AP Moller Maersk (MAERSKb.CO)

Transcription

1 Europe/Denmark Equity Research Marine Ports & Services (Logistics (Europe)) Rating UNDERPERFORM* Price (26 Feb 13, DKr) 45,4. Target price (DKr) (from 38,.) 42,7.¹ Market cap. (DKr m) 195, Enterprise value (DKr m) 291,781.5 *Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector. ¹Target price is for 12 months. Research Analysts Neil Glynn, CFA neil.glynn@credit-suisse.com Thomas Adolff thomas.adolff@credit-suisse.com Hugo Turner hugo.turner@credit-suisse.com Tim Ramskill, CFA tim.ramskill@credit-suisse.com Julia Pennington julia.pennington@credit-suisse.com AP Moller Maersk (MAERSKb.CO) INCREASE TARGET PRICE Earnings risk drives continued caution 213 earnings risk apparent: We cut our 213 EBITDA forecast by 9% to DKK74,88m on lower Maersk Oil forecasts due to 1% lower production, 4% below consensus. We now forecast $3.7bn NOPAT in 213 (DKK24.7bn), 1% below consensus of $4.1bn. We raise our TP by 12% to DKK42,7, reflecting higher multiples as Maersk Line earnings improve, however re-iterate our Underperform based on earnings risk with 6% downside to the current price suggested. Maersk Line expectations rising but headwinds remain strong: We now forecast ML NOPAT of $1bn in 213E, representing the best performance since $2.2bn in 21A. However, we continue to see distinct pricing risk to 2H given the potential for 17 points of oversupply on the crucial Asia-Europe trade lane, and forecast 2H13 NOPAT down 36% yoy. This suggests scope for rising expectations to be disappointed (consensus up 75% in 3M). Lower Maersk Oil production drives 213E EBITDA down 18% and NAV down 7%: We have reduced our 213E MO NOPAT from $2.bn to $1.5bn, lowering our production estimate from 275kboepd to 25kboepd (guidance 24-25k). In combination with higher exploration expense ($1m), we lower our 213E EBITDA to DKK38.9bn/$7.m and our NAV falls to $17.5bn. TP of DKK42,7 suggests c6% downside risk, re-iterating Underperform: Our TP represents an EV/IC multiple of.9x (213E ROIC 7% below WACC of 9%; 3Y average 1.x), an EV/EBITDA of 4.1x (3Y avg 3.7x) and a P/E of 1x (3Y avg 1x). Our SOTP valuation of DKK44,625 incorporates a 2% conglomerate discount to reflect group-level returns, which we use as a supportive valuation tool rather than our primary metric. Share price performance Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Price Price relative The price relative chart measures performance against the OMXC 2 which closed at on 26/2/13 On 26/2/13 the spot exchange rate was Dkr7.46/Eu 1. - Eu.77/US$1 Performance Over 1M 3M 12M Absolute (%) Relative (%) Financial and valuation metrics Year 12/12A 12/13E 12/14E 12/15E Revenue (DKr m) 342, , , ,233. EBITDA (DKr m) 72, , , , Adjusted Net Income (DKr m) 21, , , ,469.5 CS adj. EPS (DKr) 4,96.7 4, , , Prev. EPS (DKr) 4, , , ROIC (%) P/E (adj., x) P/E rel. (%) EV/EBITDA Dividend (12/13E, DKr) 1,3. IC (12/13E, DKr m) 333,31.69 Dividend yield (%) 2.9 EV/IC.88 Net debt (12/13E, DKr m) 96,353.1 Current WACC 9. Net debt/equity (12/13E, %) 4.7 Free float (%) 41. BV/share (12/13E, DKr) 5,578.2 Number of shares (m) 4.4 Source: FTI, Company data, Thomson Reuters, Credit Suisse Securities (EUROPE) LTD. Estimates. DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON US ANALYSTS. FOR OTHER IMPORTANT DISCLOSURES, visit or call +1 (877) US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION Client-Driven Solutions, Insights, and Access

2 AP Moller Maersk MAERSKb.CO Price (26 Feb 13): DKr45,4., Rating: UNDERPERFORM, Target Price: DKr(from 38,.) 42,7. Income statement (DKr m) 12/12A 12/13E 12/14E 12/15E Sales revenue 342,58 33, , ,233 EBITDA 72,897 74,88 82,433 87,397 Depr. & amort. (3,973) (28,26) (3,25) (32,186) EBIT (CS) 41,924 46,619 52,183 55,21 Net interest exp. (4,376) (4,32) (4,32) (4,32) Associates Other adj, PBT (CS) 37,548 42,587 48,151 51,178 Income taxes (19,138) (23,321) (24,38) (22,678) Profit after tax 18,41 19,267 24,114 28,5 Minorities (1,722) (1,722) (1,722) (1,722) Preferred dividends Associates & other 4,969 1,691 1,691 1,691 Net profit (CS) 21,657 19,236 24,83 28,469 Other NPAT adjustments Reported net income 21,657 19,236 24,83 28,469 Cash flow (DKr) 12/12A 12/13E 12/14E 12/15E EBIT 41,924 46,619 52,183 55,21 Net interest (4,327) (4,327) (4,327) (4,327) Cash taxes paid (21,443) (23,321) (24,38) (22,678) Change in working capital (4,15) (3,553) (3,594) (3,846) Other cash & non-cash items 32,63 28,26 32,9 34,614 Cash flow from operations 44,22 43,679 53,125 58,973 CAPEX (47,18) (44,8) (47,572) (46,693) Free cash flow to the firm (2,96) (1,121) 5,553 12,28 Acquisitions Divestments 1,121 Other investment/(outflows) 3,181 Cash flow from investments (33,86) (44,8) (47,572) (46,693) Net share issue/(repurchase) Dividends paid (5,475) (6,384) (6,823) (6,823) Issuance (retirement) of debt Other (5,267) (7,45) 7,45 Cash flow from financing (1,742) (13,429) 222 (6,823) activities Effect of exchange rates Changes in Net Cash/Debt (346) (14,55) 5,775 5,457. Net debt at start 81,457 81,83 96,353 9,578 Change in net debt ,55 (5,775) (5,457) Net debt at end 81,83 96,353 9,578 85,121 Per share data 12/12A 12/13E 12/14E 12/15E No. of shares (wtd avg) CS adj. EPS (DKr) 4,96.7 4, , , Prev. EPS (DKr) 4, , , Dividend (DKr) 1,2. 1,3. 1,3. 1,3. Dividend payout ratio Free cash flow per share (665.56) (254.84) 1, ,79.8 (DKr) Key ratios and 12/12A 12/13E 12/14E 12/15E valuation Growth(%) Sales 6.1 (3.3) EBIT (15.5) Net profit 43.3 (11.2) EPS 43.3 (11.9) Margins (%) EBITDA margin EBIT margin Pretax margin Net margin Valuation metrics (x) EV/sales EV/EBITDA EV/EBIT P/E P/B Asset turnover ROE analysis (%) ROE stated-return on equity ROIC Interest burden Tax rate Financial leverage Credit ratios (%) Net debt/equity Net debt/ebitda Interest coverage ratio Source: FTI, Company data, Thomson Reuters, Credit Suisse Securities (EUROPE) LTD. Estimates. Balance sheet (DKr m) 12/12A 12/13E 12/14E 12/15E Assets Cash and cash equivalents 22,216 7,666 13,441 18,898 Accounts receivable 4,458 Inventory 13,42 13,42 13,42 13,42 Other current assets 3,22 54,276 5,825 54,671 Total current assets 78,936 74,984 77,38 86,611 Total fixed assets 261, , ,667 31,392 Intangible assets and goodwill 34,183 34,183 34,183 34,183 Investment securities Other assets 46,23 47,676 49,149 5,621 Total assets 42, ,97 456,37 481,88 Liabilities Accounts payable 35,594 Short-term debt 12,952 12,952 12,952 12,952 Other short term liabilities 19,921 55,66 58,15 6,147 Total current liabilities 68,467 68,612 7,967 73,99 Long-term debt 98,112 98,112 98,112 98,112 Other liabilities 31,568 31,568 31,568 31,568 Total liabilities 198, ,292 2,647 22,779 Shareholders' equity 28,8 222,322 24,69 263,445 Minority interest 13,744 14,357 14,97 15,583 Total equity & liabilities 42, ,97 456,37 481,88 Net debt (DKr m) 81,83 96,353 9,578 85, Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Price Price relative The price relative chart measures performance against the OMXC 2 which closed at on 26/2/13 On 26/2/13 the spot exchange rate was Dkr7.46/Eu 1. - Eu.77/US$1 AP Moller Maersk (MAERSKb.CO) 2

