|The share price here has not reacted to the Baltic dry index recent rise...on my watch list and tempting me to buy my first tranche if the price falls below 300|
|BDI is on fire at the moment up another 86 pts (7.5%) today to 1,231
Up 324% from the 2016 low, and 95% since BMS last updated the market in August.
Capesize rates have nearly tripled to $20k a day from the summer lows and, VLCC rates are back close to $50k a day.
The Donald Trump Shipping Stock Boom? - Nathan Vardi
Euroseas is a tiny Greek shipping company with a fleet of 12 vessels and a penny stock traded on Nasdaq. On Tuesday, Euroseas’ shares rose by 100%. Since Donald Trump was elected president, Euroseas’ stock has nearly quadrupled. Seanergy Maritime, another small dry bulk shipping company that moves grain and coal, saw its shares soar by 75% on Tuesday. Shares of DryShips, a Greek shipping company that recently looked like it could be headed for bankruptcy, have climbed by 1,400% since Election Day.
President-Elect Trump’s initial impact on financial markets has been seismic, steepening the yield curve, sending copper prices soaring and sparking a broad stock rally in most sectors outside of technology. But one of the most bewildering and out-sized moves has been in shipping stocks, particularly small dry bulk shippers that have squeezed short sellers and seem to be trading in ways that are not linked to their fundamentals.
The larger dry bulk shipping companies, which still have small market capitalizations after years of being hammered in the stock market, have seen strong moves since the election. Shares of Diana Shipping are up 60% while Safe Bulkers shares are up 30% in the last week.
“Many of the shipping names in the last four to five years have adjusted to slower growth by not investing in shipping capacity,” says Douglas Mavrinac, a shipping analyst at Jefferies. “It will be good for these names if we have inflation and more economic growth, and it turns out we had underinvestment in the shipping market to facilitate the increased need for commodities going forward.”
Mavrinac points out that Wall Street had stopped really paying attention to many of the shipping companies, particularly the very small ones. The lack of liquidity in the stocks of many of the dry bulk shippers means that they are easy to knock around and were trading at big discounts to their historical multiple levels. It does seem like short sellers were caught offside in some of the dry bulk shipping stocks and were squeezed, particularly in the case of DryShips.|
|Ship Charter rates continue to surge ahead with the BDI now up to 1145: a rise of 295% from the 2016 low and, up 81% since August. Together with the strong dollar this should give a major boost to ship-brokers earnings in H2.
Most of the charter rate improvement is being seen in the tanker and dry bulk sectors, where BMS operates, while the container sector continues to remain very subdued, as a result of continuing overcapacity issues: as evidenced from the share-price performance of Mearsk, the industry leader in this sector, which dropped 50% in 2015, and is yet to show any sign of starting a recovery this year.|
|Baltic Dry Index now up 267% since the 2016 low, and some 70% since August.
11 Feb - 290
09 Aug - 631
15 Nov - 1065|
|Share price finally seems to be heading up. Way oversold in my opinion.|
|TBH if there is a shave in the dividend it would be disappointing, but hardly a disaster - a 6% yield would do while awaiting a shipping turnaround. But on balance I expect it is likely to be maintained.
My investment here is not fully weighted anyway, so further drops would present top-up opportunities. I am thinking principally longer term.|
|I hope it works out for you Edmundshaw. This is how IC saw it:
'Given thinning cover levels, management has not committed itself to the full-year dividend, but declined to tell us whether this might mean a full cut or a lowering of the payout rate. The potential £1.5m sale of Baltic Exchange to SGX, and a weakened pound should both help, but such uncertainty could negatively impact the shares in the short term. Back to hold.'
One to watch from the sidelines for now. There will be plenty of time to get on board once things start to turn.|
|318p, yield over 8%. If that is sustainable, the share is certainly too cheap; BMS throws off cash, and is expected to remain debt free at the end of the year. Easily capable of riding out a year or two of really tough trading if need be. So I am banking on that dividend staying put for the time being, and a recovery in share price sooner or later.|
|New Edison research note...
