Samudera Shipping

https://indoshippinggazette.com/2022/sam...p-391-yoy/

(03-08-2022, 11:11 AM)bryan2003 Wrote: https://indoshippinggazette.com/2022/sam...p-391-yoy/

Hi bryan2003

Thanks for sharing.  But do make some effort to narrate or highlight the salient information for the benefit of all.  

Indonesia’s leading shipping line Samudera – PT Samudera Indonesia Tbk (SMDR) recorded a fantastic financial performance in the first half (H12022). Its revenue, operating profit, net profit, and EBITDA grew so fantastic, the highest in the company history.

Referred to the historic financial report, Bani explained that the target was so realistic.  “Earlier data explained that there would be higher financial growth in second half, compared to the first half,” he said.

(08-04-2022, 04:23 PM)Yoyo Wrote: I have sought some information from Samudera Shipping yesterday via Ms Alvina Tan of Ark Advisors, the company investor relations consultant.

Questions raised:
1.  What is the estimated ratio of revenues based on spot rate and contracted rate for the container shipping business?
2.  For customers on contracted term rate, usually they are signed/lock-in for how long (ie years)?
3.  Has Samudera Shipping began levying fuel surcharge on its customers?

Answers given:
1. The bulk of Samudera's container slots are contracted to the main line operators (ie, the bigger shipping lines that ply Asia - US/Europe) and these contribute approximately 70-80% of the Company's revenue.
2. The duration of a typical contract period  is 12 months and is subject to renewal upon expiry.
3.  Yes, the company currently has a scheme of arrangement which allows it to pass on a fuel surcharge to its customers.

Follow-up Q&A
Questions raised:
1.  Which part of the year does the line operators enter into a new contract period with Samudera?  I am more interested in the top 2 customers that contribute greater than 10% of the revenue.
2.  In the event that the spot rates dropped below these contracted rate, is Samudera pressurise to renegotiate ie lower its contracted rate during the contract period or these line operators will honour the contracted rate regardless of market movements (ie ironclad)
3.  Which quarter of the year does Samudera experience the most revenue generation - Q1, Q2, Q3 or Q4.  It will be great if some rough percentage is given.

Answers given:
1.  Contracts can be entered into or renewed at any time of the year
2.  The contracts are signed and renewed annually or every two years, and there is no negotiation while it is in effect
3.  The Company generally sees greater revenue generation in Q4 of the calendar year as shipping activity increases ahead of Chinese New Year

Just sharing

(03-08-2022, 01:57 PM)Yoyo Wrote:

(03-08-2022, 11:11 AM)bryan2003 Wrote: https://indoshippinggazette.com/2022/sam...p-391-yoy/

Hi bryan2003

Thanks for sharing.  But do make some effort to narrate or highlight the salient information for the benefit of all.  

Indonesia’s leading shipping line Samudera – PT Samudera Indonesia Tbk (SMDR) recorded a fantastic financial performance in the first half (H12022). Its revenue, operating profit, net profit, and EBITDA grew so fantastic, the highest in the company history.

Referred to the historic financial report, Bani explained that the target was so realistic.  “Earlier data explained that there would be higher financial growth in second half, compared to the first half,” he said.

 Oppssss...sorry...i thought the members will do their own study. From what we can read from the article, Mr. Bani mentioned second half will have better growth. Hence, it is indirectly telling us Samudera Shipping will be even better in second half since most of the profit for PT Samudera is contribute by Samudera Singapore. We can also refer to PT. Temas' HY report to gauge whether the business is slowing down. PT Temas also reported a superb HY result earlier. 
Based on past few quarters record, Mr. Bani is someone walk the talk. He didnt over commit on the result of the group.

Some key takeaway from the fund managers briefing.

1) Volume has dropped slightly but the freight cost remained at high side.
2) Volume will pickup late third quarter till forth quarter due to festive season.
3) The drop of spot rate doesn't affect Samudera much because they have long contract with their customer.
4) Mr. Bani is highly confidence second half's revenue will be better than first half.
5) New capacity will only arrive in the market late 2023 and 2024. Current new capacity in the market doesn't seem to interrupt the supply and demand. The supply is still tight.

Quote 1: Referring to the historic financial report, Bani explained that the revenue target of USD 1 billion was realistic. “Earlier data explained that there would be higher financial growth in the second half, compared to the first half,” he said.  Bani explained that Samudera enjoyed high demand from any shipping sector, including container shipping, dry bulk, and liquid bulk.
Quote 2: 12 month Outlook. Freight rates are expected to remain higher than pre-pandemic levels due to the lag in container vessel supply to meet demand.

