Singapore Shipping Corp

[Nick]

> they can use US$18mil on 70% financing to have total buying power of US$60mil

Today the debt (LT + short term) to ship asset ratio is around 40%.

My friend asked a question on the purchase of the ships. OW YEW HENG said ONE NEW RORO SHIP COSTS US$40M
THey got 2 10 year old RORO for US$33M???

Did my friend hear wrongly? Anyone at the AGM?

Ship Finance bought similar ships for 40 mil each a couple of years back.

http://www.shipfinance.org/index.php?id=...51888.html

Buy low, charter low is my guess ? Coupled with some shrewd deal making.

(Vested)

[learner88]

Guess which ship is coming to Singapore?

http://www.marinetraffic.com/en/ais/deta.../356181000

Voyage Related Info (Last Received)
Destination SINGAPORE [SG]
ETA 2014-09-02 23:00 UTC
Last Known Port LAEM CHABANG [TH] (2014-08-31 11:11:00)
Previous Port SINGAPORE [SG] (2014-08-27 12:56:00)
Draught 8.5m
Speed recorded (Max / Average) 18.1 / 16.3 knots
Info Received 2014-08-31 13:50 (2014-08-31 13:50)


http://www.scheepvaartwest.be/CMS/index....mo-9267699

[lonewolf]

Acquisition of Pure Car Pure Truck Carrier

The Board of Directors of Singapore Shipping Corporation Limited (the “Company” or “Group”) announces its purchase of a new build PCTC (Pure Car Truck Carrier) for a total consideration of US$80million.

Upon delivery, the vessel is expected to be deployed on a long term charter to a blue-chip shipping major.

[Nick]

Acquisition of Pure Car Pure Truck Carrier

The Board of Directors of Singapore Shipping Corporation Limited (the “Company” or “Group”) announces its purchase of a new build PCTC (Pure Car Truck Carrier) for a total consideration of US$80million.

Upon delivery, the vessel is expected to be deployed on a long term charter to a blue-chip shipping major.

Another deal wow ! 3 ships in 1 year - who would have guessed !

1) There was no mention of equity raising in the announcement. I am guessing 90% LTV financing can be obtained from banks. This isn't unprecedented as Pacific Shipping Trust did manage to obtained loans at that range post GFC for its M&A of 9 vessels. Gearing will shoot up but Debt / EBITDA should be alright. Makes sense to leverage in light of low interest environment.

2) Even at 5% ROA, this deal will generate US$4 mil NPAT - more than 50% of the recurring profit in FY 2014.

3) Profit growth for the next 3 years will be assured as the 3 vessels are delivered.

4) Often regarded as the sleepy sister to St****** but Ow has been working hard here:

2010: US$50 million purchase of Boheme
2011: US$16 million purchase of Sirius Leader
2013: US$12 million purchase of Cougar Logistic assets
2014: US$33 million purchase of 2 x PCTC vessels
2014: US$80 million purchase of 1 x PCTC vessel

(Vested)

[kikababoo]

the b/s seems abit overly conservative before this. now it might be slightly tight lol. but still, im rooting for Ow optimising the b/s

[greengiraffe]

No of shares outstanding 436m, mkt cap @$0.25 - S$109m.

New build @ US$80m = S$100m. This is on top of the purchase of 2 used vessels already...

Have to trust Ow and his acumen on his latest revival for Sp Ship. It has taken almost 7 years for him to re-open his pocket and build a new lease of life for Sp Ship.

Risk taker or good allocator of capital?

Newly Vested
GG

[kagemusha]

I do not believe in a risk taker who is consistently good in risk taking.
If the so call risk taker is consistently good, the person is not a risk taker, but a person with foresight.

<vested>

[Greenrookie]

Like what Nick says, the earnings will improve over the next 2 years at least. The rerating of the stock, however, IMHO, need the increase in dividends. I think there is enough cash flow for increase of dividend to 1.5 cents conservatively and depending on the details pending of the last acquisition, even 2 cents dividends.

Hope Ow choose to take this route rather than more acquisitions through gearing to boost earnings without increasing dividends

(Vested)

[Drizzt]

Like what Nick says, the earnings will improve over the next 2 years at least. The rerating of the stock, however, IMHO, need the increase in dividends. I think there is enough cash flow for increase of dividend to 1.5 cents conservatively and depending on the details pending of the last acquisition, even 2 cents dividends.

Hope Ow choose to take this route rather than more acquisitions through gearing to boost earnings without increasing dividends

(Vested)

i have a question. if ssc can deploy the earnings at > 20% roic, is it better for them to give us the dividends?

[Greenrookie]

Like what Nick says, the earnings will improve over the next 2 years at least. The rerating of the stock, however, IMHO, need the increase in dividends. I think there is enough cash flow for increase of dividend to 1.5 cents conservatively and depending on the details pending of the last acquisition, even 2 cents dividends.

Hope Ow choose to take this route rather than more acquisitions through gearing to boost earnings without increasing dividends

(Vested)

i have a question. if ssc can deploy the earnings at > 20% roic, is it better for them to give us the dividends?

Hi drizzt,

I am not sure which is better. But I do know my reason for investing is I believe with the acquisitions, SSC is in a better position to give higher dividends, he has been fair to shareholders in that sense that when he sold the vessels in the past, he return the profits to shareholders and had maintain a good dividend record.

Of course, perhaps you are right, with good allocation of capital, the capital appreciation will more than offset possible dividend gains. But personally, company profits growth is meaningless to me if it does not translate to either capital gain or dividend growth.

Capital gain can be milked by selling, but I cannot be sure if I sell at the right price, of course, a over-valued price is a no-brainer, but I prefer dividend flow and modest capital gain than high capital gains but no dividends..
?

Perhaps u can share your answer to your question?