3 213E EBITDA estimates 4% behind consensus We now forecast EBITDA of DKK74,88m for APMM, down 9% from DKK81,954m previously and 4% behind Reuters consensus of DKK78,221m. This represents $13.4bn (down 4% on our prior forecast given recent USD strength) which compares to company provided consensus of $14.1bn pre-4q12. Our EBITDA reductions come from i) Maersk Oil (down DKK8.4bn from DKK47.4bn to DKK38.9bn), offset by (ii) Maersk Line with an increase of DKK2.5bn from DKK13.6bn to DKK16.bn. We focus on EBITDA to reflect the development of the underlying group s performance, which is more comparable to consensus data than NOPAT given the potential for varying accounting for exceptional items. Group guidance is for an underlying NOPAT of $2.9bn before impairments and gains on asset sales (flat on 212 s result), and our forecast of $3.7bn NOPAT (DKK2.9bn) also reflects an underlying figure of $3.7bn (we assume nil impairments, versus $45m net impairments in 212A, and gains of $39m on the sale of assets, down from $636m). As such, we are significantly ahead of management guidance, yet 1% behind consensus expectations of $4.1bn NOPAT in USD terms (though marginally ahead of Reuters figure of DKK2.5bn). Figure 1: AP Moller Maersk 211A-215E profit & loss account - estimate changes in DKK millions, unless otherwise stated 211A 212A 213E 213E Change 214E 214E Change 215E Year to December Actual Actual Old New % Old New % New Revenue 322,52 342,58 353,612 33,869-6% 368,63 348,965-5% 364,233 EBITDA 78,56 72,897 81,954 74,88-9% 87,941 82,433-6% 87,397 Profit before financial items 55,32 46,893 53,162 48,311-9% 57,84 53,874-7% 56,91 Profit before tax 5,452 42,517 48,95 44,279-1% 53,592 49,842-7% 52,869 Profit for the year continuing 18,5 23,379 2,963 2,958 % 26,461 25,85-2% 3,191 operations Profit for the year 18,83 23,395 2,963 2,958 % 26,461 25,85-2% 3,191 (in USDm) 3,377 4,38 3,583 3,739 4% 4,523 4,65 2% 5,388 Of which: Non-controlling interests 2,894 1,722 1,72 1,722 % 1,72 1,722 % 1,722 A.P. Møller - Mærsk A/S share 15,189 21,673 19,243 19,236 % 24,741 24,83-3% 28,469 Basic EPS 3,479 4,964 4,528 4,376-3% 5,821 5,479-6% 6,477 Diluted EPS 3,478 4,962 4,522 4,372-3% 5,815 5,473-6% 6,47 EBITDA 78,56 72,897 81,954 74,88-9% 87,941 82,433-6% 87,397 EBITDA margin 24.3% 21.3% 23.2% 22.6% -.6% 23.9% 23.6% -.3% 24.% EBIT 55,32 46,893 53,162 48,311-9% 57,84 53,874-7% 56,91 EBIT margin 17.1% 13.7% 15.% 14.6% -.4% 15.7% 15.4% -.3% 15.6% Net income 15,189 21,673 19,243 19,236 % 24,741 24,83-3% 28,469 Net margin 4.7% 6.3% 5.4% 5.8%.4% 6.7% 6.9% -.2% 7.8% Source: Company data, Credit Suisse estimates (PBT reflects Maersk reporting, in contrast to databoxes on pages 1, 2 reflecting PBT pre-gains on asset sales, share of profit/loss in associated companies, which are reported below the PBT line). Notes: Whereas our PBT estimates fall by 1% in 213E, our net earnings are flat as our effective tax rate forecast falls from 57% to 53% given the mix effect from a lower tax estimate at Maersk Oil on lower MO earnings (MO ETR 71% up from 68%). AP Moller Maersk (MAERSKb.CO) 3

