Samudera Shipping

[bryan2003]

Yang Ming 'under pressure' from shippers demanding contract rate cuts - 8 Sept 2022
https://theloadstar.com/yang-ming-under-...rate-cuts/

Yang Ming chief operating officer Chang Chao-feng has admitted that, as spot rates fall, the carrier is under pressure from shippers demanding to renegotiate contract rates.
The line is believed to be the first to confirm receiving demands from shippers for lower contract fees and, yesterday, Mr Chang said the situation had become more challenging than in mid-year.

Xeneta questions ‘myths’ of heavily declining container volumes and bunker price unrest - 9 Sept 2022
https://www.hellenicshippingnews.com/xen...ce-unrest/

In its latest ‘Ocean Freight Pulse’ survey of its user base, made up of globally leading shippers, Xeneta found that over 50% of respondents expected volumes to stay the same or increase, while 38% expected a drop of just 5%.
(1) On the issue of BAF, the survey found the huge majority of shippers accepting the rise, with only 22% renegotiating – 17% successfully and 5% without success. (2) Customers were also quizzed over whether they’d renegotiated their prices while their long-term contracts were still valid. 52% had, 41% hadn’t, and the remaining 7% tried to, but unsuccessfully

PS: I had previously queried Samudera IR on this renegotiation issue and they have reverted that the contracts are signed and renewed annually or every two years, and there is no negotiation while it is in effect.  The pressure can be very really, and I certainly hope that Samudera business partners are of respectable qualities.

Personally feel why Mr. Bani has very high confidence on their customer will honour to the signed contract is because he has been in this sector for a long time. Based on my 10 years experience in logistic and port sector, i strongly believe Mr. Bani insight is correct due to the fact below.

Carrier / liner - Long distance route (From Europe / USA to Asia)
Feeder - Short distance route (Within Asia)

1) Samudera Shipping is feeder service compared to those carrier / liner (Maerks, Hapag Lloyd, Yang Ming, Evergreen etc). There are not many feeder shipping company in Asia has similar number of fleet as Samudera. Even though the demand for carrier service might slight drop, the demand for feeder is still high as the TEU of a carrier can ship is few times of what feeder can ship. Normally company like Samudera will ship container from countries like Vietnam, Indonesia, Philippines, India etc to Singapore or Malaysia, thereafter the carrier will consolidate everything on their vessel and ship to Europe / USA.

2) Indonesia is net export of crude palm oil and coal and these commodities are highly in demand. Hence, this will support the freight cost contract for Samudera.

3) No doubt Samudera has competitors like Temas Line (listed at Indonesia), Harbour Link & Shin Yang shipping (listed at Bursa Malaysia), MTT (non listed Malaysia company), but these players have smaller fleet compared to Samudera and they have lesser route compared to Samudera. 

4) In short, we can describe Samudera's business model as our daily necessity regardless how bad the economic as we can see from the past record, even 2018-2019, there are trade war between US and China, Samudera is still maintain profitable. This is mainly because those carrier's vessel unable to go direct to countries like Indonesia, Vietnam, Philippines etc because the port crane has limitation for the carrier's vessel as the vessel height is high where the port crane height is not as high as the vessel high. Hence, the major ports like PSA Singapore, PTP and Port Klang Malaysia, Shanghai port need feeder service to "dispatch" the containers from Europe and USA.

The CEO, Mr. Bani continues buy PT Samudera in August as well as November.

https://www.idx.co.id/StaticData/NewsAnd...1dff9f.pdf

https://www.idx.co.id/StaticData/NewsAnd...7184b4.pdf

[sgpianolessons]

Profit guidance by Samudera:

Based on a preliminary assessment of the Financial Results, the Group has recorded a
significant improvement in revenue and earnings for 9M2022 as compared to 9M2021. This
was primarily due to an increase in container volume handled and higher freight rates in 2022.
On this note and barring unforeseen circumstances, the Group’s performance for the full year
ended 31 December 2022 is expected to be significantly better than its performance for the
full year ended 31 December 2021.

https://links.sgx.com/1.0.0/corporate-an...d3979e4250

Last year EPS is 23.9 US cents, this year 35 US cents? So barring unforeseen circumstances, proposed special dividends, 20 cents?

