The ratings on Wan Hai Lines Ltd. reflect high industry risks associated with high fuel costs and cyclical demand in the container shipping industry, Wan Hai's volatile profitability, and high competition risk due to the company's somewhat limited operating scale. The company's fair market position supported by its largest share by revenue in relatively stable intra-Asia container routes and its intermediate leverage partly offset the weaknesses. We assess Wan Hai's business risk profile and financial risk profile as "Fair" and "Significant". In our view, Wan Hai is not immune from the high cyclicality of the global container shipping industry. Wan Hai's profitability has improved in the first three quarters of 2012 following major carriers' improving discipline in freight rate setting
