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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
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Hi tanjm, do you have any forecasts or projects the container rates to raise?
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27-04-2015, 09:43 PM
(This post was last modified: 27-04-2015, 11:36 PM by tanjm.)
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.
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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?
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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.
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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.
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