Mercator Lines SIngapore - Trading at 65% discount to NAV

year : 2009... 2010... 2011... 2012... 1H2013


dividend (US cents) 3.91... 2.31... 2.40... 2.40... 1.20

Thus, dividend yield around 10%. Steady

Rickmers recently had a rights issue, which doubled its units. According to Rickmers, the distribution per unit (DPU) of US 0.60 cents per quarter for the rest of 2013 will be maintained.

However, don't expect this to continue into FY2014. The DPU will be cut!

This is about Rickmers Maritime. source: mosi.sg/blog/2013/4/24/soaring-like-an-eagle


I just want to share some salient points raised at the AGM/EGM:

This is the longest down cycle in the shipping sector but things appear to be getting better.

It's business as usual. Management is hopeful that MSC will charter Kaethe C. Rickmers in Sept 2013 on a long charter. Other than that, the next major 'risk' would come in early 2014 with the two 3,450 TEUs leased to Ital Marittima (part of Evergreen) expiring.

Pleasantly surprised by board's friendliness to unitholders. They understand the importance of sustaining and growing DPU.

New build is at a low of 20%, down from 60% of capacity in 2008. Future capacity growth is constrained but there are still many unknowns - trade volume, Chinese shipyards/building capacity, ship financing, demolition etc

Banks are getting out of the financing space - meaning, only the well capitalised shipowners will survive and grow.

So what does it mean?

This is not a short term gamble

You cannot expect to flip the stock and make 15% overnight
There may be price inefficiencies during the trading of the rights and different strategies for you if you are into that. But in the greater scheme of things, it doesn't matter

Calling a spade a spade: RMT is a leveraged play on container shipping. If you buy in, you expect container shipping rates to recover.

How bad can it get? Industry wise, not much. If somebody goes bust, it's not a bad thing as capacity will likely be withdrawn. Hopefully, it's not a RMT counter party.

How bad can it get? For RMT, again, not much. IMHO, the default/counterparty risk now is much lower than 1-2 years ago. Leverage is now so low that banks will be shooting themselves if they pull the loan from RMT.

In any case, the rights issue should settle the nerves of the bankers.


If you examine the facts and figures and take the position that recovery is not happening anytime soon, then don't buy into the RMT story.

still waiting for rebound .. Mercator is green in a sea of red


means it is undervalued ... can't go further south already

Zen, can you help us understand your stock pick? I see that its 1Q ended June2013 was a Net Loss of USD 6.7 mn. Spot rates were down, termination of chartered in vessels, disposal of a vessel and new contracts at rates lower than previous rates.

Fundamentals have weakened. Will 2Q be another loss-making quarter? Why would this company be a pick for you? Granted the discount to NAV is high, but .... it's not enough to merit a meaningful investment, is it?

i will agree the fundamental is nothing to shout about now .

It is the buying into Mercator when price is so cheap now , way below NAV and when IPO is at 76cents

Just wait for tech rebound thats' all