The rating on Wan Hai Lines Ltd. reflects the highly cyclical nature of the container shipping industry, the company's relatively high leverage, as well as its somewhat limited operating scale and weak presence on long-haul routes. Counterbalancing factors include the company's strong market position in intra-Asia container routes and its high operational flexibility. Wan Hai is not immune from the high cyclicality of the global container shipping industry, in our view. Following the deepest-ever industry downturn in Wan Hai's history that plunged its operations into losses in 2008-2009, its operating performance improved sharply in 2010 due to improving demand, rising freight rates, and relatively stable fuel prices. Wan Hai generated Taiwan dollar (NT$) 8.3 billion in operating profits in the
