Outlook for Listed Dry Bulk Companies in 2016

By Aiswarya Lakshmi
Wednesday, January 20, 2016
Graphics: Drewry Shipping Consultants Limited

 Investors suffered massive wealth erosion in 2015, as share prices of dry bulk companies kept tumbling during the year, says Drewry Maritime Equity Research (DMER).

 
DMER’s shipping index, which is based on the market cap of leading dry bulk companies, was down ~43% in 2015. Asset values failed to find a bottom with ship owners putting their vessels on the block in a bid to fix their balance sheets. 
 
Investors, enticed by cheap valuations, were caught on the wrong foot as stock prices breached critical support levels during the year.
 
Devanshu Saluja, Vivek Shah and Rahul Kapoor, analysts at DMER stated, “We see no recovery in sight over the next 12-18 months because Chinese growth pangs will continue to haunt the dry bulk market and vessels will burn cash in 2016 as freight rates remain under pressure. Any improvement in vessel utilisation and earnings look set to remain elusive with little prospect of change in the foreseeable future”.
 
Every year since 2011, industry participants have repeatedly failed in their attempts to call the bottom of the market. We believe such exercises are futile as the market will continue to be unpredictable and volatile. 
 
For this reason we remove the % bands for our DMER “Value” ranking system for dry bulk stocks under coverage and will continue to emphasise on DMER “Risk” methodology for the time being.
 
We have divided our dry bulk coverage universe into two buckets: 1) companies that are well positioned to weather the downturn 2) companies with higher embedded risk. 
 
The first cluster comprises D/S NORDEN, Pacific Basin, Diana Shipping and Navios Maritime Holding: all having positive operating cash flows and no financing concerns. On the other hand, Star Bulk Carriers, Scorpio Bulkers and Golden Ocean are exposed to high uncertainty and we advise investors to swap their holdings in these companies with better quality stocks.
 
Dry bulk shipping will not be a preferred space and we advise contrarian investors to be selective while chasing the deep discounts presented by the ongoing sector weakness. Notwithstanding this, they should look to companies with diversified business structures over pure plays with large fleet sizes. Hence, we recommend D/S NORDEN and Navios Maritime Holdings from our dry bulk portfolio.
 

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter July 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Bulk Carrier Trends

LNG-fueled Bulker Ordered from Korea

Hyundai Mipo Dockyard (HMD) has signed a contract to build a 50,000 dwt bulk carrier with ILSHIN LOGISTICS. The project is a collaboration between POSCO and ILSHIN

Broad Declines drag Baltic Index down

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Tuesday on lower rates for capesize, panamax and supramax vessels.

How to Avoid Claims for Self-cooking Cargo

North P&I Club has advised its members to be extra vigilant during loading and transport of soya beans to ensure they do not get blamed for cargoes that start ‘cooking’ at sea.

Finance

China Joins UN Trucking Treaty

China has taken a major step towards establishing a speedy new "Silk Road" to Europe by signing up to a U.N. trucking treaty.   Fifteen years after joining the World Trade Organization (WTO),

Bahri Q2 Net Profit Soars

National Shipping Company of Saudi Arabia (Bahri), the exclusive oil-shipper for Saudi Aramco, reported a 47.2 percent increase in second-quarter net profit on Tuesday.

Gulf Petrochem Group Expands European Bunker Operations

Gulf Petrochem Group, the UAE based global bunker supplier, has announced that it is now officially offering physical bunker supply in the port of Rotterdam, out of its new office based in Dordrecht.

Vessels

NASSCO Delivers Garden State to APT

Marking its seventh ship delivery in the span of just over a year, General Dynamics NASSCO has delivered the newly built ECO Class tanker Garden State for American Petroleum Tankers.

LNG-fueled Bulker Ordered from Korea

Hyundai Mipo Dockyard (HMD) has signed a contract to build a 50,000 dwt bulk carrier with ILSHIN LOGISTICS. The project is a collaboration between POSCO and ILSHIN

BMT to Lead Repower for Historic USCG Eagle

BMT Designers & Planners, a subsidiary of BMT Group, an international maritime design, engineering and risk management consultancy, is leading the effort to repower the historic U.

Logistics

New Container Facility at Krishnapatnam Port

Krishnapatnam Port, India's largest all-weather; deep water port on the east-coast of India has inaugurated CONCOR’s - Port Side Container facility – a Government of India undertaking.

China Joins UN Trucking Treaty

China has taken a major step towards establishing a speedy new "Silk Road" to Europe by signing up to a U.N. trucking treaty.   Fifteen years after joining the World Trade Organization (WTO),

Gulf Petrochem Group Expands European Bunker Operations

Gulf Petrochem Group, the UAE based global bunker supplier, has announced that it is now officially offering physical bunker supply in the port of Rotterdam, out of its new office based in Dordrecht.

 
 
Maritime Standards Navigation Offshore Oil Pipelines Port Authority Salvage Ship Electronics Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0737 sec (14 req/sec)