Fighting the waves - HTTP://www.edisoninvestmentresearch.com/research/report/braemar-shipping-services262276/full
Management action in response to a tough trading climate and falling profits should contribute to a sound recovery in profits next year. Following share price weakness, the group is valued at a substantial discount to both the broking market leader Clarkson and to other peers. Meanwhile, if the dividend can be held, the shares offer a well aboveaverage yield, pending an eventual improvement in trading conditions...|
|"We are taking action to address the structure of our business, especially in the Technical division where the project activity levels are falling and contract timing is difficult to predict. This restructuring programme, along with the shipbroking forward order book, gives us the confidence for an improved performance in the second half of the current financial year and we continue to seek both organic and acquisitive opportunities to grow and diversify the Group over the longer term."
28/2/15: + £7.2m
31/8/15: - £3.1m
29/2/16: + £9.2m
31/8/16: + £0.7m
|Initial press headlines mostly negative:
BRAEMAR OPERATING PROFIT SLUMPS 80%
Braemar Shipping Services has seen its first half operating profit crash by 80% to just £1.4m ($1.7m), figures released Tuesday show.
Technical division posts first half loss as shipbroking and logistic arms see results deteriorate.
BRAEMAR REVENUES FALL
The maintained dividend will presumably encourage holders to continue holding; but might also appeal to newcomers, especially if they can exploit today's headlines to drive the price down a bit lower before buying for an even better percentage payout.|
|In line. They don't exclude the restructuring costs of 1.8mm from the underlying Operating Profit figure so it's not quite as bad as it looks. More importantly, the net cash has improved from last year, the dividend is maintained (7.9% yield) and all the shipping indices have picked up. Even Technical should improve gradually as the oil price recovers.|
Of the stated metrics, which ones are better and which are worse than the most recently expressed expectations?|
|Cheers Clarksons1 so it looks like the steady rise up could continue then and now might be a good time to add a few whilst they're on offer, Buffet style?|
|Tanker Rates Surge as Middle East Cargoes Rise Before OPEC Deal
Oil tanker rates jumped to a four month high as traders booked the most cargoes for the time of year on record, offering signs that Middle East producers could be adding barrels to the market just before OPEC embarks on its deepest output cuts in eight years.Day rates on shipments from the Middle East to Asia jumped to $46,896 while a surplus of crude tankers in the Persian Gulf matched the lowest level in a year, Baltic Exchange and Bloomberg surveys showed
Analysts surveyed by Bloomberg are anticipating rates of $35,000 a day for the ships in 2017. That would make them profitable for a fourth consecutive year, according to estimates gathered by Bloomberg and cash-break even data from Bermuda-based Frontline Ltd., one of the largest operators.
|As with Clarksons, BMS is likely shaping up to experience a year of two quite different halves.
Weaker first 6 months, from falling charter rates and volume across both tanker and bulk markets.
Strong recovery in the second half from rising rates and volumes, and currency gains, although the full beneficial impact from weaker sterling is more likely to be felt in the next financial year due to their rolling hedging policy.
When the 31 Aug trading update was released, average VLCC rates were $15,500/day, and had been on a falling trend all spring/summer. In early September rates started to rise strongly, accelerating in the last week near to $50,000/day.
Likewise, capsize bulker rates averaged around $6,000/day April-August, then took off late August and now average around $15,000/day.
Shipbrokers earn a fixed percentage of the daily rate - so should be seeing a very material increase in earnings from the tanker and bulker markets since late August.|
|Interesting clarksons1 but if the figures are looking so good why is the BMS share price taking such a dive do you think?|
|better to sell than cross fingers|
|Edison report in May pointed out currency sensitivity with majority of costs in GBP substantial income in USD. Interested to see if that is of benefit as it also mentions they had $31m in forward currency contracts to sell back in Feb at an average rate of $1.477/£1.
Just bought a stack to go with my high yield small caps because I'm an impatient idiot. Fingers crossed they don't announce a divi cut at the end of the month.|
|Forecasts for this year to Feb'17 have been reduced and now range from 20.6p EPS by Edison to 23.2p EPS from Cantor. At 336p the P/E is pretty hefty at 15 or 16.
The dividend is of course terrific, and forecasts to Feb'18 now range from 25.8p EPS to 28p EPS.
BMS will remain on my watchlist. I wouldn't be tempted to buy at all at present given the possibility of further drift, but if the year end trading statement shows confidence in the outlook, matching the 2017/18 forecasts, that might be the time to buy.|
|Unsure but toying with a top up this afternoon. I think next update in October.|