Credit Suisse downgraded DP World to “neutral” from outperform as it sees trade growth slowing down for the port operator in the second half.
“Some weakness in global trade seems unavoidable according to the recent leading indicators,” the brokerage said.
DP World’s terminals are well positioned but about 50 per cent of the volumes in its main hub of Jebel Ali in the emirate of Dubai are made of volatile transshipment business, which has a more sensitive pricing, Credit Suisse said.
However, the brokerage said DP World is better prepared to face a market downturn now, compared with 2009, as it has a more diversified portfolio and higher margins, which are likely to increase further by year-end. The company, which is one of the more profitable assets of debt-laden Dubai World, recently posted a four-fold rise in its first-half profit on the sale of its Australian operations. – Reuters