6 15.1 17.7 13.7P/E (Reported) (x) 5.9 nm nm nm 17.7 13.7P/BV (x) 0.6 0.9 0.8 1.1 1.0 1.0

FCF yield (%) nm nm nm 1.3 20.5 11.6Dividend yield (%) 7.3 4.0 3.6 4.1 5.3 5.3



Sales 286 407 565 655 664 692EBITDA 197 290 414 490 487 506EBIT 127 190 276 326 317 332Pre-tax profit 79 95 123 138 131 149Net income 131 -115 -122 -16 92 122

Cash Flow (USDm)

Cash flow from operations 95 154 262 232 309 328Net Capex -364 -717 -632 -216 -70 -193Free cash flow -269 -564 -371 16 239 135Equity raised/(bought back) 198 26 216 -172 0 0Dividends paid -45 -24 -58 -85 -120 -146Net inc/(dec) in borrowings 162 535 686 2 -63 35Other investing/financing cash flows -49 -72 -5 -14 0 0Net cash flow -3 -99 469 -254 56 24Change in working capital -3 -4 -42 -30 0 0


Cash and cash equivalents 133 34 481 297 353 377Property, plant & equipment 3,485 3,192 4,697 4,785 4,728 4,746Goodwill 0 0 0 0 0 0Other assets 46 1,151 269 469 418 413Total assets 3,664 4,377 5,448 5,551 5,499 5,537Debt 2,294 2,428 3,033 3,106 3,043 3,078Other liabilities 311 959 1,231 1,337 1,337 1,337Total liabilities 2,605 3,387 4,264 4,443 4,379 4,415Total shareholders' equity 1,060 990 1,183 1,108 1,120 1,122Net debt 2,160 2,394 2,552 2,809 2,689 2,701

Key Company Metrics

Sales growth (%) 24.5 42.6 38.7 16.0 1.3 4.3DB EPS growth (%) -28.6 32.0 -4.5 15.4 -14.5 29.5

Payout ratio (%) 31.6 nm nm nm 67.7 51.1


ROE (%) 14.5 -11.3 -11.2 -1.4 8.2 10.8


DuPont Analysis

EBIT margin (%) 44.6 46.6 48.9 49.8 47.8 47.9x Asset turnover (x) 0.1 0.1 0.1 0.1 0.1 0.1x Financial cost ratio (x) 0.7 0.5 0.5 0.5 0.4 0.5x Tax and other effects (x) 1.5 -1.1 -0.9 -0.1 0.7 0.8= ROA (post tax) (%) 3.8 -2.9 -2.5 -0.3 1.7 2.2x Financial leverage (x) 3.9 3.9 4.5 4.8 5.0 4.9= ROE (%) 14.5 -11.3 -11.2 -1.4 8.2 10.8annual growth (%) na na 0.0 87.6 na 31.6x NTA/share (avg) (x) 9.8 12.3 12.6 13.6 12.9 12.7

= Reported EPS 1.42 -1.38 -1.41 -0.19 1.06 1.37annual growth (%) na na -2.7 86.5 na 29.5


30 January 2013

Marine





United States

Marine

Textainer Group Holdings Reuters: TGH.N Bloomberg: TGH UN



52 Week range USD 27.45 - 41.87


EURm 1,565

Company Profile Textainer (TGH) is the largest lessor of intermodal containers, with a total fleet of more than 2.4 million TEUs of capacity. TGH leases its fleet on a mixture of short- and long-term leases, with over 78% of its fleet employed on long-term leases.

Price Performance

10

20

30

40

50


Textainer Group HoldingsS&P 500 INDEX (Rebased)

Margin Trends

4050

60708090

09 10 11 12E 13E 14E



05101520253035

-20-10

01020304050

09 10 11 12E 13E 14E


Solvency

0

2

4

6

8

10

050

100150200250300

09 10 11 12E 13E 14E




Financial Summary



FCF yield (%) 0.1 nm nm nm nm nmDividend yield (%) 7.8 4.1 4.4 3.9 4.6 5.1




Cash Flow (USDm)

Cash flow from operations 100 164 213 267 340 394Net Capex -99 -344 -760 -985 -1,165 -1,125Free cash flow 0 -180 -547 -718 -825 -731Equity raised/(bought back) 0 5 12 200 58 100Dividends paid -44 -48 -63 -83 -102 -115Net inc/(dec) in borrowings -19 202 620 603 770 669Other investing/financing cash flows 47 21 -4 12 44 44Net cash flow -15 0 18 14 -55 -33Change in working capital -16 -7 -50 -21 0 0


Cash and cash equivalents 57 57 75 89 34 0Property, plant & equipment 1,074 1,439 1,906 2,901 3,939 4,913Goodwill 0 0 0 0 0 0Other assets 230 251 326 364 329 291Total assets 1,360 1,747 2,306 3,354 4,301 5,204Debt 687 889 1,509 2,112 2,883 3,552Other liabilities 100 187 117 240 240 238Total liabilities 787 1,077 1,626 2,352 3,123 3,790Total shareholders' equity 573 671 680 1,001 1,179 1,414Net debt 630 832 1,434 2,024 2,849 3,552

Key Company Metrics

Sales growth (%) -14.4 27.7 39.5 16.0 17.6 19.2DB EPS growth (%) -16.6 48.0 42.6 5.9 6.5 11.4

Payout ratio (%) 48.4 41.2 33.3 41.8 46.0 46.0


ROE (%) 19.1 21.3 29.7 23.5 20.3 19.3


DuPont Analysis

EBIT margin (%) 43.7 56.6 58.7 57.6 57.9 58.0x Asset turnover (x) 0.2 0.2 0.2 0.2 0.2 0.1x Financial cost ratio (x) 0.9 0.9 0.8 0.7 0.7 0.6x Tax and other effects (x) 1.0 0.8 0.9 1.0 1.0 1.0= ROA (post tax) (%) 6.8 7.4 9.3 7.0 5.8 5.3x Financial leverage (x) 2.8 2.9 3.2 3.4 3.5 3.7= ROE (%) 19.1 21.3 29.7 23.5 20.3 19.3annual growth (%) 0.8 11.7 39.4 -20.8 -13.6 -4.9x NTA/share (avg) (x) 9.9 11.0 12.7 16.3 19.8 23.2

= Reported EPS 1.88 2.35 3.77 3.83 4.03 4.49annual growth (%) 5.7 24.6 60.6 1.5 5.3 11.4


30 January 2013

Marine



Appendix 1

Important Disclosures Additional information available upon request For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Justin Yagerman Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes:

1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were:

Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12-month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period

47 % 51 %

2 %

48 % 42 %

37 %0

50100150200250300350400450500

Buy Hold Sell

North American Universe

Companies Covered Cos. w/ Banking Relationship

31. db dry bulk shipping 2013 outlook

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