Singapore Shipping Corp

[xierwang]

1) Management cancelled 37m TREASURY SHARES, we will see EPS improvement moving forward,

2) The Coy reported good set of 1st half year result

3) They have stopped share buy back since last July, will they increase dividend pay out in May?

Looking forward for their full year result in May, any valuebuddies interested in this stocks?

<vested>

[¯|_(ツ)_/¯]

SpShip @ 25cents

 I use SpShip as a place to park my excess $$$.

Every year 1 cent dividend.

Just need to make sure buy below 25 cents.

QED.

[edragon]

SpShip @ 25cents

 I use SpShip as a place to park my excess $$$.

Every year 1 cent dividend.

Just need to make sure buy below 25 cents.

QED.

Earning a mere 4% pa from a vessel (ship) with a short lifespan and high overheads is risky business for the long term unlike utilities/infrastructure  where one can earn a safer 6% pa.

[xierwang]

Indeed, the Coy has been consistently paying 1ct dividends for more than 10 years, better than bank's fixed deposit rate. They should have no issue to continue paying 1ct or more dividends since they are able to generate about yearly US$24+m free operating cash flow and at least 10 more years to go base on current contracts.

I'm just wondering why its share has been moving to no where around 25cts but the Coy and young boss bought back around 29 cts, what's this magic figure of 25cts about? Margin Of Safety? would appreciate your comments please.

Thanks

[¯|_(ツ)_/¯]

SpShip @ 26cents



There are many many company with better yield and growth than SpShip... no doubt in my mind... and I had already brought them. e.g. PIL.

SpShip is just a place to park my excess $$$ which I really don't need.

I'm not saying you should buy or park your $$$ with SpShip, it's just me.

Also, 25 cents is a good number for me and definitely not for others.

What I did was rather simple, when the share is selling below or at 25 cents, then I just buy with my excess $$$ that I don't need.

Similarly, when the shares go above 25cents, I just sell some and take back some cash. Quite easy process and so far the reward is ok for me.



Enjoy:

[ghchua]

Indeed, the Coy has been consistently paying 1ct dividends for more than 10 years,  better than bank's fixed deposit rate. They should have no issue to continue paying 1ct or more dividends since they are able to generate about yearly US$24+m free operating cash flow and at least 10 more years to go base on current contracts.

I'm just wondering why its share has been moving to no where around 25cts but the Coy and young boss bought back around 29 cts, what's this magic figure of 25cts about? Margin Of Safety? would appreciate your comments please.

Thanks

Hi xierwang,

Though operating cash flow is around US$24+m, do take note that depreciation is a non cash item. Ships will get old, and they need to be replaced. Depreciation is around US$8m yearly.

Also, do take note that the US$24+m is not completely free to pay dividends. They have to pay for expenses, drydocking, payment of bank interest and reduce bank debt.

And when you need to buy new ships, that is where their bank borrowings will increase and cash level decrease again to fund new purchases. Which is why they also need to set aside some cash every year.

Why share price had not been moving? I guess the market is not expecting any growth in dividend payout. Its current share price is trading at a discount from NAV, but not a big discount to tempt value hunters.

[xierwang]

Hi ghchua,

Thanks for your comments.

They used part of cash to buy back shares for past years, they have stopped share back since last year, hope they will use this part money to increase the dividend payout, anyway EPS with improve since they cancelled 37m treasury shares. let's wait for their full year results in May.

[¯|_(ツ)_/¯]

SpShip@28
Rev USD42m (vs 46m)
GP  USD10m (vs 10m)
NP  USD10m (vs  9m)
Div 0.5cents (vs 1)
https://links.sgx.com/FileOpen/SSC%20Res...eID=667894

• The Group continues to record stable results in its ship owning segment. 
  
• Agency and logistics segment recorded an overall decline in revenue and profit due to the disruption in the global Ro-Ro supply chain arising from Covid-19. While the global shipping industry has generally improved, it is uncertain when the pre-pandemic levels will return. 
  
• With its increasing cash position, the Group continues to evaluate acquisition opportunities.
  

Thank you valuebuddies.
Gratitude!

[fallscushion]

Going net cash soon.
Dividend cut down half to 0.5 cent, another ship acquisition is perhaps coming?

Below are definitely all hypothetical and merely personal opinions (not hard facts).
Dividend cut imho perhaps cut 3 ways:
1) Purge out shareholders who are more into chasing income & not as long term as controlling shareholder.
2) Lower price, cheaper to buy back.
3) When price is low enough, it is easier to go private (if any)

Over the past 10 years, SSC had retained over 50% of their earning (and far more from FCF, considering the deferred income).
It's just strange for Mr Market to price the company about the same as 10 years ago.
Retained earning obviously added substantial intrinsic value to the company.

[ghchua]

Hi fallscushion,

Unfortunately, the market seems to value SSC based on its yield rather than balance sheet strength. Yes, their NAV had increased throughout the years, but its share price had been mostly flat.

Ultimately, ships are still depreciating assets. The revenue and cash it can generate are limited to its useful life. Renewal of its fleet is important to keep its assets fresh so that it can continue to generate cash and dish out dividends.