Singapore Shipping Corp

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It gonna have something to do with the son than the father, thats what happens to Stam-ford Land before. The good thing is that the Ows dont have that much of percentage in SSC.
(28-05-2021, 09:54 PM)ghchua Wrote: 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.

Their cash generation is marvelous.

The latest 3 ships were purchased in Sep-2014, Nov-2014 & Mar-2015.
Total purchase about S$110M.

That turned their net cash of S$1.7M in FY2014 to net debt of (S$100M) in FY2015.
After just 7 years, the net debt is at (S$6M) in FY2021.
In between they paid out S$22M as dividend and S$8M in buyback.

I don't think their Ships IRR is super high but it should be rather satisfactory.
The newbie, Taurus, built in 2015 and hence still has a long run way.
Even the old dude, Cougar Ace, built in 1993, still operating in Jun-2020.

I'd say this company is hugely undervalued by Mr Market.
But I do understand the reason behind it.
The management (controlling shareholders) are just playing different game with Mr Market expectation and I do think both are justified in their own way.

Investors looking at this company should only come in with eyes wide open and understand the Management game (the company structure).
If they tried to enforce their way through (like what they did in the sister company), it'd just be a lose-lose situation.

Playing different game with no one giving ground is really just a marriage gone bad! Big Grin
Hi fallscushion,

I think shareholders got to have to differentiate sometimes between investing in a trust and a company. If yield is their primary concern, then investing in hospitality and shipping trusts might be a better option than Stam-ford Land and SSC.

Both Stam-ford Land and SSC are decent companies, but if one just invested in them with an expectation of consistent high yield every year, then they might be disappointed. Both companies had been profitable for the past two FYs, despite Covid-19 disruptions. NAV for both companies also increased. It shows that being conservative in dividend payouts during good times had served them well. I guess as long as the management is delivering results, we should allow them to have the runway to execute long term plans. Yes, some shareholders might be looking at SSC's dividend cut this time round to sell the stock, but long term investors could also take this opportunity to accumulate.

I parked my excess $$$ in SpShip for the very same reason highlighted, which is:
1. constant 1cents dividend
2. $$$ keep increasing
3. NAV keep increasing
4. Debt keep decreasing (fast)

And the most important reason is Snr Ow's wisdom demonstrated by the past few exceptionally executed acquisition (and disposal).

Basically, when SpShip dropped below 25, I just buy with my excess $$$.
And whenever, it goes above 26, I sell to get back my cash.

With the dividend cut into 0.5 cents, the #1 reason for me to vest is no long true.

Of course, the initial thought was change of game plan and after one day of digestion, yes, change of game plan.

Instead of selling, I would hold and see what magic Snr (and Jnr) Ow could pull from their hat.

There is one possibility that both cut the dividend to conserve cash aka play safe during C19 but I doubt so.

If this is what they are thinking then I would be very disappointed.

Rather, my guts feeling is acquisition is on the way.
I'm willing to give them 4 - 8 Qtr to prepare for the move.

Let's see.

Oh, like GH says, if the share price drop below 25, I do have some excess $$$ to pick up more.   Big Grin

I am going into a territory that gotten warning by moderator
and I'm going to risk it again.  Tongue


Ok, I see Straco the same as SpShip aka it's a place to put my excess $$$ which is:
1. constant (and increasing) dividend
2. $$$ keep increasing
3. NAV keep increasing
4. Debt keep decreasing (fast)

And the most important reason is Snr Wu's wisdom demonstrated by the exceptionally executed acquisition.

Of course, situation change and #1 is no longer true.
There are some differences thou:
1. Straco had been holding cash for a long time for acquisition. Unfortunately, the idea deal had yet to come and the good thing is there is still a chance to buy the best asset but the worst thing is this could continue forever (or like the case of Stam-ford, pull the trigger at a wrong asset - yet to be proven thou).

2. Straco Singapore Flyer - had breakdown due to technical issues. This is acceptable to me. What is not acceptable is the radio silence during the breakdown. The waiting for announcement was gruesome.  One of my investment motto is sell until sleeping point. So, when the Flyer spin again, I took the opportunity to sold out.

<not vested>

Stay home and stay safe, everyone.
Annual dividend policy is 0.5cents

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Stay home and stay safe, everyone.

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