For transport stocks, the latest news from Hong Kong stinks.
The Asian port city, whose name means 'fragrant harbor' in Chinese, is a key global gateway between East and West. That is why investors keep a close eye on Hong Kong airfreight volumes, which serve as a barometer of global trade activity and growth prospects. For the two major airfreight shipping companies, FedEx and United Parcel Service, these cargo volumes also are a direct read on business activity.
The message from recently released August figures is pretty clear: Activity is slowing. Hong Kong airfreight tonnage volumes were down 7.8% year-on-year, compared with most analysts' expectations for a small increase. Europe, North America and Japan all posted double-digit-percentage declines in cargo traffic compared with a year earlier, according to the Hong Kong International Airport. The results were 'a significant miss to the downside,' said Avondale Partners in a client note. For shareholders of FedEx, which reports fiscal first-quarter earnings Thursday, 'this is not good news,' the firm noted.
Of course, it never is wise to read too much into any one-month decline. And after a 23% slump since July, Avondale emphasizes that FedEx's shares, trading at just 10 times estimated 2012 earnings, seem a bargain. Moreover, the company's latest results still are expected to look strong: Analysts forecast earnings of $1.47 a share for the August quarter, up from $1.20 a year earlier. It is worth noting, however, that FedEx's earnings have come up short of analysts' estimates in three of the past four quarters.
And it isn't so much the company's August quarter as its prospects going forward that will be the focus Thursday. At a recent investor conference, rival UPS expressed a cautious view about the strength of demand in coming months. That prompted many analysts to pare back their earnings estimates for both companies. According to R.W. Baird analyst Jon Langenfeld, airfreight weakness has continued into September, casting doubt on the strength of the holiday shipping season.
Any slowing certainly will mean headaches for FedEx, where international airfreight is its highest margin business. FedEx managed to increase volumes in this division even as Hong Kong freight activity began slowing this spring. But it can defy gravity only so long.
FedEx /Bloomberg News
此外，周四收益报告的重点与其说是8月份一个季度的收益，还不如说是公司未来的前景。在最近的一次投资者会议上，竞争对手UPS表达了对未来几个月需求形势的谨慎看法。这令很多分析师下调了对这两家公司的收益预期。据美国投资研究公司贝雅(R.W. Baird)分析师朗根费尔德(Jon Langenfeld)说，航空运输业的疲弱走势持续到9月份，为假期运输季的强劲与否梦上了阴影。