Rickmers Maritime Trust

http://www.businesstimes.com.sg/companie...red-for-q3

Rickmers Maritime sinks US$53m into the red for Q3
By
Malminderjit Singhmsingh@sph.com.sg@MalminderjitBT
5 Nov5:50 AM
Singapore

MAINBOARD-LISTED Rickmers Maritime on Tuesday posted a Q3 net loss of US$53.02 million, compared to the US$13.09 million net profit made during the corresponding quarter last year.

The group registered charter revenue of US$33 million for the three months ended Sept 30,

http://rickmers.listedcompany.com/misc/a...ar2014.pdf

The trust has nine vessels whose charters are due to expire over the course of 2015. These vessels will face greater exposure to the current spot charter rates which are at present still below the historical average rates that the trust had enjoyed over the past eight years.

Strong headwinds

(21-04-2015, 06:50 PM)butcher Wrote: http://rickmers.listedcompany.com/misc/a...ar2014.pdf

The trust has nine vessels whose charters are due to expire over the course of 2015. These vessels will face greater exposure to the current spot charter rates which are at present still below the historical average rates that the trust had enjoyed over the past eight years.

Strong headwinds

Known long ago and already built into the share price.

Hi tanjm, do you have any forecasts or projects the container rates to raise?

This is NOT an inducement to buy or sell. Neither is it a forecast. I will note the following things from what I gleaned from reading the financial reports.

1. US$190 mio of interest rate swaps expire by July 2015. Since the swaps were fixed at 5%, while the original loan interest rates were Libor+1.75%, this means RMT saves about 3% on 190 mio = 5.7 mio a year once the swaps expire.

2. dividends amount to 20 mio a year.

3. Last year, operating cashflow before debt principal payments was $85 mio. This is about 4x dividends. Most of the remaining cash went to principal payments on loans.

4. As per graph on last qtr report, while spot charter rates remain well below the trust's average leases, they have been rising : almost 50% for 4400 TEU vessels in the last 6 months. All their recent charters have been on very short leases (presumably the management expects rising rates) - the latest being Kaethe C Rickmers at a charter of 16.2k a day to NYK.

Thanks for your analysis; considering that the charter rate of 16.2k a day is still lower than their long term rate of around 20k+ and the fact that 9 out of their fleet of 16 ships are up for charter contract renewal in 2015, would it be fair to say that the risks are now higher than before, that revenue may drop further in this year?

(27-04-2015, 11:37 PM)sykn Wrote: Thanks for your analysis; considering that the charter rate of 16.2k a day is still lower than their long term rate of around 20k+ and the fact that 9 out of their fleet of 16 ships are up for charter contract renewal in 2015, would it be fair to say that the risks are now higher than before, that revenue may drop further in this year?

Naturally but like I said, These facts about revenue drop are already baked into the current share price. If they had distributed all their free cash flow last year instead of paying down debt, it would have been a 40+% dividend yield! So obviously mr market believes (currently) that the cashflow is not sustainable.

Like I said, not a forecast, nor an inducement to buy or sell. You need to do your own analysis whether the risk reward is worth it.

Obviously, the charter rate is much lower now. But the key is how they are going to manage the new contract renewal. They might be going for shorter renewal so as to enjoy any upside in the charter rate when they eventually recover. I don't think they will lock in a longer charter contract at this current environment. Yes, rates will be lower but we are looking forward and if container shipping recovers to normal rates, they will enjoy the upside as well.

Rickmers declared no distribution for 3Q2015 and price plunged 17% to 0.166.
http://infopub.sgx.com/FileOpen/Announce...eID=376536
the quarter however closed with 9 million $ profit (the new lower rates still have to kick in completely)

Half of their fleets would be affected with lower charter rates starting next year, but let's just assumed that their revenue would be cut for 50%. So if we also draw a 50% mark on its share price 1 year ago, we should derived at about 14c. Though it is still highly leveraged, the current financial position is much better than few years back.

For me I think it's time to re-look into it again if happen to see it drop to 10c, where paying 15c for something worth a dollar in book.