Singapore Shipping Corp

[ksir]

> Do you mean the share price?
> I do hope the stamford Q1 surprise is not contagious.

The business of RORO is leasing ship.  So it will be stable.

There wont be dividend increase, as the new CEO already says he want to double fleet.
The dream outcome will be additional 20 yr lease for a new roro ship addition, and increase in dividend.

If this comes true, it is like strike 4D.

I believe the stability came with the risks, may not be applicable now but it may in future:
1. Currency risk, US$
2. Counterparty
3. Inflation

Looking at UMS & UPP's results, point 1 maybe apllicable for SSC's Q1 result.

Point one not valid as ssc report in usd. The only risk is changing usd to sing for dividend

I see, my bad, missed out that.
Dividends can be partially paid by Logistic unit.

[CCUV]

> Do you mean the share price?
> I do hope the stamford Q1 surprise is not contagious.

The business of RORO is leasing ship.  So it will be stable.

There wont be dividend increase, as the new CEO already says he want to double fleet.
The dream outcome will be additional 20 yr lease for a new roro ship addition, and increase in dividend.

If this comes true, it is like strike 4D.

I believe the stability came with the risks, may not be applicable now but it may in future:
1. Currency risk, US$
2. Counterparty
3. Inflation

Looking at UMS & UPP's results, point 1 maybe apllicable for SSC's Q1 result.

Point one not valid as ssc report in usd. The only risk is changing usd to sing for dividend

I see, my bad, missed out that.
Dividends can be partially paid by Logistic unit.

You are some how right,any business that earn foreign currency is subject to some kind of exchange rate risk whether small or huge but that is life,there is no risk free business in the world.

[cyclone]

Full Year Financial Statement And Dividend Announcement for the year ended 31 March 2016 :
http://infopub.sgx.com/FileOpen/FS%20FY2...eID=407040

Some highlights :
1. For FY2016, the Group recorded total revenue of US$44.9 million, an increase of 29.4% due to the delivery of 3 vessels.
2. For FY2016, top 3 customers accounted for 80% (48%, 24%, 8%) of revenue.
3. The company declared 1 Singapore cent final dividend.
4. Three vessels are due for dry-docking in FY2017. The Group expects earnings from the ship owning segment to remain stable.
5. Owing to the depressed shipping market, agency & logistics segment income will be challenging.
6. Barring unforeseen circumstances, the Group expects its overall performance in FY2017 to be profitable.
7. Given its strong cash position, the Group will selectively evaluate further acquisition opportunities.

<not vested>

[setan]

Full Year Financial Statement And Dividend Announcement for the year ended 31 March 2016 :
http://infopub.sgx.com/FileOpen/FS%20FY2...eID=407040

Some highlights :
1. For FY2016, the Group recorded total revenue of US$44.9 million, an increase of 29.4% due to the delivery of 3 vessels.
2. For FY2016, top 3 customers accounted for 80% (48%, 24%, 8%) of revenue.
3. The company declared 1 Singapore cent final dividend.  
4. Three vessels are due for dry-docking in FY2017. The Group expects earnings from the ship owning segment to remain stable.
5. Owing to the depressed shipping market, agency & logistics segment income will be challenging.
6. Barring unforeseen circumstances, the Group expects its overall performance in FY2017 to be profitable.
7. Given its strong cash position, the Group will selectively evaluate further acquisition opportunities.

<not vested>

Anyone can help me to understand what is due for dry-docking?

[brattzz]

like car going to workshop for 100k servicing... ships also need to go dry-docking for servicings.. 2 weeks?

[ksir]

Due to my lack of experience, i find below interesting, quoted from page 2 of Q4:
The Group had previously recorded its ship owning revenue based on actual daily charter income in accordance with the terms of the charter hire agreements.

This was the approach consistently adopted by the Group up to and including the interim unaudited financial results announcement issued on 10 February 2016 for the nine month period ended 31 December 2015.

This year, following a change of audit partner, the Group was strongly advised that for such charter hire agreements, it is more appropriate to adopt a "straight-line" revenue recognition over the entire period of the charter instead (this despite declining charter hire rates in subsequent years).

