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14-11-2013, 04:16 PM
(14-11-2013, 02:32 PM)valuebuddies Wrote: From the latest result, it seems that the cougar assets are generating additional US$1.2m NPAT semi-annually, the potential loss of profit from the expiring of charters with Mitsui is estimated to be US$1.5m annually. Assume that the 2 vessels did not contribute any revenue or profit in FY2015, I still expect a US$900k increase in the NPAT, not yet counting the contribution from the new vessel which scheduled to deliver next year. I do worry about the lower charter rate that it might secure for the new vessel because of the current gloomy shipping market. I am not sure if these specific vessel are affected but I guess the charter rate will be definitely much stable comparing to container ship charters.
Unless I am mistaken, the car carrier (RoRo) vessels operate in a very niche segment with few operators and newbuilding vessels. So I don't think we are experiencing the over-supply malaise in the dry bulk and container sector currently.
There are 2 vessels leased to Mitsui - Singa Ace and Cougar Ace of which the latter is 30% owned and accounted for as an associate. Cougar Ace contributed 26k NPAT in the past 2 years so its contribution is minimal. I suspect scrapping the vessel post-contract and repaying debt will be more accretive. Singa Ace is an issue since it contributed US$4.8 million revenue in FY 2013 and US$1.98 million revenue in 1H 2014 (charter hire reduction). Being an old ship, I don't think the margins will be necessarily high though. I think the vessel acquired next year will be more than sufficient in replacing this income stream.
On another note, last year, Ship Finance acquired 2 car carriers with 5 year charters - http://www.shipfinance.bm/index.php?id=4...51888.html - based on my rudimentary calculations, I think the 2 vessels cost US$80 million and each vessel generates US$8.5 million revenue p.a.
Cougar Logistic assets generated EBIT of US$1.95 million in 1H 2014 compared to EBIT of SG$4.4 million and SG$4.3 million in FY 2012 and FY 2013 respectively. I suspect it enjoys higher margin as a private entity since there is no need to pay listing fees, directors fees. Moreover, since the shipping division doesn't pay tax, the US$57k tax must be attributed to Cougar Log which is quite low compared to its listing days. This is looking to be a really attractive buy. Granted, in a recession here, earnings are likely to fall.
Don't really see much catalyst unless dividends are raised or the Management acquires more vessels. Hopefully more details on the vessel acquisition will be revealed in the upcoming quarter.
(Vested)
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