SIMIC

The report paints a rosy picture for terminal operators, with volumes and profits holding steady despite the volatility from the Covid crisis.

"Shipping companies make for strong media interest, with high-profile consolidations and the evolution of vessel sizes dazzling casual observers," OSC noted. "But the financial performance of ports is superior to shipping lines.

"Taking an anecdote from the de-listing of DP World, management decided it was meaningless to be listed when market participants fail to appreciate its business and strategy."

Comparing Hamburg terminal operator HHLA with compatriot shipping line Hapag-Lloyd, for example, OSC said the latter had gained a third of its market capitalisation over the past 12 months, while HHLA lost 20 per cent in the same period. This was despite the terminal operator having a consistently higher ebitda over the past half-decade.

"While shipping lines boosted their profitability in 2020, the earnings are more volatile than the port sector. Hence, for long-term investors, such as pension funds, the port sector matches the investment mandate of stable dividend/income-yielding investments," OSC added.

Perhaps putting to bed previous fears that new port investments would be subdued, container ports are also leveraging their balance sheets for further expansion, which OSC described as a "sound strategy".

For example, it said, "high-profile port operators had tapped into debt and private equity markets" for portfolio expansion, with US$6.6 billion raised last year.

"Deep-pocket investors secured 13 container port deals - just one shy of the total in 2019," OSC noted, adding that all the deals announced in 2019 were fulfilled, which indicated investors saw Covid-19 as temporary crisis.