I am still holding some shares of Samudera Shipping, and I have been interested to bridge the Bani optimism of the 2H to the current gloomy global shipping index (Drewry, SCFI).  Though management has guided that the freight rates are well supported by the contracted rates, I cannot help feeling apprehensive on the spot rates for the regional markets that it operates, have these correct sharply (after-all the spot rates will have some influence over the contracted rates upon contracts renewal).

I stumbled across these articles
24 Aug 2022
https://splash247.com/regional-liner-squ...g-nations/
Regional liner trades are being squeezed further (with the impact of higher freight rates on consumer prices now five times stronger) in many less well connected countries.
Despite a year-on-year cellular fleet growth of 3.8% as of August 1, three trades have shown a significant reduction over the past 12 months, according to Alphaliner. The intra-Europe trade was the worst hit as the total capacity of cellular ships deployed in dedicated intra-European services was down 14.2% on August 1 compared to last year.
The two other regions with a reduced offering are intra-Asia services, down by 10.3%, and all Africa-related services, which are down by 4.3% year-on-year, according to data from Alphaliner.
The ongoing shift of tonnage to the bigger tradelanes was hurting smaller and developing countries.

18 Aug 2022
https://theloadstar.com/namsung-orders-m...umes-soar/
Healthy freight rates for shipments to Singapore, Malaysia and Indonesia have convinced South Korean intra-Asia carrier Namsung Shipping to order more containerships to meet the rising demand.
Namsung confirmed to The Loadstar today it had ordered a pair of 2,500 teu ships fitted with scrubbers from compatriot shipbuilder Hyundai Mipo Dockyard, costing $43m each.
Currently, freight rates for shipments from South Korea to Singapore, Malaysia and Indonesia are averaging between $1,100 and $1,200 for a 20ft container – a nine-fold increase on pre-Covid levels.

Somehow, I felt more at ease after reading, having the impression that the South East Asia feeder markets (consists of about 75% revenue) current supply conditions is still favourable to the demand, as such the spot rates do not face the same sharp correction as the global freights (For NOW)

Insider buying - Bani, @April 2022 shareholding 3,272,000
27 May 2022 6,700 (0.745)
18 Aug 2022 15,300 (0.985)
19 Aug 2022 33,800 (1.03)
25 Aug 2022 49,000 (1.02)
After 1H 2022 result release, Bani bought 98,100 shares @1.02
More to come???
Noted no insider purchase since YE2015. (as far as I can track)

Just sharing
VBs, beware of negative sentiment and the cyclical nature of this stock

Press article 8 Sept 2022
Company Watch: S'pore-listed Samudera riding wave of container shipping boom
https://www.straitstimes.com/business/co...pping-boom

The supply-demand imbalances that have boosted global container shipping charter rates and lifted the profits and stock prices of operators to record highs is not likely to disappear anytime soon. In fact, the market could get hotter when China lifts its Covid-19 lockdowns.

When asked if the container shipping market had peaked, CEO Bani Mulia said that even if that was the case, this was a peak which would remain in place for a while.  He explained: "There is a huge supply-demand imbalance which won't disappear over the next 12 months", and in the small containership space that Samudera operates there is little threat of an influx of new vessels.

Yang Ming 'under pressure' from shippers demanding contract rate cuts - 8 Sept 2022
https://theloadstar.com/yang-ming-under-...rate-cuts/

Yang Ming chief operating officer Chang Chao-feng has admitted that, as spot rates fall, the carrier is under pressure from shippers demanding to renegotiate contract rates.
The line is believed to be the first to confirm receiving demands from shippers for lower contract fees and, yesterday, Mr Chang said the situation had become more challenging than in mid-year.

Xeneta questions ‘myths’ of heavily declining container volumes and bunker price unrest - 9 Sept 2022
https://www.hellenicshippingnews.com/xen...ce-unrest/

In its latest ‘Ocean Freight Pulse’ survey of its user base, made up of globally leading shippers, Xeneta found that over 50% of respondents expected volumes to stay the same or increase, while 38% expected a drop of just 5%.
(1) On the issue of BAF, the survey found the huge majority of shippers accepting the rise, with only 22% renegotiating – 17% successfully and 5% without success. (2) Customers were also quizzed over whether they’d renegotiated their prices while their long-term contracts were still valid. 52% had, 41% hadn’t, and the remaining 7% tried to, but unsuccessfully

PS: I had previously queried Samudera IR on this renegotiation issue and they have reverted that the contracts are signed and renewed annually or every two years, and there is no negotiation while it is in effect.  The pressure can be very really, and I certainly hope that Samudera business partners are of respectable qualities.

