350_chairmancm
Hsu Chih Chien, chairman of Courage Marine.
File photo by Leong Chan Teik

COURAGE MARINE’s earnings recovered strongly in 2010 and the dry bulk shipping company is proposing a jump in the final dividend – from 0.47 US cent to 0.71 US cent a share.

That translates into a dividend yield of about 4.8% based on its recent stock price of 19 Singapore cents.

Courage Marine, which operates 9 dry bulk carriers mostly carrying coal and sand last year, reported a US$9.0 million net profit for the full year compared to US$75,000 in 2009.

However, most of the 2010 earnings were achieved in the first half.

Courage Marine made US$8.2 million in the first half, and eked out only US$800,000 in the 2H as the Baltic Dry Index tumbled.

It barely broke even with a net profit of US$12,000 in 4Q when the Baltic Dry Index averaged about 1,500, which is about half way down from an average of about 3,000 in 4Q09.

Baltic_Feb11
The Baltic Dry Index has fallen sharply since 3Q10. Source: Bloomberg

The index is currently hovering around 1,200.

That Courage Marine even had a profit is testament to its ability to operate cost-effectively its fleet of old ships which average 25 years of age.

As Mr. Hsu Chih Chien, Chairman of Courage Marine, said: “The weak market conditions have led to losses in many dry bulk shipping companies. Fortunately, the Group remains profitable, led by the management’s years of experience. We effectively utilise the strategy of using pre-owned vessels and minimal operating costs to achieve over five consecutive years of profitability.”

In 2010, Courage Marine’s turnover increased by 67% to US$46.5 million due to higher utilisation and higher fleet capacity, particularly in 1H.

carl_yuen_2011
CFO Carl Yuen. Photo by Leong Chan Teik

Cost of sales increased at only 21% to US$35.2 million, resulting in a gross profit of US$11.3 million compared to a gross loss of US$1.1 million in FY2009.

The Group achieved a gross profit margin of 24.4% for FY2010.

CFO Carl Yuen highlighted Courage Marine's strong customer base - which includes big names like China Coal Energy and Glencore International - and gave that as the key reason the company has no bad debt issue.

In addition, he said, the company is in a net cash position (US$29.4 million) and has a low interest burden (US$119,000 in 2010) when its peers commonly have 50-60% gearing (which could cause severe financial stress).

Catalysts: BDI turnaround, Hong Kong dual-listing

Courage Marine cited a report from Deutsche Bank on Feb 9, 2011, saying the BDI may turn around in 1 to 2 months’ time.

The Group currently has a diversified fleet comprising four handysize vessels, four panamax size vessels and one capesize vessel, which represents a total of over 576,000 deadweight tonnes in capacity.

Last month (January), Courage Marine announced its plan for a dual-listing in Hong Kong to facilitate ‘business opportunities, customer relationship and business development in the PRC.”


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