4 TP up 12% to DKK42,7 but we remain cautious We have raised our AP Moller Maersk target price by 12% to DKK42,7, which reflects our switch to using a group-level multiples approach to better represent Maersk s conglomerate returns profile. In effect, the higher TP reflects higher multiples (fair given improving Maersk Line earnings), with a 213E EV/IC multiple of.9x up from.8x, an EV/EBITDA multiple of 4x (up from 3.1x) and a P/E multiple of 1x (up from 8.4x). We remain cautious on the group given i) 4% downside risk to consensus EBITDA on our estimates (at DKK74.9bn versus consensus of DKK78.2bn), ii) rising Maersk Line profitability expectations, despite a concerning level of capacity delivering in 213, iii) an unattractive Maersk Oil production and FCF outlook, and iv) as outlined below, the group s valuation relative to European Logistics peers is not attractive enough to compensate. Maersk currently trades on an EV/IC multiple of 1.x in 213E, and an EV/EBITDA multiple of 4.2x, 5% behind and 18% ahead of 3Y averages respectively, while our target price of DKK42,7 is 12x group guidance of an underlying NOPAT of $2.9bn in 213E. Figure 2: APMM multiples based on stock price on 26 February 213 At current price 45,4 At target price DKK42,7 213E 214E 215E 213E 214E 215E P/E P/B EV/EBITDA* EV/EBIT* EV/Sales* EV/IC* Source: Credit Suisse estimates (*EV includes full provisions on balance sheet) It trades broadly in line with the sector in EV/IC terms relative to our ROIC numbers for 213E, whereas an expected fall in earnings in 213E means its P/E multiple of 1x looks appropriate. Figure 3: European Logistics EV/IC vs ROIC DP DHL Figure 4: European Logistics P/E vs earnings growth 25 Panalpina KN 2 213E EV/IC (x) TNTE Express.96 APMM R² = % 1% 15% 2% 213E ROIC 213E P/E (x) 15 1 APMM DSV DP DHL R² = % -5% 5% 15% 25% 213E earnings growth Source: Credit Suisse estimates, Thomson Reuters cons. (TNTE) Source: Credit Suisse estimates, Thomson Reuters cons. (TNTE) Maersk has the only likely negative FCF in our universe in 213E, on our numbers. However, it looks more attractive on EV/EBITDA, EV/Sales and P/B metrics. AP Moller Maersk (MAERSKb.CO) 4

5 Figure 5: European Logistics - 213E FCF yield 6% Figure 6: European Logistics EV/EBITDA vs ROIC 14 5% 4% 3% 2% 1% % -1% APMM DP DHL K+N DSV Panalpina TNTE Express 213E EV/EBITDA (x) DSV TNTE Express DP DHL Panalpina 4 APMM R² = % 1% 2% 3% 4% 5% 6% 213E ROIC KN Source: Credit Suisse estimates, Thomson Reuters cons. (TNTE) Source: Credit Suisse estimates, Thomson Reuters cons. (TNTE) Similarly, its 213E P/B multiple looks high on a ROE-adjusted basis, while negative FCF in 213E is unattractive relative to peers. Figure 7: European Logistics EBITDA mgn vs EV/Sales.7 KN APMM E EV/Sales (x) TNTE Express.4.3 Panalpina DP DHL R² = % 1% 15% 2% 25% 213E EBITDA margin Figure 8: European Logistics ROE vs PB 213E P/B (x) TNT Express APMM DP DHL.6 R² = % 5% 1% 15% 213E ROE Source: Credit Suisse estimates, Thomson Reuters cons. (TNTE) Source: Credit Suisse estimates, Thomson Reuters cons. (TNTE) We use a blend of multiples to produce our TP, to reflect Maersk s positioning within the broader sector. Our EV/IC multiple of.8x is justified by a sub-cost of capital ROIC of 7% in 213E (WACC 9%). The market is currently paying a 213E EV/EBITDA multiple of 3.9x and 213E P/E of 1.2x on consensus numbers for the group we use 3.7x and 1x respectively to value the stock, in line with 3Y averages. Figure 9: AP Moller Maersk multiples based target price DKK42,7 (rounded) in DKK millions, unless otherwise stated EV/IC basis EV/EBITDA basis P/E basis 213E invested capital 333, E EBITDA 74, E diluted EPS 4,371.5 EV/IC multiple.8 EV/EBITDA multiple 3.7 P/E multiple E enterprise value 266, E enterprise value 277, E net cash (debt) (96,353.1) 213E net cash (debt) (93,353.1) 213E book value of investments 35, E book value of investments 35, E provisions (12,26.) 213E provisions (12,26.) 213E off balance sheet liabilities 213E off balance sheet liabilities 213E minority interest (13,744.) 213E minority interest (13,744.) 213E equity value 18, E equity value 19, E fair value per share 4, E fair value per share 43, E fair value per share 43,715.3 Average 42,653.3 Source: Credit Suisse estimates We highlight below our SOTP model, which produces a fair value of DKK55,781 per share before we apply a 2% discount to reflect the prevailing discount implied by group-level returns in our view. Our SOTP fair value, post-discount, reflects a 213E EV/EVIC multiple AP Moller Maersk (MAERSKb.CO) 5

6 of.9x (which we deem fair given a 213E ROIC of 7% and a WACC of 9%) and an EV/EBITDA multiple of 4.2x (15-18% above 3Y-5Y averages). Figure 1: AP Moller Maersk SOTP fair value DKK44,625 in DKK millions, unless otherwise stated 213E Invested Capital 213E ROIC, EVIC (x) EV estimate (DKKm) USDm % contribution to EV Maersk Line 121, %,.6x 72,216 12,559 22% Maersk Oil 45, %, 2.2x 1,464 17,472 3% APM Terminals 39, %, 1.3x 51,474 8,952 16% Maersk Drilling 35, %, 1.3x 46,288 8,5 14% Maersk Supply Services 13,54 5.3%,.8x 1,443 1,816 3% Maersk Tankers 23,188-1.%,.4x 9,275 1,613 3% Damco 3,21 1.4%, 2.x 6,42 1,116 2% SVITZER 9,74 7.2%,.7x 6,818 1,186 2% Dansk Supermarked Group 15,786 8.%,.8x 11,839 2,59 4% Other businesses 33,21 3.4%,.5x 16,65 2,888 5% Group enterprise value 331,841 57,712 1% Net cash (debt) (96,353) (16,757) Pensions/provisions* (12,26) (2,132) Minority interest (13,744) (2,39) Investments (Dec 212A book value) 35,966 6,255 Equity value 245,45 42,687 Diluted shares outstanding 4,4 4,4 Fair value per share 55,781 9,71 SOTP discount applicable 2% 15% Discounted fair value 44,625 7,761 Current share price 45,4 Suggested upside/downside -2% Source: Credit Suisse estimates (*Note DKK9,622m of provisions related to abandonments excluded as reflected in Maersk Oil EV estimate) AP Moller Maersk (MAERSKb.CO) 6