[bryan2003]

Profit guidance by Samudera:

Based on a preliminary assessment of the Financial Results, the Group has recorded a
significant improvement in revenue and earnings for 9M2022 as compared to 9M2021. This
was primarily due to an increase in container volume handled and higher freight rates in 2022.
On this note and barring unforeseen circumstances, the Group’s performance for the full year
ended 31 December 2022 is expected to be significantly better than its performance for the
full year ended 31 December 2021.

https://links.sgx.com/1.0.0/corporate-an...d3979e4250

Last year EPS is 23.9 US cents, this year 35 US cents? So barring unforeseen circumstances, proposed special dividends, 20 cents?

1st half 2022's EPS already USD 0.3192. FY should be at least USD 0.5-0.55 cents.

[bryan2003]

Profit guidance by Samudera:

Based on a preliminary assessment of the Financial Results, the Group has recorded a
significant improvement in revenue and earnings for 9M2022 as compared to 9M2021. This
was primarily due to an increase in container volume handled and higher freight rates in 2022.
On this note and barring unforeseen circumstances, the Group’s performance for the full year
ended 31 December 2022 is expected to be significantly better than its performance for the
full year ended 31 December 2021.

https://links.sgx.com/1.0.0/corporate-an...d3979e4250

Last year EPS is 23.9 US cents, this year 35 US cents? So barring unforeseen circumstances, proposed special dividends, 20 cents?

1st half 2022's EPS already USD 0.3192. FY should be at least USD 0.5-0.55 cents.

Samudera Indonesia has released their 3rd quarter 2022 result. As we know, huge chunck of it' s profit is from Samudera Singapore. From the report, profit attributable to parent entity is around USD 171.5M. In order to get the 3 months (July till Sept 2022), we use USD 171.5M - USD 115.7M = USD 55.8M. This USD 55.8M is the 65% of profit contributed by Samudera Singapore as Samudera Indonesia holds 65% of Samudera Singapore. Hence, the net profit of Samudera Singapore is in the range of USD 80-85M.

The EPS for Q3 is around USD 0.15 and YTD EPS is USD 0.46 (SGD 0.644). If final quarter can make SGD 0.2, FY EPS will be 0.84. Based on such EPS and the generous of the dividend payout, the dividend for second half should be around SGD 0.25-0.30.

The cash in bank is almost the market cap of Samudera Shipping.

Report link as below.

https://www.idx.co.id/StaticData/NewsAndAnnouncement/ANNOUNCEMENTSTOCK...

[Coco]

@Bryan, amazingly low valuation but what do u reckon is causing this? Market ignorance ? Concern about next year's earnings?

[bryan2003]

@Bryan, amazingly low valuation but what do u reckon is causing this? Market ignorance ?  Concern about next year's earnings?

Most probably investors are afraid the freight cost drop in near future. However, the cash Samudera shipping has almost its market cap. Also, Samudera is generous on dividend. Personally foresee the dividend in coming Feb will be around SGD 0.2-0.3.

[Yoyo]

Post #217
Press article 8 Sept 2022

The supply-demand imbalances that have boosted global container shipping charter rates and lifted the profits and stock prices of operators to record highs is not likely to disappear anytime soon. In fact, the market could get hotter when China lifts its Covid-19 lockdowns.

When asked if the container shipping market had peaked, CEO Bani Mulia said that even if that was the case, this was a peak which would remain in place for a while.  He explained: "There is a huge supply-demand imbalance which won't disappear over the next 12 months", and in the small containership space that Samudera operates there is little threat of an influx of new vessels.


Euroseas Ltd. Says Container Shipping Rates Declined by almost 80% in Two Months - 16 Nov 2022
https://www.hellenicshippingnews.com/eur...wo-months/

“Containership rates reached all-time highs for most vessel segments during March of 2022, stayed near those levels through August, but since the beginning of September 2022 have started declining, dropping almost 80% until the beginning of November. Still, present charter rates are, for the segments we operate, more than double the average rates during 2019, the year before the pandemic. We believe that the precipitous decline in rates was the result of lower shipping demand due to the economic slowdown across the globe combined with the reversal of port delays and other related inefficiencies that had crept in the transportation system which increased effective vessel supply.

“Looking forward, one of the challenges in the market is the absorption of the containership orderbook standing now at nearly 29% of the existing fleet. This orderbook will start being delivered, mainly, from the second half of 2023 and onwards and is heavily concentrated on the larger containership segments and much less so on the feeder size segments we operate. The feeder fleet, in addition, has an age profile that is tilted towards older vessels and as a result it is expected to be affected the most, as compared to larger ships, by the greenhouse gas regulations being introduced in 2023, thus, further mitigating the supply growth for the segment.