Following extensive consultations, the Group has decided to conform recognition with straight-line

Accordingly, prior reporting periods have been restated to be consistent with the accounting treatment in the current reporting period. Had the Group continued with its previous recognition approach, net profit for FY2016 and FY2015 would be US$13.8 million and US$9.3 million respectively.

=========end quote

I could be very wrong, but my interpretations of that:
1. the charter hire contracts are using reversed accelerated rate.
Higher rate at first then going down across the years.
Take note of the deferred income of Q4 ($1M) and FY2016 ($4M).
The cashflow remains about the same, but IFRS earning is affected.

I reckon the deferred income will go down over the years.

2. The idea of IFRS is to smoothen the earning, but realistically the rate is lower because the ship is older, right? Hence is it wrong to recognize higher rate then lower in subsequent years?

3. IMO, the contracts were designed in such a way that it actually smoothen the earning. However, with the straight line revenue recognition, now it makes the earnings lumpy.
Don't forget the initial Finance cost for first few years will no longer be there.
So what will happen after another 8 years (debts paid off), the earning will be a lot more.

Hence the lumpiness of the earning and not cashflow.

Is this the case of theory versus real world practice?

In theory there's no difference between theory and practice, but in practice there is.

<vested>

[Boon]

FY2016 results (ending 31th Mar 2016):
 
Revenue (USD million)
FY2014  = 34.446
FY2015  = 35.126
FY2016  = 44.921
 
Revenue - Ship Owning (USD million):
FY2014 = 17.849
FY2015 = 19.527
FY2016 = 32.322
 
Revenue – Agency & Logistic (USD million):
FY2014 = 16.597
FY2015 = 15.599
FY2016 = 12.599
 
NPAT (USD million)
FY2014  = 8.558
FY2015  = 8.896 (restated)
FY2016  = 9.588
 
EPS (USD, Cent)
FY2014  = 2.0
FY2015  = 2.0 (restated)
FY2016  = 2.2
 
OCF – After Change in Working Capital (USD million)
FY2014  =11.572
FY2015  =12.246
FY2016  =25.726
 
Cash and Cash Equivalent (USD, Million)
FY2014 =   6.003 (Bank borrowing =   15.821)  
FY2015  =  7.297 (Bank borrowing = 107.602)  
FY2016 = 13.160 (Bank borrowing =   95.414)  
 
DPS
FY2014 = SGD 1.0 cent
FY2015 = SGD 1.0 cent
FY2016 = SGD 1.0 cent
 
Comments:
1) FY2016 revenue, NPAT and OCF exceeded that of FY2015, with full charter income from the 3 vessels. Drag down a little by poorer agency and logistics business.
2) The group has generated OCF of 25.726 m in FY2016, more than enough to cover (yearly repayment of bank borrowing + interest payment + dividend payment) of about 18 m, with excess OCF available for investment (acquisition of more vessels.)
3) Cash flow would be further improved come 2018 when existing old loan (with yearly principal repayment of 4.520 million) would be fully repaid. 
______________________________________________________________________________

[specuvestor]

Ksir

An auditor tells me a car depreciates over 5 years and another depreciates over 10 years with no residual value. This is not even remotely complicated based on Singapore system.

No offence but sometimes i think auditors / accountants are more concerned with the form of accounting rather than the principle of accounting. Their world exist in numbers, not in how things work.

[ksir]

I pretty much concur. I reckon it is usually due to ignorance and lack of industry knowledge and hence 1 rule fits all kind of thing.
That's to say, probably your auditor never drives (ha ha ha) and lack of common sense, no offense intended.

However, having said that, I actually didn't know that the charter hire rate is contractually designed to be decelerated. But if it wasn't so, the deals would be definitely too-good to be true. As it is, to me the deals are still pretty attractive.

<vested, intend to make my holding longer>

[Greenrookie]

Personally, the numbers are still good and the "operations story" intact. But the "prize" of increased dividends is elusive and most probably not going to be happen since they are still looking for acquisitions.

Nothing wrong with the company, just that I am wrong to think that this could be a dividend grower within a few years since I bought it in 2014.