7 Maersk Line expectations getting higher, but rates softening again Maersk Line surprised us and the market positively in 4Q. Its 4Q12 EBITDA of $715m came in ahead of our forecast of $658m and consensus of $676m, producing an EBITDA margin of 11.% (CS 9.5%, consensus 9.9%). Revenues were up only 2.5% yoy in 4Q compared to our expectation of 9% (consensus 7%) which illustrates the challenge in modelling liner revenues over the short term in a volatile environment volumes were down 8% yoy (CS flat) and rate growth improved only marginally from 6% in 3Q to 7% (CS +8%). Cost control remains a key theme for Maersk Line, and unit costs were down 1.6% yoy in 4Q (down 3.3% for the full year) despite volume reductions as bunker consumption per FFE declined (slow steaming) and charter capacity was removed. Figure 11: Maersk Line rates yoy 21A-4Q12A 6% 5% 4% 3% 2% 1% % -1% -2% -3% 21A 211A 1Q12A 2Q12A 3Q12A 4Q12A Total network Asia Europe Figure 12: Maersk Line ex-fuel unit costs 21A-4Q12A 3% 2% 1% % -1% -2% -3% -4% -5% -6% -7% 21A 3Q11A 4Q11A 211A 1Q12 2Q12 3Q12A 4Q12E 212E Source: Company data Source: Company data, Credit Suisse estimates (4Q12A, 212A) Unit revenues and unit costs moving in benign opposite directions in unusual in this industry, and this has driven three quarters of successive profitability. Figure 13: Maersk Line EBITDA, margin 211A-212A 12 16% Figure 14: Maersk Line NOPAT, net margin 211A-212A 8 12% % 8% 4% % 4-4 8% 4% % -4% -8% -4 1Q11A 2Q11A 3Q11A 4Q11A 1Q12A 2Q12A 3Q12A 4Q12A -4% -8 1Q11A 2Q11A 3Q11A 4Q11A 1Q12A 2Q12A 3Q12A 4Q12A -12% EBITDA ($m) (RHS) EBITDA margin (LHS) NOPAT ($m) (RHS) Net margin (RHS) Source: Company data Source: Company data It also managed to drive a second successive quarter of positive free cash flow as capex reduced to $576m (the lowest level since 1H11A). AP Moller Maersk (MAERSKb.CO) 7

8 Figure 15: Maersk Line OCF, OCF margin 1Q11A-4Q12A 12 2% Figure 16: Maersk Line FCF, FCF margin 1Q11A-4Q12A 8 1% % 1% 5% % -5% % % -5% -1% -15% -2% -4 1Q11A 2Q11A 3Q11A 4Q11A 1Q12A 2Q12A 3Q12A 4Q12A -1% -16 1Q11A 2Q11A 3Q11A 4Q11A 1Q12A 2Q12A 3Q12A 4Q12A -25% OCF ($m) (LHS) OCF margin (RHS) FCF ($m) (LHS) FCF margin (RHS) Source: Company data Source: Company data While we have raised our Maersk Line 1Q13 forecast we had been forecasting negative $185m NOPAT on flat volumes and 2% higher rates, and now forecast $12m on 4% lower volumes but 7% higher rates (1Q12A -$599m) we continue to see the risk that 2H13 NOPAT will fall yoy given oversupply risk on AE trades and forecast Maersk Line 213E NOPAT of $973m (2H13E $535m versus 2H12A $833m). This is broadly in line with guidance of higher Maersk Line earnings in 213, based on cost efficiency improvements (212A NOPAT $461m). We are now in line with pre-fy12 consensus of $953m, which we think will likely rise following a $154m 4Q12 outperformance of consensus. The top end of the consensus NOPAT range pre-fy12 results was $1.5bn. Our central Maersk Line concerns for 213 remain the volume of tonnage due to deliver from 2Q-4Q13 in particular. We have been reassured somewhat over recent quarters by management s ability to raise pricing (Maersk Line s capacity management has been market leading), and reduce unit costs, driving our estimates higher on reduced unit costs (we forecast rates down 1% for 213E with a 4% decline in 2H13E). However, pricing has begun to fall again post-chinese New Year, with the Shanghai- Europe rate retreating below $12/TEU for the first time since early December (213 peak $1,4-plus), while eastbound transpacific rates have also softened (but remain above early-january levels). We highlight Drewry commentary that carriers have not yet done enough to prevent rate erosion, particularly on the Asia-Europe trade, while regarding imminent March/April GRIs attempts may have limited success initially, but this is not expected to be sustained. Figure 17: Shanghai-Europe/Med rates Figure 18: Shanghai-US WC/EC rates /2/21 6/2/211 6/2/212 6/2/2 2 6/2/21 6/2/211 6/2/212 6/2/213 Shanghai-Europe ($/TEU) Shanghai-Mediterranean ($/TEU) Shanghai-US (WC) ($/TEU) (LHS) Shanghai-US (EC) ($/TEU) (RHS) Source: Shanghai Shipping Exchange (data to 15 February 213) Source: Shanghai Shipping Exchange (data to 15 February 213) We forecast EBITDA of $2,866m and NOPAT of $973m at Maersk Line for 213E per the charts below. AP Moller Maersk (MAERSKb.CO) 8

9 Figure 19: CS Maersk Line EBITDA, mgns 27A-215E 5, 2% Figure 2: CS Maersk Line EBIT, mgns 27A-215E 4, 15% 4, 3, 2, 1, 15% 1% 5% % 3, 2, 1, -1, -2, 1% 5% % -5% -1% -1, 27A 28A 29A 21A 211A 212A 213E 214E 215E -5% -3, 27A 28A 29A 21A 211A 212A 213E 214E 215E -15% EBITDA ($m) (LHS) EBITDA margin EBIT ($m) (RHS) EBIT margin (LHS) Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates However, with Maersk Line 213 consensus NOPAT rising from $545m in November 212 to $953m prior to FY12 results, market expectations would seem to have risen sharply. Figure 21: CS Maersk Line NOPAT, mgns 27A-215E 3, 15% Figure 22: Maersk Line consensus NOPAT estimates ($m) 1,4 2, 1% 1,2 1, 5% 1, % 8-1, -5% 6-2, -1% 4-3, 27A 28A 29A 21A 211A 212A 213E 214E 215E NOPAT (($m) (LHS) Net margin (LHS) -15% 2 Pre-2Q12 Pre-3Q12 Pre-4Q12 Source: Company data, Credit Suisse estimates Source: Company-provided consensus data As we outlined in our AP Moller Maersk initiation on 23 November, the global orderbook is shrinking as a proportion of the prevailing global fleet. Per latest Clarksons data, it currently stands at 21%. Figure 23: Industry supply/demand balance 2-213E Figure 24: Global orderbook as % of global fleet % 15% 1% 5% % -5% -1% E Demand Supply - gross Supply - net Source: Drewry, Credit Suisse estimates 8, 7, 6, 5, 4, 3, 2, 1, Jan-4 Jan-6 Jan-8 Jan-1 Jan-12 Source: Clarksons However, 213 represents the peak in recent years in terms of vessel deliveries, which suggests that pricing pressure may return through the year, particularly in light of continued demand weakness. Liner orderbook (' TEU) Ordebook % Fleet 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% AP Moller Maersk (MAERSKb.CO) 9

