Singapore Shipping Corp

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PCTC Flexibility Wins Out

By Wendy Laursen 2015-08-24 17:21:21 

Conventional deepsea ro-ro vessels are fading from importance largely due to global economic development in, for example, the nations of Africa. The contraction of this market has been balanced by a rise in pure care and truck carrier (PCTC) orders, including the largest one built to date.

Conventional ro-ro vessel does not need extensive shoreside handling facilities, making them ideal ship for serving the developing world. Their often heavy-duty ramps also allow heavy and other project cargoes to be rolled on and off the ship. Basically every kind of cargo can be put on wheel, using different types of chassis. Therefore, they can be used for cars, trucks, high and heavy cargo, special product cargo and the transport of steel or paper.

However, as port, terminal and hinterland infrastructure develops around the world, the ability to operate without significant shore-side equipment is not as important as it was. 
This is obvious in West Africa, until fairly recently one of the more popular ro-ro trades, reports shipping analyst Dynamar based in The Netherlands. Operators such as Delmas (CMA CGM) and NileDutch now completely focus on box ships in the region after having operated ro-ros for many years.

Just a few operators, Bahri, Grimaldi (including subsidiary ACL), Messina and Nordana have been responsible for most (24) of the conventional (deepsea) ro-ros ordered during the last five years, says Dynamar. The global fleet declined has by nearly six percent over that time.

Where the conventional deepsea ro-ro fleet has shrunk by nearly 100 units over the last five years, the number of vehicle carriers has increased by 40 ships. This equates to a growth rate of three percent per year over the last five years.

More than just cars

Conventional ro-ro vessels and vehicle carriers both have ramps and both carry cars and high and heavy cargo, an industry term for such rolling stock as buses, trucks and agricultural machinery, as well as road building and construction equipment.

However, while automobiles are a vehicle carrier’s base cargo, the conventional ro-ro vessel is basically a breakbulk-ship-extra, says Dynamar, for which cars is just one of the many different cargoes carried. The modern PCTC is a specialist, ungeared vehicle carrier with multiple decks, in part adjustable for flexible clearance and reinforced to handle heavier loads. For some of the PCTC operators, other-than-car cargoes make up for up to 50 percent of their overall income.

More orders in 2015

This year has seen further PCTC orders including a K Line vessel that will carry railcars to the U.K. A series of K Line's 7500-unit size ro-ro vessels are now under construction in Japan. Some of these vessels from the order of 10 will be deployed into this Japan – Europe trade, which the company expects to grow. The new vessels will also give K Line an increased car-carrying capacity of 20 percent as well as much more space for high and heavy cargo, including construction machinery. 

In July, Grmaldi signed an agreement for the construction of three new PCTCs with the shipyard Jinling of China. With delivery expected in 2017, the new vessels will be deployed on the group’s regular service linking the Mediterranean with North America. This service is mainly dedicated to the transport of brand new vehicles produced by Fiat Chrysler Automobiles destined for U.S. and Canadian markets. The order follows another in June for the construction of five new PCTCs at Chinese shipyard Yangfan. The vessels, also expected by 2017, will be deployed on the same route. 

Höegh Target, named in June, is the first in a series of six Post Panamax vessels that Höegh Autoliners will take delivery of in the next 18 months. With its deck space of 71,400 square meters and carrying capacity of 8,500 car equivalent units, the vessel is the world’s largest PCTC. The vessel also has a higher door opening than Höegh Autoliners’ current vessels, enabling cargo up to 6.5 meters high and 12 meters wide to be loaded. Extra ramp strength allows for cargo weighing up to 375 tons to be loaded over the stern ramp and 22 tons over the side ramp.

In contrast to the PCTC news, investment in newbuilds for the deepsea ro-ro segment remains slow.

http://maritime-executive.com/article/pc...y-wins-out
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Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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Ow chio kiat worked in Mistui OSK for 30 years, he was heading it. :-)
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Even car carrier business also softening...



OSLO, Sept 17 (Reuters) - Shipping firm EUKOR Car Carriers is transporting 25 percent fewer cars from Germany to China compared to a year ago as demand slows, and the weak trend will probably continue next year, the company said on Thursday.

"Imports from Europe are reduced and exports (from China) are also soft," Chief Executive Craig Jasienski told an investor meeting in Oslo.

EUKOR is owned 40 percent each by Norway's Wilh. Wilhelmsen ASA and Sweden's Wallenius Lines, and a combined 20 percent by Hyundai Motor and Kia Motors.
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(23-09-2015, 12:34 AM)chinafarmer Wrote: Even car carrier business also softening...



OSLO, Sept 17 (Reuters) - Shipping firm EUKOR Car Carriers is transporting 25 percent fewer cars from Germany to China compared to a year ago as demand slows, and the weak trend will probably continue next year, the company said on Thursday.

"Imports from Europe are reduced and exports (from China) are also soft," Chief Executive Craig Jasienski told an investor meeting in Oslo.