Euroseas chairman statement on feeder fleet reinforces Bani's representation made 2 months ago.

[Yoyo]

Post #222

Profit guidance by Samudera (28 Oct 2022):
Based on a preliminary assessment of the Financial Results, the Group has recorded a
significant improvement in revenue and earnings for 9M2022 as compared to 9M2021. This was primarily due to an increase in container volume handled and higher freight rates in 2022.  On this note and barring unforeseen circumstances, the Group’s performance for the full year ended 31 December 2022 is expected to be significantly better than its performance for the full year ended 31 December 2021

While it is commendable that Samudera issues a profit guidance, I can hardly squeeze any beneficial information out of it.  1H 2022 earnings is already in excess of FY 2021, regardless of how badly 2H fares, the FY 2022 will be deemed significantly better.  It will substantially add value if management includes a short statement on the Q4 outlook.

Perhaps, I am supposed to read in between the lines, where no bad news in the guidance is a clear GOOD signal.  No representation of any severe hardships expected in Q4.

Samudera, please make my life a little easier.  Old man lah.

[Yoyo]

Update
Since the informative press article dated 8 Sept 2022, Samudera share price tumbled from a high of $1.12 to a recent low of $0.785

These two months witnessed global shipping rates declined by 80% (the main linears).  I wonder if such drop has catch Samudera offguard.  I am, expecting a gradual decline.  The favourable 9 months results (profit guidance) has set the floor for the share price for the moments.  The market gyration is a bit too much to stomach, and I have taken the opportunity to further liquidated some of my holding.  My original intention is to hold all till the announcement of full year results in end Feb 2023.  

Just to pen down my thought.

[Yoyo]

High traded volume in the last few days.  The below may be the cause.  Other than this, the only news is the delivery of the purchased tanker.

Samudera Shipping Line Ltd (SAMU SP): Shipping peak season comes
https://www.kgieworld.sg/research/kgi-da...-nov-2022/

BUY Entry – 0.97 Target – 1.10 Stop Loss – 0.90

Samudera Shipping Line Ltd provides feeder services to Main Line Operators between the deep-harbor “hub” ports and the outlying “spoke” ports. It also provides inter-region and intra-region Container Shipping services to the end users. Singapore and Dubai are the main “hub” ports that the Company serves. Serving several major ports in China, Samudera’s Far East service acts as a bridge between South East Asia and China reflecting the growing intra-Asia trade. In addition to Container Shipping, the Group, through its wholly-owned subsidiary Foremost Maritime Pte Ltd, is engaged in Industrial Shipping. It positions itself as a reliable logistics partner to its industrial customers in distributing their bulk cargo – liquid, gas and dry.
China recalibrating Covid Zero. With a detailed 20-point playbook regarding changes to the Covid Zero policy, China is easing its isolation from the world as well as the impact of the virus mitigation measures on the ground. China has announced the easing of quarantine measures for tourists and close contacts to a total of 8 days instead of 10 days and is pulling back on testing. Furthermore, the system that penalises airlines for bringing virus cases into the country will also be scrapped. China’s reopening process will likely remain slow and cautious, however, businesses will gradually start to pick up with the new measures implemented. This will also increase the shipments in and out of China as manufacturing output increases.
Holiday sales. With the holiday season coming up, there will be a surge in demand for shipping as retailers and consumers order goods to stock up their shelves and to order gifts for the holidays. Indonesia-based Samudera Shipping is riding on a big pickup in shipping services in the wake of disruption to global supply chains triggered by the pandemic.
3Q22 profit guidance. Based on a preliminary assessment of the Financial Results, the Group has recorded a significant improvement in revenue and earnings for 9M2022 as compared to 9M2021. This was primarily due to an increase in container volume handled and higher freight rates in 2022. The Group’s performance for the full year ended 31 December 2022 is expected to be significantly better than its performance for the full year ended 31 December 2021.
Updated market consensus of the EPS growth in FY22/23 is 101.31%/-38.12% YoY respectively, which translates to 3.29x/5.31x forward PE. Current PER is 1.45x. Bloomberg consensus average 12-month target price is S$0.83.