10 Figure 25: Quarterly delivery TEUs Q12 4Q13 4Q14 4Q15 Feedermax Handymax Handysize Panamax Post-Panamax Del % cur fleet 3.% 2.5% 2.% 1.5% 1.%.5%.% Figure 26: 213E new vessel deliveries by size & quarter Q13 2Q13 3Q13 4Q13 Sub-Panamax Panamax Post-Panamax Source: Clarksons Source: Alphaliner, Credit Suisse estimates Maersk Line s moves to take out capacity should provide some resilience to its rate performance over the coming months, and we see management as firmly committed to getting paid for a higher quality service. However with the potential for 17% oversupply on Asia-Europe in 213, we think it will be difficult for Maersk Line to avoid rate deterioration in 2H. Figure 27: Capacity deployment by major trade lane Figure 28: Trade-specific vessels delivering in 213E 44, 42, 4, 38, 36, 34, 32, 3, 28, Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Far East - Europe Source: Alphaliner, Credit Suisse estimates Far East - N. America suggesting 17% supply growth on AE, TP 18% 5,, 4,5, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, Existing EU capacity >1, TEU vessels Source: Alphaliner, Credit Suisse estimates Idling rates peaked at 11% of the global fleet as 29 turned into 21. Currently the idled rate is around 5%, emphasising the need for the sector to address rate softness through capacity cuts. Over 9% of idled vessels are smaller ships and we would expect increased idling to continue to focus on smaller, lower efficiency sizes. Time charter rates have languished at historically low levels since mid-211 we would look to a pick-up in time charter rates as a potential leading indicator of resurgent demand. Existing T/Pac capacity TEU vessels AP Moller Maersk (MAERSKb.CO) 1

11 Figure 29: Idling rates (to January) 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, - Oct-8 Jun-9 Feb-1 Oct-1 Jun-11 Feb-12 Oct-12 Idle fleet capacity % of fleet 12.% 1.% 8.% 6.% 4.% 2.%.% Figure 3: Time charter rate development 6, 5, 4, 3, 2, 1, Jan-4 Jul-5 Jan-7 Jul-8 Jan-1 Jul-11 Jan teu 35 teu 44 teu Source: AXS Alphaliner data Source: AXS Alphaliner data These capacity headwinds mean it looks challenging to protect rates through 213 and we model a slight decline of 1% (2H-weighted) following an average of 2% growth in 212. We expect yoy weakness to manifest in 2Q13 as the most challenging quarter in terms of tonnage delivery, beyond easy yoy rate comps in 1Q13 and a round of aggressive GRIs in March. To summarise, our concerns regarding the sustainability of present rates centre around the following key points: 213 is scheduled to see 1.7m TEUs deliver globally, representing c1% of the 212 global fleet. Slower steaming and a modest uptick in idling/scrappage rates may cushion the blow but vessel deliveries look problematic for the industry as a whole in 213. Maersk Line itself will take delivery of 1 vessels in 213, though fleet reductions (74) in 3Q suggest a smaller fleet through 213 than in 212. We may struggle to see global volume growth over 5% in 213 (Maersk Line expects 4-5% with AE weaker), suggesting up to a five point industry-wide headwind on top of an unsatisfactory 212, unless industry actions address oversupply more successfully than in 212. New order slippage may potentially remove up to 1 point of oversupply using historical new order slippage rates of 15-2% as a guide, while scrapping may remove a further point, which would still suggest a net excess of supply over demand of three percentage points. Of the scheduled deliveries, Asia-Europe as the longest trade lane should take a disproportionate level of large vessels (8, TEUs and over), exaggerating pressure on highly exposed carriers such as Maersk Line as operators seek to benefit from unit cost savings of up to 25% relative to the vessels (panamaxes) being replaced. Whereas the container shipping market is concentrating (AE is 85% controlled by three groups and Maersk Line), the success of partnerships in driving sustainably higher rates in 212 is debatable. In our view, demand uncertainty requires a significantly greater level of cooperation, involving Maersk Line as market leader. We acknowledge that current rate levels are low relative to historical levels, with 212A finishing 6% below 21A s average at ML. Further, the prevailing bunker fuel price above $6 at one level warrants a commensurately higher rate including bunker adjustment factors (BAFs). Comfortingly, ML has been clear that it will not chase volumes to offset soft pricing, as the industry has been prone to do in the past, providing self-fulfilling pricing weakness. AP Moller Maersk (MAERSKb.CO) 11

12 Maersk Oil forecasts cut on lower production 4Q12 results in line clean EBIT of ~$1.2bn was slightly softer than our expected ~$1.35bn, while NOPAT of ~$44m was slightly ahead of our expectations of ~$42m. The delta at the operating line is probably explained by the lower than expected production we assumed 256kboed versus 242kboed realised, and relative to our estimates this is due to (a) a slight delay to the Gryphon start-up and (b) lower entitlement volumes from Qatar and Denmark. At the NOPAT level, it appears that the offset came from a lower tax rate than we had expected. 213 production outlook disappoints the company guided to 24-25kboed of entitlement production for 213 based on an average oil price of $15/bbl. It expects a gradual improvement in the production profile in 213. Operationally, this is explained by: (a) a lower production share in Denmark due to the entry of Nordsofonden as partner with 2%, though with no impact to the bottom line as this replaces a 2% profit share collected since the agreement made in 23, (b) PSC effect in Qatar, which is always difficult to gauge, and (c) natural declines in Denmark and also base production in the UK. We previously forecasted production of ~275kboed for 213. We now adjust our forecast to be at the higher end of the guidance range, and we make the following adjustments relative to our prior forecast: (a) a steeper decline rate for Denmark and the base in the UK (b) a lower entitlement factor from Qatar. The entitlement factor should in theory recover from 214 onwards following a new agreement that involves additional spending of $1.5bn (ie higher cost recovery) to extend the plateau production. Industry press suggested that this agreement should extend the plateau by another 18 months. We believe that there are more undeveloped reservoirs in the field that could at some point be developed to help further extend the plateau production. (c) a slight delay to the El-Merk start-up in Algeria, which is now expected in the nearterm (1Q13) versus our prior estimate of end of 212. We also assume a longer rampup to plateau than our prior estimate. (d) a slight delay to the Gryphon start-up, which is expected in the near-term (1Q13) versus our prior estimate of 4Q12. We also now assume a longer ramp-up than our prior estimate. When adjusting for the one-off tax adjustment (~$9m) from the settlement of the Algerian tax dispute, Maersk Oil generated a result of $1.5bn (NOPAT) in 212 based on an oil price of ~$112/bbl and it is guiding to lower results in 213 y/y based on an oil price of $15/bbl. The $1.5bn earned in 212 probably also includes the compensation of $47m received under the existing insurance policy relate to the Gryphon FPSO with more expected to be received in 213 once negotiations are completed to determine the final insurance proceeds. It is unclear what the final figure is, but it is fair to assume that it will be less than the amount thus far received in 212. We now assume operating results of $1.5bn in 213 based on our Brent forecast of $115/bbl; a $1/bbl higher oil price forecast than Maersk s budget, which boosts the operating results by $.2bn. This also includes a higher than expected (by $1m) exploration expenditure, which is fully expensed operationally. We also highlight that the decline in the production share in Denmark (excluding natural decline) has a neutral impact as discussed below, hence in this instance it is incorrect to just look at the trend in the entitlement production y/y (natural decline aside) to determine the trend in the operating result. AP Moller Maersk (MAERSKb.CO) 12

