SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

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Equity Bottom-Up

Samudera Shipping Line / Equity Bottom-Up

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
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<h2>Samudera Shipping Line Ltd</h2>
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<h3>Trade activity anchoring shipping demand</h3>
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<p><strong>Samudera Shipping Line Ltd is primarily engaged in the transportation of containerised and non-containerised cargo</strong>. Its main business of container shipping provides feeder and liner services for the shipping of containerised cargo between Singapore and other ports in Asia. The bulk &amp; tanker business is involved in the transportation of special dry bulk, liquid and gas cargo, and the logistics business engages in forwarding, warehousing and other agency services.</p>
<p><strong>Strong demand for goods to drive shipping activity.</strong> SSL recorded a revenue of US$347.9m in FY20, down from US$373.8m in FY19, despite seeing higher volume (1.3m vs 1.2m TEUs), largely due to changes in shipment terms from “CY” to “FIO”, which decreases both revenue and costs. Overall gross margin rose to 8.5% in FY20 from 4.8% in FY19 due to higher market freight rates and shipping volume, amid strong consumer demand and high trade activity.</p>
<p>FY20 PATMI rose 84.9% yoy from US$3.9m to US$7.2m, largely due to higher gross margins and lower finance costs, but was dragged down by a US$9.4m impairment charge on 6 vessels. PBT margin increased from 1.3% in FY19 to 2.2% in FY20.</p>
<p><strong>Higher freight rates to buoy margins.</strong> Improvement in consumer sentiment with the progress of vaccination rollout globally will likely sustain consumer demand. Port congestions and shortage of containers, against the lack of shipping capacity, had caused a surge in freight rates alongside higher container prices. Higher freight rates will continue give SSL pricing power and lift margins in the coming months.</p>
<p>We like SSL for its high net cash position of US$51.3m, which gives them room for expansion opportunities. High trade activity and freight rates are key drivers in the near-term. However, we are wary of the impact of high freight rates on charter costs when existing contracts are due.</p>
<p><strong>Key risks</strong>: Port delays, high charter rates, high fuel costs</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.




Samudera Shipping Line Ltd




Trade activity anchoring shipping demand




Samudera Shipping Line Ltd is primarily engaged in the transportation of containerised and non-containerised cargo. Its main business of container shipping provides feeder and liner services for the shipping of containerised cargo between Singapore and other ports in Asia. The bulk &amp; tanker business is involved in the transportation of special dry bulk, liquid and gas cargo, and the logistics business engages in forwarding, warehousing and other agency services.
Strong demand for goods to drive shipping activity. SSL recorded a revenue of US$347.9m in FY20, down from US$373.8m in FY19, despite seeing higher volume (1.3m vs 1.2m TEUs), largely due to changes in shipment terms from “CY” to “FIO”, which decreases both revenue and costs. Overall gross margin rose to 8.5% in FY20 from 4.8% in FY19 due to higher market freight rates and shipping volume, amid strong consumer demand and high trade activity.
FY20 PATMI rose 84.9% yoy from US$3.9m to US$7.2m, largely due to higher gross margins and lower finance costs, but was dragged down by a US$9.4m impairment charge on 6 vessels. PBT margin increased from 1.3% in FY19 to 2.2% in FY20.
Higher freight rates to buoy margins. Improvement in consumer sentiment with the progress of vaccination rollout globally will likely sustain consumer demand. Port congestions and shortage of containers, against the lack of shipping capacity, had caused a surge in freight rates alongside higher container prices. Higher freight rates will continue give SSL pricing power and lift margins in the coming months.
We like SSL for its high net cash position of US$51.3m, which gives them room for expansion opportunities. High trade activity and freight rates are key drivers in the near-term. However, we are wary of the impact of high freight rates on charter costs when existing contracts are due.
Key risks: Port delays, high charter rates, high fuel costs













(Non-SGX Report) Samudera Shipping Line Ltd: Trade Activity Anchoring Shipping Demand

Singapore

Samudera Shipping Line Limited owns and operates ocean-going ships and provides containerized feeder shipping services. Through its subsidiaries, the Company also owns and charters vessels, provides sea and air freight forwarding, and operates shipping agency and container freight station services.

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Samudera Shipping Line (SAMU SP)

(Non-SGX Report) Samudera Shipping Line Ltd: Trade Activity Anchoring Shipping Demand

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)