Price: SGD0.29 Date: July 31, 2013
2Q13 earnings lower due to decline in operating profit. Rickmers Maritime (RMT) reported 2Q13 revenue of USD35.0 mln (-2.7% YoY) and net profit of USD7.7 mln (-13.6% YoY). Profit was slightly lower than our expectations due to one-off debt processing fee.
Declining operating profit growth. Revenue was USD1.0 mln lower YoY mainly due to 37.9 days of scheduled off-hire for three vessels’ dry docking. Vessel operating expenses increased by 6.5% YoY due to contractual increase in fixed operating expense, vessel management fees and related expenses.
Successful equity raising, deleveraging continued. RMT managed to raise USD80.7 mln through 1-to-1 equity raising and paid USD73.7 mln in bank loans, which helped to lower the gearing level to 50% from 58% in 1Q13. USD54.7 mln from the rights issue was used to fully repay the top-up facility which has the most stringent value-to-loan (VTL) covenant. A one-off debt processing fee was incurred upon extension waiver extension for value-to-loan (VTL) covenant to Dec. 29, 2014.
DPU unchanged. Distribution per unit (DPU) of US 0.60 cents for 2Q13 is unchanged. RMT has committed to a dividend payout of US 0.60 cents per quarter throughout 2013. Due to the enlarged equity base, the total distribution amount to unitholders doubled to USD5.1 mln.
Earnings Outlook / Estimates Revision
Our 2013 earnings estimate is unchanged as we expect interest savings from its reduced debt to be offset by debt processing fees and slightly lower revenue due to higher days of scheduled off-hire. However, we raise our 2014 earnings estimate by 6% to reflect the lower interest expense going forward.
We expect excess capacity to keep the container shipping industry flat, with recovery anticipated toward the end of 2014 as demand starts to outstrip capacity growth. We expect charter rates to increase to a reasonable level in 2014, but remain below the existing rate enjoyed by RMT currently. We factor this risk into RMT’s earnings estimate by assuming lower rechartering rate for its five vessels upon expiry throughout 2014. As a result, we expect DPU in 2014 to be lower (US 1.6 cents) as compared to 2013.
Key investment risks include: (i) rechartering prospect of five vessels throughout 2014; (ii) charter counter-party default risk that may adversely affect RMT’s cashflows. However, we see a low rate renegotiation/default risk on RMT’s clients given that the clients are established global liner shipping companies with good reputation and track record of timely payment; (iii) higher interest rate and (iv) further DPU cut in 2014 due to weak chartering market.
Source/Extract/Excerpts/来源/转贴/摘录: S and P Equity Research,
Publish date: 31/07/13