13 Recent events impacting our valuation this includes Norway (Johan Sverdrup), Qatar (Al Shaheen) and Brazil (BM-C-37). In terms of exploration drilling, there also appears to be a delay in the drilling of the prospects in the Kwanza Basin (Blocks 8 and 23) and this is related to rig availability. It is unclear how many wells Maersk Oil will spud in 213, and this is, in our view, the key area of high-impact wells in Maersk s exploration portfolio. Otherwise, there will be updates from other operators, particularly with Cobalt International also actively drilling in the region in 213. NORWAY Johan Sverdup (PL-51) recent guidance by Lundin on PL-51, where Maersk Oil has a 2% stake, has been disappointing. Lundin announced that resources in PL-51 are now likely to be in the lower end of the original guidance range (which was 8-1,8mmboe). An official guidance is expected to be provided by Statoil in 4Q13, once further appraisal work has been performed. Following Lundin s new guidance, we now assume the low end of the original range at 8mmboe from previously the mid-point of 1,3mmboe. We still assume some upside (to the prior mid-point) from appraisal on a risked basis from the lowered base assumption. Appraisal work continues in 213 some key wells are due to be drilled in PL-265 (Maersk has no interest) and PL-51 (Maersk with 2%). Although we recognise that this work may add further upside to volumes, we no longer expect a material upgrade to PL-51, which is proving to have thinner reservoirs and a shallower oil-watercontact than PL-265. In contrast, Det norske recently indicated that the company sees an increase in resources in PL-265 to 1,23-1,95mmboe (from previously 9-1,5mmboe). This does not bode well for Maersk in the unitisation talks (and this in turn is likely to impact the production share to Maersk), which is expected to conclude in 4Q14. At this stage, we still assume an upside to the prior mid-point from further appraisal, though we risk this upside at 25%. Torvstad an exploration prospect could also add gross 25mmboe (unrisked); a prospect that will be drilled in 2Q13. Explaining the difference between PL-265 and PL-51 To date a total of 15 exploration/appraisal wells have been drilled on the field, providing data that points to a more variable sand distribution than expected, leading to differing thicknesses in the oil columns. Johan Sverdrup is a low relief structure that means reservoirs exist above and below the oil water contact. Part of the appraisal work has been to delineate this oil water contact which has proven to be deeper in the North East of the field, i.e. PL265. We see this as the reason for the more positive update on PL265 and the less positive update on PL51. Elsewhere in Norway, Maersk Oil drilled a dry well; the first exploration well in PL- 513, which is around 6km north of the Victoria discovery in the Norwegian Sea. We had no risked value attached to this prospect for Maersk Oil. QATAR We have now split our valuation into two; in essence, splitting it between (a) the field to 217 with production plateau at 3kboe extended to 217 as part of the recent agreement and further potential upside in light of Qatar s intention to work on overall oil production capacity, and (b) a risked approach to valuing the possible extension to 23. We have previously valued Al-Shaheen unrisked to 23 in the assumption that existing operator typically is successful in negotiating an extension, albeit on likely different terms. We are still of the view that Maersk will successfully extend its contract beyond 217. However, recent industry press (MEES) suggests that there are risks around the structure of working interest, and as such we now take a risked approach in the valuation of the Al-Shaheen field. AP Moller Maersk (MAERSKb.CO) 13

14 An article in MEES (industry press) in late January 213 suggested that state-owned Qatar Petroleum (QP) is in talks with Maersk to convert the production sharing agreement (PSA) when it expires in 217 into a joint-venture (JV). This was already done with Total recently. Under a JV structure, QP and the IOC will form a new company. This will split the risk, which is obviously now much lower than at the time Maersk had become operator of the field, and investment, and thereby share the oil subject to the new stake split. Currently, Maersk is the operator with a working interest of 1% and a recent agreement with Total showed that Total is now left with only 4% in another field. It is unclear what the clear impact will be from the potential JV to Maersk s valuation, but it appears reasonable to assume that Maersk s working interest in Al-Shaheen is likely to be lower than before. At this stage, we now assume that production plateau at 3kboed would be extended, however we see it unlikely to see production ramp-up from current levels. Overall, we now apply a 5% risk weighting to our valuation between 217 and 23, which in itself is assumed to be lower than the period to 217 due to (a) time value of money effects and (b) our revised assumption of production decline from 22. BRAZIL Campos Basin drilling mixed The impact to the valuation here is quite small. The Cozumel prospect in BM-C-37 was a dry-hole and the rig moved to drill Cancun. However, the Tulum well in the same block, whilst still ongoing as of early February, had found already 35m of net pay in good porosity sandstone reservoirs. While Maersk s partner in the block is upbeat on the prospect, it is unclear whether this is sufficient to justify an FPSO (ie meeting the commerciality threshold). Drilling started in the Cancun prospect in the same block, which will be important to reach the commerciality threshold, in our view. The operator has until March 12 th to (1) declare commerciality, (2) relinquish, or (3) submit to the ANP PADs for the prospects that have found hydrocarbons and, if those are accepted, be able to drill appraisal wells. Read-across valuation from APC we expect APC to pursue the sale of its Brazil acreage in 213 (possibly 1H13), which includes its stakes in Wahoo and Itaipu (BP recently stated that it expects Itaipu to come onstream in the second half of the decade, which compares to our estimate of 219, but not included in Maersk s official guidance). This will be a relevant read-across for Maersk s Brazil assets since its core value at this stage in Brazil lies in the Wahoo and Itaipu discoveries. We sense that there is a negative read-across for Maersk, particularly relative to what it has paid for these assets. In late 21, it acquired SK Energy for $2.4bn (or ~$18/boe on reserves and contingent resources provided by the operators), which included a 4% stake in the producing Polvo field (BM-C-8), 2% interest in the Wahoo discovery (BM-C-3) and 27% interest in the Itaipu discovery (BM-C-32). APC, a partner in these discovered fields and in the producing Polvo field, placed its Brazil portfolio up for sale already some time ago, with the press at the time (FT on January 14, 212) reporting that Total, Statoil and Maersk had planned to bid with a valuation range of $3-4bn. This implied a $12-15/bbl range based on existing discoveries (reserves and contingent resources), which is higher than our bottom up valuation, but lower than what Maersk had paid for (we think Maersk paid up for additional resource potential, similarly visible in the case of the Peregrino stake sale by Statoil to Sinochem, though little has been heard on Itaipu and Wahoo for a while). We expect APC to pursue the sale in 1H13 (it has been held back by unitisation talks), and we would now be surprised to see Maersk bid for these assets. AP Moller Maersk (MAERSKb.CO) 14

