14-03-2012, 03:05 PM
One of the most commonly asked questions during the conference call was what are RMT's plans for Kaethe. The CEO said they will hopefully find Kaethe a job ASAP but the rate will be lower which is to be expected due to poor market conditions.
1. So, I believe RMT has already taken into consideration the fact that they will receive a lower revenue for year 2012 compared to 2011 and they will probably make their plans around that.
2. Shipping industry is very risky, especially when charterers default (ie. recent issues with FSL defaults). RMT has probably tried to minimise this risk but taking on large/leading charterers in the world like CMA CGM, MOL, MSC... So these are probably some plus points for RMT
3. It's hard to predict the future so I can't say for sure but with the riskiness of this industry, the returns will be greatly rewarded in good market conditions. Thus this industry is probably more appealing to risk lovers
4. RMT's goal is to reach a debt/equity ratio of 50/50, as well as to pay consistent dividends every quarter. A caller in the conference call asked if the company would use their cash to pay off their debt earlier but the CEO says that they intend to keep the cash for unforeseen circumstances so that the company will still be financially healthy. They are confident in their business model and deleveraging plans, so we'll see if they can slowly work their way to 50/50 debt/equity ratio. In my opinion, I believe that they will aim to pay consistent dividends and it can be seen in their past 4-5 years of dividend history.
5. I thought about this question too. I checked other shipping trusts like Seaspan Corporation (US listed company) that has a similar model to RMT and it seems that 4250 TEUs dominate their portfolio so it's possible that these vessels may still be in demand. Furthermore, it could also be possible that charterers like smaller vessels to take shortcuts via the panamax, suez... canals and hence consume less fuel. I'm a little unsure about this point so maybe you can read up more about it and share it with us.
These are just some of my opinions to answer Nick's questions. I'm quite new to learning all about finance and researching the market so some things I might have said may not make sense. Do let me know so I can improve and learn more, thanks!
1. So, I believe RMT has already taken into consideration the fact that they will receive a lower revenue for year 2012 compared to 2011 and they will probably make their plans around that.
2. Shipping industry is very risky, especially when charterers default (ie. recent issues with FSL defaults). RMT has probably tried to minimise this risk but taking on large/leading charterers in the world like CMA CGM, MOL, MSC... So these are probably some plus points for RMT
3. It's hard to predict the future so I can't say for sure but with the riskiness of this industry, the returns will be greatly rewarded in good market conditions. Thus this industry is probably more appealing to risk lovers
4. RMT's goal is to reach a debt/equity ratio of 50/50, as well as to pay consistent dividends every quarter. A caller in the conference call asked if the company would use their cash to pay off their debt earlier but the CEO says that they intend to keep the cash for unforeseen circumstances so that the company will still be financially healthy. They are confident in their business model and deleveraging plans, so we'll see if they can slowly work their way to 50/50 debt/equity ratio. In my opinion, I believe that they will aim to pay consistent dividends and it can be seen in their past 4-5 years of dividend history.
5. I thought about this question too. I checked other shipping trusts like Seaspan Corporation (US listed company) that has a similar model to RMT and it seems that 4250 TEUs dominate their portfolio so it's possible that these vessels may still be in demand. Furthermore, it could also be possible that charterers like smaller vessels to take shortcuts via the panamax, suez... canals and hence consume less fuel. I'm a little unsure about this point so maybe you can read up more about it and share it with us.
These are just some of my opinions to answer Nick's questions. I'm quite new to learning all about finance and researching the market so some things I might have said may not make sense. Do let me know so I can improve and learn more, thanks!