KUALA LUMPUR: Malaysian Bulk Carriers Bhd’s (Maybulk) share price has been bucking the trend when most of its peers are heading south against the backdrop of softening charter rates.
But Maybulk’s share price movement does not mirror its financials entirely. In fact, Maybulk shares the same fate as its peers that face falling charter rates as the industry suffers from the oversupply of vessels, weaker US currency and slower Chinese demand.
For 9MFY11 ended Sept 30, the company posted a RM74.92 million net profit, down 56% from RM170.67 million a year ago. Revenue fell 38% to RM198.95 million from RM319.53 million. The company is estimated to post a net profit of RM114.3 million for FY11 ended Dec 31, which is 52% lower than RM238.4 million for FY10 and down 53% from RM243.8 million for FY09.
Despite weaker financials and the Baltic Dry Index plunging to a record low, Maybulk shares are on the uptrend. While there is speculation of a privatisation, it is unclear what really fuelled the rally in Maybulk shares.
The strong rebound in Maybulk’s share price has also drawn attention to the bulk carrier’s US$221 million (RM671.8 million) investment in PACC Offshore Services Holdings Group (Posh) made at end-2008.
It now has a 21.23% stake in the Singapore-based company that offers offshore marine support services. There is a put option tied to this investment that can be exercised if Posh is not listed by end-2013.
In the event Maybulk exercises its put option at a 25% premium or RM8.12 apiece, this could help enhance the company’s real net asset value (RNAV) of RM2.27.
The RNAV is based on CIMB Research’s estimate of Maybulk’s fleet valued at RM798.7 million, net cash of some RM286.2 million, other net assets of RM1.14 billion and charter earnings of about RM39.9 million.
Unlike Maybulk’s core business that is dependent on dry bulk cargos, Posh is involved in providing services to the oil and gas industry, which is experiencing increased activities thanks to the crude oil price boom.
CIMB noted that Posh’s earnings have been falling in recent quarters. Earnings fell to a mere RM300,000 in the second quarter ended June 30, lower than the previous quarter at RM1.8 million. This was much below the RM16 million quarterly average back in 2009, added CIMB.
In the past, Maybulk’s management said it was confident that prospects in the oil and gas industry would improve and might decide to keep its stake in Posh.
That said, the investment in Posh could be a wildcard for Maybulk against the backdrop of the harsh operating environment in the dry bulk business.
If Posh undertakes a listing exercise or the exercise of the put option, Maybulk will stand to gain eventually.
This article appeared in The Edge Financial Daily, January 30, 2012.
But Maybulk’s share price movement does not mirror its financials entirely. In fact, Maybulk shares the same fate as its peers that face falling charter rates as the industry suffers from the oversupply of vessels, weaker US currency and slower Chinese demand.
For 9MFY11 ended Sept 30, the company posted a RM74.92 million net profit, down 56% from RM170.67 million a year ago. Revenue fell 38% to RM198.95 million from RM319.53 million. The company is estimated to post a net profit of RM114.3 million for FY11 ended Dec 31, which is 52% lower than RM238.4 million for FY10 and down 53% from RM243.8 million for FY09.
Despite weaker financials and the Baltic Dry Index plunging to a record low, Maybulk shares are on the uptrend. While there is speculation of a privatisation, it is unclear what really fuelled the rally in Maybulk shares.
The strong rebound in Maybulk’s share price has also drawn attention to the bulk carrier’s US$221 million (RM671.8 million) investment in PACC Offshore Services Holdings Group (Posh) made at end-2008.
It now has a 21.23% stake in the Singapore-based company that offers offshore marine support services. There is a put option tied to this investment that can be exercised if Posh is not listed by end-2013.
In the event Maybulk exercises its put option at a 25% premium or RM8.12 apiece, this could help enhance the company’s real net asset value (RNAV) of RM2.27.
The RNAV is based on CIMB Research’s estimate of Maybulk’s fleet valued at RM798.7 million, net cash of some RM286.2 million, other net assets of RM1.14 billion and charter earnings of about RM39.9 million.
Unlike Maybulk’s core business that is dependent on dry bulk cargos, Posh is involved in providing services to the oil and gas industry, which is experiencing increased activities thanks to the crude oil price boom.
CIMB noted that Posh’s earnings have been falling in recent quarters. Earnings fell to a mere RM300,000 in the second quarter ended June 30, lower than the previous quarter at RM1.8 million. This was much below the RM16 million quarterly average back in 2009, added CIMB.
In the past, Maybulk’s management said it was confident that prospects in the oil and gas industry would improve and might decide to keep its stake in Posh.
That said, the investment in Posh could be a wildcard for Maybulk against the backdrop of the harsh operating environment in the dry bulk business.
If Posh undertakes a listing exercise or the exercise of the put option, Maybulk will stand to gain eventually.
This article appeared in The Edge Financial Daily, January 30, 2012.