15 Maersk Oil risked NAV new versus old Figure 31: Maersk Oil risked NAV (NEW) Upstream Risked NPV NPV Country/Field Country Gross Reserves Interest WI Reserves CoS (%) WI Reserves $/boe $mn Core Assets - Producing assets Algeria Algeria 54 1% ,167 Brazil Brazil 6 1% Denmark Denmark 313 1% ,67 Qatar to 217 Qatar 549 1% ,217 Qatar extension from 217 to 23 Qatar 439 5% ,224 UK UK 283 1% ,75 Subtotal ,568 Risked NPV NPV Country/Field Country Gross Reserves Interest WI Reserves CoS (%) WI Reserves $/boe $mn Sanctioned Growth Projects El Merk Algeria % 46 1% ,9 Dunga Phase II (includes value for Phase I) Kazakhstan 14 6.% 62 1% ,91 Golden Eagle UK % 44 1% Jack US % 6 1% Sanctioned Growth Projects ,229 Risked NPV NPV Country/Field Country Gross Reserves Interest WI Reserves CoS (%) WI Reserves $/boe $mn Unsanctioned Growth Projects Chissonga (assume Caporolo as tie-back) Angola % 265 1% Wahoo Brazil 3 2.% 6 5% Itaipu Brazil % 95 5% Elly-Luke (gas) Denmark % 25 75% Johan Sverdrup (PL-51) Norway 8 2.% 16 1% Zidane (gas) Norway % 22 75% Culzean (gas) UK 1 5.% 5 75% Flyndre & Cawdor (oil & gas) UK 5 6.% 3 75% Jackdaw (condensate & gas) UK % 26 75% Buckskin US % 83 75% Advanced unsanctioned Growth Projects ,515 Contingent Resources Risked NPV NPV Country/Field Gross Resources Interest WI Resources CoS (%) WI Resources $/boe $mn Azul (pre-salt) Angola (pre-salt) 35 5.% % JS (PL-51) upside to the mid-point of prior guidance range Norway 5 2.% 1 25% Sarsang (assumes govt back-in right) via HKN Iraqi Kurdistan % 84 75% Buckskin upside US 3 2.% 6 15% Total contingent Prospective Resources Risked NPV NPV Country/Field Gross Resources Interest WI Resources CoS (%) WI Resources $/boe $mn Diamante Angola (pre-salt) 35 5.% 175 1% Opala Angola (pre-salt) 35 5.% 175 1% Safira Angola (pre-salt) 35 5.% 175 1% Celeste Angola (pre-salt) 35 5.% 175 1% Turquesa Angola (pre-salt) 35 5.% 175 1% Torvstad (PL-51) - exploration Norway 25 2.% 41 2% Oceanographer US 15 2.% 3 2% Tulum (BM-C-37) - to spud in 4Q12 Brazil % 71 35% Cancun (BM-C-37) - to spud in 1Q13 Brazil % 72 2% Viedma (BM-C-38) - to spud in 1Q13 Brazil % 84 2% Cotopaxi (BM-C-38) - to spud in 1Q13 Brazil 35 3.% 11 2% Total exploration Total Upstream (pre dry well costs) ,494 Dry well cost at recent CoS Total Upstream ,84 Upstream equity 2% discount 17,472 Source: Company data, Credit Suisse estimates AP Moller Maersk (MAERSKb.CO) 15

16 Figure 32: Maersk Oil risked NAV (OLD) Upstream Risked NPV NPV Country/Field Country Gross Reserves Interest WI Reserves CoS (%) WI Reserves $/boe $mn Core Assets - Producing assets Algeria Algeria 54 1% ,167 Brazil Brazil 6 1% Denmark Denmark 313 1% ,67 Qatar (assumes extension to 23) Qatar 987 1% ,72 UK UK 283 1% ,75 Subtotal ,2 Risked NPV NPV Country/Field Country Gross Reserves Interest WI Reserves CoS (%) WI Reserves $/boe $mn Sanctioned Growth Projects El Merk Algeria % 46 1% ,116 Dunga Phase II (includes value for Phase I) Kazakhstan 14 6.% 62 1% ,91 Golden Eagle UK % 44 1% Jack US % 6 1% Sanctioned Growth Projects ,337 Risked NPV NPV Country/Field Country Gross Reserves Interest WI Reserves CoS (%) WI Reserves $/boe $mn Unsanctioned Growth Projects Chissonga (assume Caporolo as tie-back) Angola % 265 1% Wahoo Brazil 3 2.% 6 5% Itaipu Brazil % 95 5% Elly-Luke (gas) Denmark % 25 75% Johan Sverdrup (PL-51) Norway 13 2.% 26 1% ,341 Zidane (gas) Norway % 22 75% Culzean (gas) UK 1 5.% 5 75% Flyndre & Cawdor (oil & gas) UK 5 6.% 3 75% Jackdaw (condensate & gas) UK % 26 75% Buckskin US % 83 75% Advanced unsanctioned Growth Projects ,31 Contingent Resources Risked NPV NPV Country/Field Gross Resources Interest WI Resources CoS (%) WI Resources $/boe $mn Azul (pre-salt) Angola (pre-salt) 35 5.% % JS 16/2-13 (PL-51) - appraisal Norway % 25 67% JS 16/3-5 (PL-51) - appraisal Norway % 25 5% JS 16/2-16 (PL-51) - appraisal Norway % 25 5% JS appraisal (PL-51) Norway % 25 5% Sarsang (assumes govt back-in right) via HKN Iraqi Kurdistan % 84 75% Buckskin upside US 3 2.% 6 15% Total contingent Prospective Resources Risked NPV NPV Country/Field Gross Resources Interest WI Resources CoS (%) WI Resources $/boe $mn Diamante Angola (pre-salt) 35 5.% 175 1% Opala Angola (pre-salt) 35 5.% 175 1% Safira Angola (pre-salt) 35 5.% 175 1% Celeste Angola (pre-salt) 35 5.% 175 1% Turquesa Angola (pre-salt) 35 5.% 175 1% Torvstad (PL-51) - exploration Norway 2 2.% 4 2% Oceanographer US 15 2.% 3 2% Cozumel (BM-C-37) - to spud in 4Q12 Brazil 24 3.% 72 2% Tulum (BM-C-37) - to spud in 4Q12 Brazil % 71 2% Cancun (BM-C-37) - to spud in 1Q13 Brazil % 72 2% Viedma (BM-C-38) - to spud in 1Q13 Brazil % 84 2% Cotopaxi (BM-C-38) - to spud in 1Q13 Brazil 35 3.% 11 2% Total exploration Total Upstream (pre dry well costs) ,922 Dry well cost at recent CoS Total Upstream ,329 Upstream equity 2% discount 18,663 Source: Company data, Credit Suisse estimates Maersk Drilling 4Q12 results were disappointing clean EBITDA of $123m clearly was disappointing with an EBITDA margin of only 25% versus a range of 35-45% in prior quarters (or 46% in 211). This meant that NOPAT amounted to only $359m in 212 versus $486m in 211. Much of this is related to delayed start-up on new contracts (ie longer downtime related to maintenance between contracts) and various other one-offs, which impacted results by more than $125m (with a large chunk likely to have been booked in 4Q12). This was clearly unexpected and hard to predict. Outlook better in 213 Maersk guides to results being above 212, which is not difficult, in our view. Assuming no downtime similar to 212 and given the almost full contract coverage in 213, Maersk should be able to deliver full year results exceeding that of 211. We forecast NOPAT of $512m, which is a downwards revision to our prior forecast of $576m as we conservatively now assume more downtime than previously. AP Moller Maersk (MAERSKb.CO) 16

