SAMUDERA SHIPPING LINE LTD (SGX:S56)
Samudera Shipping Line - Riding The Wave Of High Freight Rates
High freight rates and shipping activity saw strong 1H.
- Samudera Shipping Line (SGX:S56) recorded a revenue of US$209.1m in 1HFY21, a 19.6% increase from US$174.8m in 1HFY20, with container shipping segment being key revenue driver. This was largely due to the higher freight rates charged for container shipping, especially carrier-owned cargo. Samudera Shipping Line saw an 8.1% rise in container volume handled to 715,000 TEUs (1HFY20: 662,000 TEUs).
- Samudera Shipping Line also booked one-off US$1.5m from the sale of ageing container boxes. Overall 1HFY21 PATMI surged by 5.1x y-o-y from US$7.2m to US$36.7m.
Net cash position.
- Samudera Shipping Line's net cash rose to US$80.9m (30 Jun 21) from US$51.3m (31 Dec 20), which was already an increase in net cash from US$20.8m (31 Dec 19). This was due to the sale of a number of vessels and the increased profitability in 1HFY21.
- We expect the cash will be deployed for vessels purchase when prices drop. Its solid cash position also gives room for other expansion opportunities.
Freight rates, strong demand for goods to continue to be key drivers.
- The high consumer demand, port congestions and shortage of containers, against the lack of shipping capacity, led to a surge in freight rates alongside higher container prices. The China containerized freight index, rose 10.1% m-o-m to 2,854.02 as at 23 July. The US fiscal stimulus raised global shipping activity. US recorded high import activity, due to higher household accumulated cash, though a resurgence of COVID-19 infections may dent some economic sentiment. However, we expect global demand for goods to remain elevated as the US fiscal stimulus continues, at least until its scheduled end in September.
- Samudera Shipping Line currently has some pricing power and will be riding the wave of higher freight rates. However, near/farther term headwinds include port congestions, and the impact of high freight rates on charter-in costs when existing contracts are due.
- See
Key risks:
- Port congestions, high charter rates, high fuel costs.
- See the report attached below for complete analysis on Samudera Shipping Line (SGX:S56).
Lim Li Jun Tracy
SAC Capital Research
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https://www.saccapital.com.sg/
2021-07-30
SGX Stock
Analyst Report
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SAME
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