The ratings on Wan Hai Lines Ltd. (Wan Hai) reflect the company's strong market position in intra-Asia container routes, its good operating efficiency, and intermediate financial risk profile. Counterbalancing factors include the highly cyclical nature of the container shipping industry, as well as the company's increasing exposure to volatile long-haul routes and aggressive fleet expansion. Due to higher-than-expected bunker and charter hire costs, the company's operating cash flow dropped 18% to New Taiwan dollar (NT$) 8.1 billion in 2005 from NT$9.8 billion in 2004. Accordingly, its operating lease-adjusted (OLA) ratio of funds from operations (FFO) to total debt dropped to 26% in 2005 from 32% in 2004. Although its OLA ratio of FFO to net debt was still strong at
