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JES, a PRC ship-builder, cliched US$700 million worth of new orders in the previous month raising its order-book to US$1.6 billion which is expected to be fulfilled by 31 Dec 2012. The latest contract win consisted of 9 dry bulk vessels. It successfully marketed its new dry bulk design raising over 20 orders. The company's new shipyard is fully operational now.
http://info.sgx.com/webcoranncatth.nsf/V...60015E56B/$file/JES_CorporateUpdate_20110129.pdf?openelement
At the moment, based on its last traded share price, the company has a market capitalization of S$397 million. It fell into loss in 2009 due to a lack of ship-building orders. It started to turn around in 2010.
Unless, a prudent investor believes that JES can successfully improve its margins and generate at least $40-50 million profit annually in the next few years, it might be wiser to stick to its larger rivals - YZJ and Cosco.
I find it interesting that despite the huge over-capacity of vessels, companies are still ordering new ones.
(Not Vested in any ship-builder)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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I am puzzled as well too why shipbuilding does not seem to suffer a drawback. Anyone from shipping industry or investors can help to provide some clue. But I highly doubt we can get a answer here as we have only one member working in the transportation sector and need not be in shipping..
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i am not in the industry so no insider knowledge. but my thoughts:
1. china is intent on supporting its budding shipyard industry.
2. even though a supply overhang, some companies might value owning vessels for strategic reasons. chartering might be cheaper for the upcoming years but building a ship takes time and they might be looking at it long term.
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Believe it or not :lol:
From The Edge.....
The shipbuilder intends to buy 51% of a company with a controlling stake in an entity that holds a forest-harvesting licence in Congo. It will pay US$65m (S$81m) for Scibois Co, a firm incorporated in the British Virgin Islands that owns 75% of a company engaged in forest harvesting and wood processing. The vendors - a Chinese businessman, who retired from the army, and his son - will give JES a guarantee of at least US$170 million in accumulated net profits for the first four years after the takeover.
On the face of it, the profit guarantee appears onerous for the vendors, who have yet to generate any meaningful timber sales despite being in possession for the concession for some time..........
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hmm...
http://sinoshipnews.com/News/JES-Interna...c2801.html
Quote:Singapore: Singapore-listed Chinese shipbuilder JES International Holdings announced that it has received an email notification from Lyceum Partners LLC’s legal counsel alleging that the company has committed a default under a loan & maintenance agreement by failing to make due payment of maintenance fee.
JES entered into the loan & maintenance agreement the Lyceum Partners in August 2013 for a $20m facility with the option to request for an additional $20m.
According to JES, it entered into a master repurchase agreement (MRA) with Lyceum Partners in August 2013, and Lyceum Partners sent a notice to the company on May 22 informing that an event of default had occurred under the MRA as the fair market value of the shares purchased under the MRA was less than 80% of the purchase price, and in accordance with the terms agreed the MRA was terminated.
JES believes that there is no default under the agreement, and said it had failed address the share valuation in the required time period because it did not realize that the notice was sent by Lyceum Partners until the expiration of the said time period.
“The facility provided to the company was funded by the MRA; accordingly, the agreement and the MRA are part of a series of transactions regarding the facility. As such, once the MRA is terminated, the company may not request for any further drawdown on the facility since no further shares could be purchased under the MRA. With the termination of the MRA, the Agreement is no longer subsisting. As such, the lender should therefore not be entitled to make any further claims under the agreement, including but not limited to the maintenance fee,” JES said in the announcement.JES said it is seeking legal advice on the dispute. [02/07/14]
You can count on the greed of man for the next recession to happen.
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