Masli Mulia, chairman of Samudera Shipping Lines, has this to say in the latest annual report: “Once in a blue moon, a confluence of factors may dramatically change the operating conditions of the shipping industry, setting the stage for exceptional performance for those who are well-prepared to tap the new opportunities presented. Such a blue moon rose in the FY2021 ended Dec 31.”
In FY2021, Samudera announced a net profit after tax (NPAT) of US$128.6 million ($174.9 million) compared to US$7.2 million in FY2020. This came on the back of a 51.5% rise in revenue to US$527 million versus US$347.9 million in FY2020.
“In appreciation of our shareholders who have journeyed with us through thick and thin over the years, the board has proposed a final tax-exempt dividend of 0.75 Singapore cents and a special tax-exempt dividend of 12.75 Singapore cents for FY2021,” adds Mulia. The dividends will be paid in May. Together with an interim dividend of 0.5 cents, the total dividend for FY2021 will be 14 cents. Based on its share price of $1.04, Samudera’s historic dividend yield is 13.4%. However, caution should be exercised for Samudera. Given the challenges it could face this year, it is unlikely that the dividend is repeated.
Mulia warns that this year is not going to be plain sailing: “While we have done well in FY2021, we are mindful that the operating conditions of the global shipping industry remain highly volatile, amid ongoing supply chain complications and current geopolitical tensions. While we as a regional service operator are not directly affected by the Russian invasion of Ukraine, a prolonged conflict situation could lead to a decline in global trade activity and have a cascading effect on the entire shipping industry. Meanwhile, operating costs are expected to increase significantly as the invasion has pushed bunker prices to new heights.”
Sembcorp Marine’s (Sembmarine) chart pattern looks like a textbook version of a major base formation, with prices breaking out of this major base formation at 9.7 cents. Within the major base formation, a secondary base formation had already occurred and the target indicated from the breakout was reached and breached. The breakout of the major base indicates a new target of 11.5 cents. Short-term indicators are near an overbought high, limiting immediate upmoves. Furthermore, equities are somewhat volatile.
On top of the technical headwinds, Sembmarine could be included in the regulatory watchlist following three years of losses. On the other hand, crude oil prices are a lot higher than last year, and Sembmarine’s ordebook as at end 2021 stood at $1.3 billion. On March 23, Sembmarine announced it had secured a contract for the construction of a Wind Turbine Installation Vessel (WTIV). Although the contract size was not announced, analysts estimate it could be worth US$600 million.
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In its FY2021 results announcement, Sembmarine says: “The improving industry outlook on the back of rising oil and gas prices provide impetus for oil and gas companies to review plans for the resumption of deferred activities, final investment decisions and capital expenditures. There are also improved prospects and opportunities associated with the global transition towards cleaner energy and sustainable solutions. Overall, order visibility continues to improve.”