EUKOR is owned 40 percent each by Norway's Wilh. Wilhelmsen ASA and Sweden's Wallenius Lines, and a combined 20 percent by Hyundai Motor and Kia Motors.

Positive market outlook for the car carrier sector - according to some analysts.....................
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Car carrier sector enjoying improved outlook
Kari Reinikainen
07 August 2015

The outlook in the car carrier sector appears to be brightening as slower fleet growth and rising demand have led to better vessel utilisation, according to shipping analysts at DNB Markets in Oslo.

"Based upon our proprietary car market model we expect only slightly increasing utilisation of the PCC fleet from 2015-2017, which should prove optimal for WWASA (Wilh. Wilhelmsen ASA) as this indicates still-healthy utilisation of its owned fleet combined with little rate pressure from tonnage providers," said Nicolay Dyvik, Oyvind Berle and Petter Haugen, the DNB shipping analysts, in a report emailed to IHS Maritime.

Yesterday WWASA, the listed car carrier and logistics group in the Wilh. Wilhelmsen Holding group in Norway, said its net profit in 2Q15 rose to USD75 million from USD25 million a year earlier, despite a fall in revenues to USD596 million from USD682 million.

In 1H15 profit reached USD126 million compared with just USD56 million a year earlier, although revenues again decreased to USD1.21 billion from USD1.32 billion.
"The market for transportation of auto and high and heavy volumes remained competitive. The second quarter was characterised by a seasonal increase in ocean transportation volumes and improved underlying contribution from the logistics segment," the company said.

The DNB analysts continued: "We prefer WWASA over Holding and estimate that WWASA should manage to maintain its 12% shipping margin in 2015-2017. The logistics division shows improvement and the risk of buying WWASA is reduced in our view as Glovis shares are down about 40% year to date."

Related news: Siem Shipping reports firmer interims, eyes new markets

In 2014 the global trade in cars increased by 5% after two consecutive years of decline. "On our estimates this translated into a 2% increase in transportation demand. Looking ahead and using LMCA [Automotive, the US based car industry research group] estimates for global car production, we estimate annual tonne-mile growth of 3% for the car segment for 2015-2017," they said.

LMCA forecasts a 12% increase in car production to 10.5 million units from 2014 to 2017, of which two-thirds is expected to come from increased production in China (53% of total growth) and India (13%).

"Historically, there is a multiplier effect ranging from 1.2 to 1.6 from production growth to demand growth for seaborne transportation, but as we assume that most of the production increases from China and India is destined for the domestic markets, we choose to assume a one-to-one relationship between production growth and trade growth in our forecast horizon for 2015-2017," the three analysts said.

"From 2015-2017, we expect steady tonne-mile demand from Korea while we expect Japan to decrease by 9%. We expect German car carrier tonne-mile demand growth of about 2% as China is becoming more and more important. German exports rose by 5% in 2014 and China was responsible for a quarter of this growth."
"We argue that China is now the most likely destination for US car exports; in 2009 China imported 4% of US exports, but this had grown to 20% in 2014. According to UN Comtrade data, US vehicle exports increased by 24% in 2014, mostly driven by Canada and China, which together accounted for about half of the growth," they continued, also forecasting the PCTC fleet to grow 4% this year, 2% in 2016, and 3% in 2017.

"The current orderbook is 11% of the fleet, predominantly larger vessels. We expect an average annual rate of scrapping in 2015-2017e of 1.5%. Year-to-date the PCC fleet has scrapped 16.8 k ceu or 1% on an annualised basis," they concluded.

http://www.ihsmaritime360.com/article/18...ed-outlook
_____________________________________________________________________________________
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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(23-09-2015, 12:34 AM)chinafarmer Wrote: Even car carrier business also softening...



OSLO, Sept 17 (Reuters) - Shipping firm EUKOR Car Carriers is transporting 25 percent fewer cars from Germany to China compared to a year ago as demand slows, and the weak trend will probably continue next year, the company said on Thursday.

"Imports from Europe are reduced and exports (from China) are also soft," Chief Executive Craig Jasienski told an investor meeting in Oslo.

EUKOR is owned 40 percent each by Norway's Wilh. Wilhelmsen ASA and Sweden's Wallenius Lines, and a combined 20 percent by Hyundai Motor and Kia Motors.

SSC should be viewed as an asset light shipping trust to principals that are happy to work with SSC. no worries
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That's the advantage of locking up charters at fixed rate for over a decade. Riding out cycles.

(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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Actually I wonder how great can SSC be? Mr Ow has been managing the 3 listed companies for decades and only recently people on the street just found value in them? Did he got wiser during old age or are we all wrong?
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Poised To Benefit From TPP

Our base-case scenario for SSC to acquire/charter out an extra PCTC vessel pa is solid, with Japan’s automotive exports set to increase. We expect the upcoming TPP to remove tariffs and increase Japanese and US automotive exports, which should in turn boost vehicle seaborne trade. Maintain BUY and SGD0.59 TP (103% upside), as SSC is poised to benefit along with Japanese PCTC shippers. We expect 2QFY16 earnings to be strong, nearly doubling YoY to USD3.5m.

