Singapore Shipping Corp Ltd (S19.SI) is a well-established shipping company in Asia. The company owns currently six vessels for charter. The ships are pure car truck transporters with a total capacity of almost 38,000 cars. Singapore Shipping Corp provides furthermore ship management, ship agency and logistics services including terminal operations and warehousing services.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] Three-quarters of the revenues come from the ship owning and management business and around half of the revenues from customers in Japan, followed by customers in Singapore with almost 30 percent. Two of its customers account for almost three-quarter of the total revenues.
Despite the downtrend in the shipping industry in 2016, Singapore Shipping Corp has been able to remain profitable. In 2017 the global shipping industry recovered from its crisis as a result of an accelerating worldwide economy. Singapore Shipping Corp management expects another profitable year 2017/18.
Singapore Shipping Corp was founded in 1988 and is headquartered in Singapore. The shares are listed on the main board of Singapore’s stock exchange since 2000. The company’s shares can also be traded in Germany. Major shareholder is the company’s executive chairman, Mr. Ow Chio Kiat, with an ownership of around 35 percent. Around 57 percent of the shares are in public hand.
With a workforce of almost 700 employees, Singapore Shipping Corp reported revenues of 23m USD and profits before tax of 5m USD over the first half-year 2017/18. This is an increase of 3 percent and 26 percent respectively compared to the same period a year ago. Every segment of the company performed profitably. In 2016/17, revenues and profits decreased 3 percent and 10 percent respectively, the first decrease in the last seven years. The operating margin of 28 percent is well above industry average. Singapore Shipping Corp had cash reserves of 13m USD at the end of Sept 2017 and announced to use the strong liquidity for investment opportunities arising in the near term. Singapore Shipping Corp shows a solid balance sheet with good profitability and financial strength. The equity ratio is at 47 percent and the gearing, defined here as total liabilities to total equity, at acceptable 113 percent.
Singapore Shipping Corp shares are in an uptrend since the beginning of this year and gained around 25 percent in value since. The company is priced at ten times earnings. The shares trade slightly above book value and at four times cash flow only. The latest dividend yielded 3.5 percent.
We are optimistic that Singapore Shipping Corp will benefit from a continuing robust worldwide economy. The company comes with good profitability and a moderate valuation. The shipping industry is still consolidating, and Singapore Shipping Corp could become a target for an acquisition in the future. For the next six months, we expect an upside potential of at least 20 percent.
AIS Rating: ★★★★☆
| 2012/13 | 2013/14 | 2014/15 | 2015/16 | 2016/17 | 2017 H1 only |
|
|---|---|---|---|---|---|---|
| EPS (USDcent) | 1.6 | 2.0 | 2.0 | 2.2 | 2.0 | 1.1 |
| Change | 14% | 25% | 0% | 10% | -9% | 22% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | LIAB./ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 10 | 25 | 1.2 | 4 | 47% | 12% | 113% | 3.5% |
* Equity / Total Assets, ** Total Liabilities / Equity
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