Shipping is a high uncertainty industry as the rates are highly cyclical. You have to understand the basic dynamics first.
It takes 3-4 years to build a ship. When rates are high, companies rush to build ships. By the time the ships are build, all these ships get delivered at the same time and those rates collapse. Companies have no choice but to send their ships for scrap to earn some money. So the size of the fleet goes down at the time when the rates are low. And as the fleet size goes down it sets up the conditions for the rates to go up.
And then when the capacity goes down, and the rates goes up, you cannot bring in capacity as it takes 3 years to build the ship.
So the only thing that can happen is for the price to go exponential.
Now that prices are trending up. We also know that supply is limited as new ships would only arrive 3 years in the future. What about the demand side?
1) Global economies are in the midst of re-opening, on track for a V-shaped recovery 2) Unleash of pent-up demand to further boast for demand for commodities 3) Massive massive infrastructure stimulus by the economic powerhouse, China and US, further boost the demand for commodities. we are talking about more than 2 trillion of stimulus here by both countries
Limited supply coupled with explosive demand. What do you think is in play here?
aiyo, only a bit... still haven;t learned from u lor... u always shout wan dollah or more than wan dollah... need to hear from you the reasoning too... then iq can increase abit lor...
Money from other sectors are pouring in due to MCO 3.0 and high Baltic index.. And Maybulk is lucky as it does not being affected by lock down, and it's also the only counter doing dry bulk shipping in Malaysia.. What if there's only one glove company in Malaysia during the pandemic... Can you imagine?
yes i understand the concept, however, money needs to start pouring in... volume now still a 7 mil, albeit slowly building up, need at least 50mil volume and above to convincingly take out previous high...
@chief999, Undoubtedly volume will push the price up fast, but honestly speaking I rather that not to happen... but prefer it to go up slowly but steadily... Personally I feel very comfortable with 5-10 mil volume now as I'm looking for long term + big gain, not small profit.. So, I hope it won't attract too many to come in at once...
ohh, sharon, nice thinking too... but in order for 85 cents to break, cannot ignore the earlier volume of 133mil.... need to get past that in order to slowly find a strong footing upwards... may I know what is the time frame you looking at? and when you said big gain, do you mean stopping at the earlier 1 to 1.2? anyway, been happy with the analysis so far... quite spot on...
sharonchong @chief999, Undoubtedly volume will push the price up fast, but honestly speaking I rather that not to happen... but prefer it to go up slowly but steadily... Personally I feel very comfortable with 5-10 mil volume now as I'm looking for long term + big gain, not small profit.. So, I hope it won't attract too many to come in at once...
@sharonchong Compare to glove sector is not appropriate in Dry Bulk business. Malaysia is the top production in glove sector and also benefits of geographical indications. This is not the case for dry bulk business. As long as you got vessel, you can do the business.
But don't get me wrong, I'm still positive to dry bulk business and i hold some share of Maybulk.
Pros: 1. BDI is on uptrend now. If can sustain the current level of BDI, definitely will benefit Maybulk. 2. Maybulk vessel is quite new and average age of 5+ years. Operational cost should be remain 3. Demand vs Supply. Demand is remain strong for now and supply is remain low for at least for coming 2-3 years. A Stimulus Plan in US should keep the demand strong for raw materials. 4. Bank Pembangunan Malaysia Berhad should be no ticket left behind for Maybulk. Should not have big sell off for Maybulk.
Cons: 1. Maybulk only have 7 vessels for coming Q2 2021. Not sure is there a plan for Maybulk to buy more vessels in future. So far i did not heard any. If not, the profit will limited at 15mil-20mil max per quarter. It's good but not great.
From Sharochong: Money from other sectors are pouring in due to MCO 3.0 and high Baltic index.. And Maybulk is lucky as it does not being affected by lock down, and it's also the only counter doing dry bulk shipping in Malaysia.. What if there's only one glove company in Malaysia during the pandemic... Can you imagine?
aiyo this Batu88, earlier ur analysis is the one getting us in... ur analysis already showed Q2 having 30mil PAT... now pula u go put 15mil PAT... mana boleh... TCE 12k already 15mil PAT now at least TCE already 20k very conservative... u still give 15mil PAT... aiyoyo... even musangking can detect good fruit or bad fruit....
@chief999 my Q2 estimation at PAT 30mil is before they release Q1 result. So have to adjust it accordingly with 7 vessels left in Q2 2021. TCE 20k is too optimistic in my view, im still using TCE 15-18k in my own forecast. Thus my estimation for next Q PAT should be around 20mil for Q2 2021. there are some limitation there if vessels remain 7. anyway, 20mil PAT is still good resul. 80mil annual PAT with current market value of 730mil, forward PE is still single digit.
yah 20mil is still good... but then again, cant u use Q1 data? 8 vessels already generating 46.6mil revenue? hmm.. 20kusd is already very conservative... this is already been achieved in end March... hence any ship going out in April onwards is already charging 20kUSD.... forget about May and June, coz time lag... this bulk bulk always give good headache to solve... but a surge of of BDI will not discount the surge in maybulk too... hope for the best
The Baltic Dry Index rose 2.9% to 3,267 on Thursday, its highest since June 2010 and extending gains for a seventh straight session, supported by prospects of robust demand and despite China’s efforts to limit rising commodity prices. The capesize, which tracks iron ore and coal cargos of 150,000-tonnes, surged 5% to a one-month high of 4,212; and the panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and iron ore, advanced 1.1% to 3,558, a peak since June of 2010. Among smaller vessels, the supramax index rose 41 points to 2,754.
Yes... Contrary to what i said.. Based on weekly, bdi actually had the best return or performance.. Against all asset classes.. Nasdaq dow, gold bond etc etc... Looking forward for the bounce..
Baltic Exchange Dry Index is expected to trade at 3491.21 points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 4457.90 in 12 months time. Tradingeconomics.com
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Posted by sharonchong > 2021-06-16 19:00 | Report Abuse
No worries.. @Chief99... even the strongest bull need a rest ma.. haha...