Rates are in a free fall and yet we still have not seen the full impact of a global recession.... Samudera will post good result this year due to long term contract but market is forward looking....Zim, Yangming.....etc etc...new lows...Big fish still in there though...trying to wriggle out...


Chinese shippers face abyss as freight rates plummet 60 per cent from ‘unprecedented’ highs at height of coronavirus pandemic
https://www.scmp.com/business/china-busi...et-60-cent

塞港畫面不復見?標普估第2季乾散貨運價已到頂 2024年才小幅回升｜非凡財經新聞｜20220908
https://m.youtube.com/watch?v=31l8-5vm5Rc

A look at the scfi chart shows the index is back to pre-covid
https://en.sse.net.cn/indices/scfinew.jsp

The Southeast Asia freight rates where bulk of revenue of Samudera comes from
https://en.sse.net.cn/indices/seafinew2.jsp

(09-09-2022, 09:04 PM)Yoyo Wrote: Yang Ming 'under pressure' from shippers demanding contract rate cuts - 8 Sept 2022
https://theloadstar.com/yang-ming-under-...rate-cuts/

Yang Ming chief operating officer Chang Chao-feng has admitted that, as spot rates fall, the carrier is under pressure from shippers demanding to renegotiate contract rates.
The line is believed to be the first to confirm receiving demands from shippers for lower contract fees and, yesterday, Mr Chang said the situation had become more challenging than in mid-year.

Xeneta questions ‘myths’ of heavily declining container volumes and bunker price unrest - 9 Sept 2022
https://www.hellenicshippingnews.com/xen...ce-unrest/

In its latest ‘Ocean Freight Pulse’ survey of its user base, made up of globally leading shippers, Xeneta found that over 50% of respondents expected volumes to stay the same or increase, while 38% expected a drop of just 5%.
(1) On the issue of BAF, the survey found the huge majority of shippers accepting the rise, with only 22% renegotiating – 17% successfully and 5% without success. (2) Customers were also quizzed over whether they’d renegotiated their prices while their long-term contracts were still valid. 52% had, 41% hadn’t, and the remaining 7% tried to, but unsuccessfully

PS: I had previously queried Samudera IR on this renegotiation issue and they have reverted that the contracts are signed and renewed annually or every two years, and there is no negotiation while it is in effect.  The pressure can be very really, and I certainly hope that Samudera business partners are of respectable qualities.

Personally feel why Mr. Bani has very high confidence on their customer will honour to the signed contract is because he has been in this sector for a long time. Based on my 10 years experience in logistic and port sector, i strongly believe Mr. Bani insight is correct due to the fact below.

Carrier / liner - Long distance route (From Europe / USA to Asia)
Feeder - Short distance route (Within Asia)

1) Samudera Shipping is feeder service compared to those carrier / liner (Maerks, Hapag Lloyd, Yang Ming, Evergreen etc). There are not many feeder shipping company in Asia has similar number of fleet as Samudera. Even though the demand for carrier service might slight drop, the demand for feeder is still high as the TEU of a carrier can ship is few times of what feeder can ship. Normally company like Samudera will ship container from countries like Vietnam, Indonesia, Philippines, India etc to Singapore or Malaysia, thereafter the carrier will consolidate everything on their vessel and ship to Europe / USA.

2) Indonesia is net export of crude palm oil and coal and these commodities are highly in demand. Hence, this will support the freight cost contract for Samudera.

3) No doubt Samudera has competitors like Temas Line (listed at Indonesia), Harbour Link & Shin Yang shipping (listed at Bursa Malaysia), MTT (non listed Malaysia company), but these players have smaller fleet compared to Samudera and they have lesser route compared to Samudera. 

4) In short, we can describe Samudera's business model as our daily necessity regardless how bad the economic as we can see from the past record, even 2018-2019, there are trade war between US and China, Samudera is still maintain profitable. This is mainly because those carrier's vessel unable to go direct to countries like Indonesia, Vietnam, Philippines etc because the port crane has limitation for the carrier's vessel as the vessel height is high where the port crane height is not as high as the vessel high. Hence, the major ports like PSA Singapore, PTP and Port Klang Malaysia, Shanghai port need feeder service to "dispatch" the containers from Europe and USA.