Clarkson Share Discussion Threads

[rivaldo] 28/3/2007 09:26

Ta woracle, now on my faves list. I'm yet to convince myself about BMS as I believe there's more upside in CKN given BMS is on a P/E of 13 (albeit on probably conservative forecasts).

[woracle] 28/3/2007 08:05

OK OK, I wont keep it to myself any longer..lots of interesting stuff here.

If theres a big logjam in Oz, may suggest bunker prices going through the roof there. Thats why I am in BMS too ;)

[rivaldo] 28/3/2007 07:50

Well, the BDI was up yet again yesterday, 7 points to 5,364.

Woracle, where did that summary come from - looks like a good web site to follow?

[woracle] 28/3/2007 01:41

Looks like rates are headed higher..

Brazil/China Capesize Iron Ore Rates Close in On Record High

March 22, 2007



The dry bulk market has been subjected to remarkable changes in the first few months of 2007. Much of the recent buzz in the dry bulk market is due to increased iron ore demand in Asia and severe Australian port congestion.

Last week a shortage of Atlantic tonnage pushed fronthaul Capesize rates through the USD 100,000/d barrier which also supported the Pacific market. It has been reported that a modern 175,000 dwt vessel achieved USD 102,000/d for a fronthaul trip on lucrative Brazil/China cargoes. One of the major factors behind the firm freight market today is due to port congestion, especially in Australia.

The West Coast of Australia was recently hit by two tropical cyclones which forced a temporary closure of Dampier, Port Hedland and Port Walcott. This sudden incident increased the queuing at coal or iron ore terminals. As a consequence, approximately 145 bulkers are waiting in Australia, of which 90 are Capesizes, representing 13% of the Capesize fleet. About 6% of the total Panamax fleet, or roughly 80 vessels, is delayed by the queue.

Even though the queue outside the West Coast of Australia is likely to be short-term, the SSY Australian Coal Port Congestion Index reports that the average berthing delays at all coal ports in Australia has climbed to a record of 20 days. The worst congestion problems are however in the large coal export terminals of New South Wales and Queensland. Last week, the average waiting time surpassed 22 days in the Port of Newcastle. In order to reduce and manage the large queue that has subsequently reformed, the Newcastle port operator, PWCS will introduce a new and revised tonnage quota system (Capacity Balancing System) from April 1.

The system was originally granted by the ACCC in 2005 to last until 31 December 2007, but in September 2006, Hunter Valley coal producers voted to switch off the system for 2007. Nevertheless, even with the immediate re-introduction of the system, it could take until July to reduce the vessel queue to a more workable length of around 20 vessels.

Another element behind the dry bulk frenzy is the newly implemented Indian export duty on iron ore. On March 1 the Indian government levied export duty on iron ore at 300 Rs a tonne (6.77 USD/t). The intention behind this new tax is to restrict iron ore exports and conserve scarce national resources, and as the India Iron & Steel Association stated: "this is the first step to cut all iron ore within five years from India". A group of Chinese importers has agreed to temporarily boycott iron ore from India, and among these are China Sinosteel, the second largest iron ore importer in China.

On top of this, on Monday the 19th, The Indian Steel Alliance (ISA) suggested to double the export duty to 600 Rs/t as it is felt that the current levy is inadequate to check overseas sales and the miners are still making profits. It remains to be seen whether or not this suggestion will be authorized.

As approximately 85% of all iron ore exported from India goes to China, the decrease in Indian iron ore exports will likely cause a change in the pattern of trade. Importers need to seek cargo from other sources. The effects of this change in trade pattern have among others led to an increase in port congestion in Brazil, bumping the queue up to 10 days in most loading ports, from only a few days two weeks ago.

Due to strong energy demand, China became a net steam coal importer in Jan-Feb.07 for the first time. In order to secure its prosperous power coal demand, China has cut its coal export quota to 42mt from 64mt in 2006. If fully implemented importers of steam coal from China will have to look for other sources of supply. Indonesia and Australia are likely replacements. Clearly this will change the trading patterns and increase tonne-mile demand.

The National Development and Reform Commission (NDRC) reported today that China will cancel tax rebates on exports of most steel products this year (from 8%), while several high-value added steel products will have their tax rebate cut to 5%. It has not yet been decided when to implement the new policy.

All these changes have occurred since our last market update and will clearly impact the market outlook over the short and medium term.

We are also concerned by the long term market effects based on the recent surge in ordering. The orderbook for dry bulk vessels has jumped from 89 mdwt in January to 99 mdwt in mid March (1138 ships vs 1255 ships).

The graph to the right illustrates the potential effects on the average of the 4 T/C routes for the Baltic Cape Index. Recent changes in the market as mentioned in the text above have been taken into account. During the next two years, these changes should result in higher rates than we projected in February. The drop in 2007 Q3 illustrates the effects the re-introduction of the tonnage quota system in Newcastle probably will cause. However, if the system fails then rates are likely to stay at a higher level as we move towards 2008.

These developments will be covered in more detail in our next monthly release, which should be available during the final week of March.

[rivaldo] 27/3/2007 23:03

Nice recent article about freight rates from mid-March and the shipping market upswing lasting till 2009 - note that since then the BDI has sped up 12% in 2 weeks to 5,357...



"Shipping Companies Benefit From Higher Freight Rates

Shipping companies such as Hanjin Shipping are enjoying rising freight rates amid strong cargo demand and a fall in fuel prices, according to industry sources yesterday.

