Singapore Shipping Corp–The replacement ship and third quarter

Nothing much to say about the business. You can read about it over here:

• Singapore Shipping Corp
• Sells MV Singa Ace
• How much returns can you get from a ship

Singapore Shipping just announced their third quarter results. You can read the announcements here

• Q1
• Q2
• Q3

Third quarter results was better than last year. The main difference being the contribution of Cougar Logistic’s assets. This was offsetting the loss in earnings this year  due to dry docking. Ships do need to be maintained to keep them tip top in the long run. For the ships they can be dry dock every 3 –5 years depending on the conditions. These are loss earnings.

It looks like we will hit USD $ 8.2 mil in profits for the full year or  USD $1.8 cents in EPS which is a 10% earnings yield at the price of SGD $0.225.

The dry dock seem to have taken a total of USD $1.6 mil in loss profits for the full year. Next year it could be USD $9.6 mil in profits. We know its gonna be higher since they are selling MV Singa Ace at USD $5.2 mil.

MV Singa Ace will be replaced by a 15 year chartered ship announced last quarter. This is a bigger ship than Sirius but smaller than Boheme. Boheme purchased for $50 mil earns $10 mil in revenue, Sirius purchased $16 mil earns $5 mil.

This new ship will be in the middle, 5 mil or 10 mil we are not sure. I suspect 6.5 mil. They could have bought it underpriced. On a net profit margin of 30%, that will work out to be USD $1.95 mil. The margins should be better than MV Singa Ace. This 1.95 mil will offset the 1.2 to 1.5 mil lost of MV Singa Ace.

We could see a recurring $10 mil earnings next year or SGD $0.028 EPS, that being a 12.5% earnings yield.

That is earnings, EBITDA  suspect is USD $15 mil, with 4.5 mil for debt payment, 3.5 mil for dividend, 1 mil in interest and tax, leaving 6 mil to work with. 6 mil probably is a down payment for another ship there, 1.8 mil more can jack up the dividend to 6.6%, or could be used to reduce debt. The strong suspect is they will pay down debt or buy ships if its negotiated  successfully.

Agency and Logistics

I look at the past three quarter’s earnings from agency and logistics:

• Q1: USD 0.939 mil
• Q2: USD 1.015 mil
• Q3: USD 0.969 mil

The results looks good for USD 3.6 mil full year, paying the full dividend. It’s a good acquisition. This is a volume handling business and we have said in the past that on average in the past the profit of Cougar Log is USD 2.5 mil. I am under no illusion there are times when it will swing the other way.

Outlook

Ship-owning’s operating results are expected to be better in the next quarter and the next financial year as no downtime for drydocking is expected. The delivery of a 6,500-unit pure car and truck carrier for long-term charter to a blue chip operator is on schedule.
 
The agency and logistics operations will continue to be profitable.
 
The Group is optimistic to expand and build up an even younger fleet with quality long-term charters.

Out of all the reports read in this quarter, I am glad I don’t have to read another “challenging environment” report.