Trans-Pacific Partnership (TPP) to remove tariffs on Japanese automobiles in North American markets. The upcoming TPP free trade agreement is set to increase demand for Japanese automotive vehicles as tariffs drop. Once the agreement takes effect, the 2.5% US tariff on Japanese automobiles will be phased out over 25 years – ie it will be halved in 20 years and eliminated in 25 years (US tariffs on Japanese trucks are currently 25%). Meanwhile, Canada will eliminate its 6.1% tariff on Japanese automobiles in five years.

Overall automotive export demand set to increase. Conversely, US automobiles should enjoy easier access into Japanese markets (while there are no tariffs on US automobiles, there are “soft” barriers such as distribution etc). Furthermore, the recent Volkswagen (VW) (VOW GR, NR) scandal should increase demand for Japanese automobiles as they grab market share from VW and possibly other European carmakers.

Base case of expansion and USD15.7m FY17F (Mar) profit solid. With demand for seaborne vehicle trade poised to increase and Singapore Shipping Corp’s (SSC) link with Japanese shipping companies strong, our base-case scenario for SSC’s expansion of one pure car truck carrier (PCTC) per year and FY17F profit of USD15.7m is solid. This also puts management’s plan of doubling its fleet (our bull-case scenario) closer to realisation.

2Q earnings should represent the full potential of SSC. We believe SSC should report 2QFY16 earnings of around USD3.5m. As 1QFY16 consisted of several one-off items, we believe that 2QFY16 should represent the full potential of its ship-owning business and future quarters should be similar.

http://rhbosk.ap.bdvision.ipreo.com/NSig...4f34cd3fe2

(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
Reply
(12-10-2015, 06:21 PM)Nick Wrote: Poised To Benefit From TPP

Our base-case scenario for SSC to acquire/charter out an extra PCTC vessel pa is solid, with Japan’s automotive exports set to increase. We expect the upcoming TPP to remove tariffs and increase Japanese and US automotive exports, which should in turn boost vehicle seaborne trade. Maintain BUY and SGD0.59 TP (103% upside), as SSC is poised to benefit along with Japanese PCTC shippers. We expect 2QFY16 earnings to be strong, nearly doubling YoY to USD3.5m.

Trans-Pacific Partnership (TPP) to remove tariffs on Japanese automobiles in North American markets. The upcoming TPP free trade agreement is set to increase demand for Japanese automotive vehicles as tariffs drop. Once the agreement takes effect, the 2.5% US tariff on Japanese automobiles will be phased out over 25 years – ie it will be halved in 20 years and eliminated in 25 years (US tariffs on Japanese trucks are currently 25%). Meanwhile, Canada will eliminate its 6.1% tariff on Japanese automobiles in five years.

Overall automotive export demand set to increase. Conversely, US automobiles should enjoy easier access into Japanese markets (while there are no tariffs on US automobiles, there are “soft” barriers such as distribution etc). Furthermore, the recent Volkswagen (VW) (VOW GR, NR) scandal should increase demand for Japanese automobiles as they grab market share from VW and possibly other European carmakers.  

Base case of expansion and USD15.7m FY17F (Mar) profit solid. With demand for seaborne vehicle trade poised to increase and Singapore Shipping Corp’s (SSC) link with Japanese shipping companies strong, our base-case scenario for SSC’s expansion of one pure car truck carrier (PCTC) per year and FY17F profit of USD15.7m is solid. This also puts management’s plan of doubling its fleet (our bull-case scenario) closer to realisation.

2Q earnings should represent the full potential of SSC. We believe SSC should report 2QFY16 earnings of around USD3.5m. As 1QFY16 consisted of several one-off items, we believe that 2QFY16 should represent the full potential of its ship-owning business and future quarters should be similar.  

http://rhbosk.ap.bdvision.ipreo.com/NSig...4f34cd3fe2

(Not Vested)

This analyst is probably greener than GG:

i) SSC model is not driven by volume rather SSC depends on their clients' strategy to go asset light
ii) even assuming if the clients' strategy remain intact, it is highly likely that SSC is the last tier beneficiaries given that Japanese are likely to look after their own mates b4 leaving the crumbs to a non Japanese company.
iii) given the bond like long term lease structure of its portfolio of ROROs, its full potential from this quarter onwards will be deemed as a new norm until new vessels are being added.

Vested
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(23-09-2015, 06:24 PM)Nick Wrote: That's the advantage of locking up charters at fixed rate for over a decade. Riding out cycles.

(Not Vested)

IIRC, Nick, you had vested in this company. Did you divest during the recent mini crisis?

(not vested)
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