The Howe Robinson Container Index (HRCI), a measure of the container shipping rate, rose 12.8 percent to 1,140.4 on March 2. The index was established on July 7, 1997 with a base of 1,000.

The Baltic Dry Index (BDI), a yardstick of dry bulk shipping rates that is seen as a good indicator of future economic growth and production, has risen 6.4 percent this year to 4,766 on March 2, the sources said. The BDI was set up January 4, 1985 with a base index of 1,000.

``Since 2002, container shipping has risen 10 percent annually, while the supply of container ships is tight,¡¯¡¯ Yonhap News quoted Ji Hun-seok, an analyst at NH Securities, as saying.

Shipping rates may continue to rise largely due to an increase in global trade and partly because of the booming demand for raw materials from Chinese steel makers, analysts said.

To meet the rising demand for shipping commodities, local shippers are realigning their routes and adding more ships to their lines.

Hyundai Merchant Marine, the country¡¯s No.2 shipper, plans to add seven more container ships this year, while Hanjin Shipping, the leading shipping company, is considering placing more ships on lines that secure high freight rates.

At the same time, prices of bunker fuel used for ships are expected to hover around $250 per ton on average this year, down 7.2 percent from last year.

``The shipping industry is forecast to remain in an up-cycle until 2009 on rising shipping rates and stable fuel prices,¡¯¡¯ Yang Ji-hwan, an analyst at Daishin Securities, was quoted as saying."

[rivaldo] 27/3/2007 10:06

Just to reiterate, the above Buy note retains a 1300p target price.

[rivaldo] 27/3/2007 09:38

Top marks for CKN - the new Panmure note is out on their web site already!



Forecast 2007 EPS is up from 80.4p to 90.23p, with 2008 EPS up to 98.38p.

You'd have to say that with freight rates the way they are 3 months into 2007 already, this H1 should be much better than H2 of last year in which CKN achieved 45.6p EPS. IMO, although the present share price is excellent value anyway on these forecasts, H1 alone could give say 55p EPS.

[rivaldo] 27/3/2007 08:51

Nah, only 970p-990p, and you can buy inside the spread too. Besides, when CKN moves it REALLY moves - the spread will close to nothing and the shares will zoom up 25p in a blink.

Take a look at Galbraiths' charts - VLCC rates shooting up this year, the BDI racing away, it all looks very promising:

[hawks11] 27/3/2007 08:36

Now the spread is 965 - 994.50p, enough to stop anyone in their tracks.

[sambessey] 27/3/2007 08:16

Good, lets hope we see 1100- 1200 soon :)

[hawks11] 27/3/2007 07:33

The Times think they are still a buy.



Few London-listed small caps offer as neat a play on globalisation as Clarkson, the 155-year-old ship broker. The profits of the £170 million company are pegged to the growth of world seaborne trade and, as such, have benefited from the massive movements in iron ore, oil and containers that have accompanied the shift in industrial production to Asia. Accordingly, shares in Clarkson have risen more than sevenfold in five years. It has not all been plain sailing: pre-tax profits were down 21 per cent last year, hurt by a weak US dollar - most of the company's costs are in sterling - a lack of corporate fleet deals and staff defections. Currencies aside, those problems have receded, while Clarkson's order book is up 23 per cent. The initial success of its hedge fund division is also encouraging. On a 2007 multiple of 10.9, and a dividend yield of 4 per cent, the shares are a "buy

[idioterna] 26/3/2007 21:49

sambessy - XD June 1st - Payment June 15th.

BDI up again today 5357

[cambium] 26/3/2007 17:29

What was their new taget, £13 was the old one

[aquilla] 26/3/2007 17:20

woracle, only saw the summary, not the details

[sambessey] 26/3/2007 13:48

when is the dividend due to be paid?

[woracle] 26/3/2007 13:42

need to see what kinda guidance company has given them regards T/O and EPS...price is too subjective.

[idioterna] 26/3/2007 13:40

woracle - I'd have thought £13 was quite enough to be going on with!

[woracle] 26/3/2007 13:39

aquila, any revised forecasts from them ?

[aquilla] 26/3/2007 13:12

Panmure Gordon, who have a target price of 13 pounds, have reiterated their buy recommendation

[clompie] 26/3/2007 10:36

Not exactly a glamorous subject the BDI index, could stick a ships bell on the end !

Fall because they want a few shares to come back into play because the figures do not show a 26% rise or whatever.

mb

[idioterna] 26/3/2007 09:56

Amazing how overlooked this share is. Another of my holdings, TAN, released figures today and there are over 100 posts on that thread. Perhaps we need to spruce up the thread a little - add a little glitter & glamour?

[idioterna] 26/3/2007 09:24

woracle - I remember the discussions on relative merits of seascape over ckn from 1999. Showing my age!;-)

[hawks11] 26/3/2007 09:10

Sambessey, look at the share price for the past three months, there are few to match it.
Saying that I expect it to continue on for quite a while yet. I'm holding for a while yet before thinking of selling some.

[woracle] 26/3/2007 08:51

BMS also worth taking a look. Smaller, not as diversified as CKN but probably even more geared to shipping rates. Slightly cheaper than CKN and projected yield 5%.

[cockneyrebel] 26/3/2007 08:35

Excellent results but the outlook is even better. They are going to have their best ever year - that must mean 110p eps and a PE of about 9 !

Very cheap for what is a very consistent company now. AND A 3.5% yield.

CR