17 Segmental results Figure 33: AP Moller Maersk EBITDA 211A-217E (in USDm) EBITDA 211A 212E 213E 214E 215E 216E 217E Maersk Line 1,9 2,179 2,866 3,33 4,59 4,579 4,88 growth -77.6% 116.% 31.5% 16.2% 21.9% 12.8% 5.% Maersk Oil 1,15 7,156 6,954 7,63 6,685 5,838 5,654 growth 21.1% -28.5% -2.8% 1.6% -5.4% -12.7% -3.2% APM Terminals 1,59 1,93 1,217 1,343 1,448 1,55 1,66 growth 21.9% 3.2% 11.3% 1.4% 7.9% 7.1% 7.1% Maersk Drilling ,499 1,88 1,75 1,643 growth 15.2% -2.9% 32.% 66.6% 25.4% -6.9% -6.2% Total 14,661 12,581 13,362 14,711 15,597 15,293 15,391 growth -6.9% -14.2% 6.2% 1.1% 6.% -1.9%.6% Source: Company data, Credit Suisse estimates Figure 34: AP Moller Maersk net income 211A-217E (in USDm) Net profit 211A 212A 213E 214E 215E 216E 217E Maersk Line ,332 1,966 2,391 2,523 growth % % 111.1% 36.9% 47.6% 21.6% 5.5% Maersk Oil 2,112 2,444 1,5 1,54 1,35 1,116 1,11 growth 25.1% 15.7% -38.6%.2% -13.2% -14.5% -.6% APM Terminals ,7 1,77 growth -18.1% 11.6% 8.5% 11.2% 7.9% 6.9% 7.% Maersk Drilling ,16 1, growth 19.6% -26.4% 42.6% 76.4% 28.4% -11.% -8.3% Total 3,375 4,38 3,739 4,65 5,388 5,585 5,718 Source: Company data, Credit Suisse estimates Figure 35: AP Moller Maersk EBITDA 211A-217E (in DKKm) EBITDA 211A 212E 213E 214E 215E 216E 217E Maersk Line 5,41 12,628 16,48 18,647 22,731 25,643 26,925 growth -78.7% 133.8% 27.1% 16.2% 21.9% 12.8% 5.% Maersk Oil 53,626 41,463 38,944 39,554 37,437 32,693 31,66 growth 15.3% -22.7% -6.1% 1.6% -5.4% -12.7% -3.2% APM Terminals 5,67 6,332 6,814 7,52 8,11 8,683 9,296 growth 16.1% 11.7% 7.6% 1.4% 7.9% 7.1% 7.1% Maersk Drilling 4,616 3,953 5,4 8,395 1,526 9,83 9,199 growth 9.8% -14.4% 27.5% 66.6% 25.4% -6.9% -6.2% Total 78,56 72,897 74,88 82,433 87,397 85,697 86,247 growth -12.% -7.1% 2.7% 1.1% 6.% -1.9%.6% Source: Company data, Credit Suisse estimates Figure 36: AP Moller Maersk net income 211A-217E (in DKKm) Net income 211A 212A 213E 214E 215E 216E 217E Maersk Line -2,961 2,671 5,451 7,462 11,1 13,391 14,127 growth -12.1% -19.2% 14.1% 36.9% 47.6% 21.6% 5.5% Maersk Oil 11,311 14,164 8,43 8,421 7,39 6,252 6,215 growth 19.2% 25.2% -4.7%.2% -13.2% -14.5% -.6% APM Terminals 3,471 4,19 4,395 4,887 5,274 5,639 6,31 growth -22.% 2.7% 4.9% 11.2% 7.9% 6.9% 7.% Maersk Drilling 2,611 2,81 2,867 5,58 6,494 5,781 5,299 growth 13.9% -2.3% 37.8% 76.4% 28.4% -11.% -8.3% Total 18,83 23,386 2,958 25,85 3,191 31,298 32,42 Source: Company data, Credit Suisse estimates AP Moller Maersk (MAERSKb.CO) 17

18 Companies Mentioned (Price as of 26-Feb-213) Anadarko Petroleum Corp. (APC.N, $78.58) Cobalt International Energy (CIE.N, $23.9) Deutsche Post DHL (DPWGn.DE, 16.98) DSV (DSV.CO, Dkr14.3) Kuehne + Nagel (KNIN.VX, SFr16.4) Lundin Petroleum (LUPE.ST, Skr146.2) AP Moller Maersk (MAERSKb.CO, Dkr454., UNDERPERFORM, TP Dkr427.) Panalpina (PWTN.S, SFr99.3) Statoil (STL.OL, Nkr142.8) TNT Express (TNTE.AS, 5.63) Important Global Disclosures Disclosure Appendix The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. Price and Rating History for AP Moller Maersk (MAERSKb.CO) MAERSKb.CO Closing Price Target Price Date (Dkr) (Dkr) Rating 23-Nov U * * Asterisk signifies initiation or assumption of coverage. U N D ERPERFO RM The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 1, 212 Analysts stock rating are defined as follows: Outperform (O) : The stock s total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stock s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 1th December 212, Japanese ratings are based on a stock s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 212, U.S. and Canadian as well as European ratings are based on a stock s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-japan Asia stocks, ratings are based on a stock s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 212 U.S. and Canadian ratings were based on (1) a stock s absolute total return potential to its current share price and (2) the relative attractiveness of a stock s total return potential within an analyst s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 1-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +1-15% and -1-15% levels in the Neutral stock rating definition, respectively. Prior to 1th December 212, Japanese ratings were based on a stock s total return relative to the average total return of the relevant country or regional benchmark. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 2% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts sector weightings are distinct from analysts stock ratings and are based on the analyst s expectations for the fundamentals and/or valuation of the sector* relative to the group s historic fundamentals and/or valuation: Overweight : The analyst s expectation for the sector s fundamentals and/or valuation is favorable over the next 12 months. AP Moller Maersk (MAERSKb.CO) 18