LOGISTICS management service provider Cosco Shipping International (Singapore) on Thursday (Feb 29) recorded a full-year net profit of S$1.9 million, reversing from an S$88.6 million loss a year ago.

 

This came as its H2 net loss shrank drastically to S$59,000 from S$94.8 million in the year-ago period, after administrative expenses fell to S$13.5 million from S$112.6 million due to the absence of a S$99 million impairment of goodwill recorded in H2 FY2022.

 

The H2 FY2023 results translate to a loss per share of 0.003 Singapore cent, narrowing from 4.23 cents in H2 FY2022.

 

Sales in the second half were down 5 per cent to S$88.5 million, however, from S$93.2 million in the year-ago period, as its property management activities experienced a substantial decline, marked by a 30 per cent drop in revenue and a 59 per cent drop in profit before tax.

 

The company attributed this decline to a reduction in the occupancy rate at the Grandstand shopping mall, where the lease for the state land on which the shopping mall is located expired on Dec 31, 2023.

 

Sales in the ship repair and marine engineering segment also fell, by 26 per cent, on a drop in the volume of ship repair jobs in Singapore.

 

That said, logistics activities, which constituted about 85 per cent of the group&rsquo s revenue in H2 2023, remained stable as its sales came in at S$75.7 million, up slightly from S$75.4 million in the year-ago period, the group said.

 

For the full year, the company&rsquo s sales fell 4 per cent to S$178.7 million.

 

The board did not propose a dividend this year, just as was the case in FY2022.

 

Addressing this, the company said the board has resolved not to recommend a dividend payment as the group is evaluating strategic moves to expand its business, ensure sustainable growth and create long-term shareholders&rsquo value. 

 

Elaborating, it said it will be investing in and building logistics supply chain infrastructure and resources at the appropriate time, expanding the logistics supply chain network, and striving to become a leading comprehensive logistics and supply chain service company in South-east and South Asia.

WEDNESDAY, JAN 31, 2024 - 07:30 PM
The Red Sea crisis &mdash and the Middle East situation in general &mdash is worsening. There&rsquo s growing conviction that shipping diversions around the Cape of Good Hope will increase in scope and last much longer than initially expected. That should be good news for shipping stocks over time, due to durably longer voyage distances.

The Houthis hit the JP Morgan-owned product tanker Marlin Luanda with a ballistic missile on Friday, setting a cargo tank on fire. The tanker was chartered by trading house Trafigura and loaded with Russian naphtha. The fire was extinguished on Saturday, with all crew safe.

On Sunday, a drone attack by an Iranian-backed militia killed three U.S. service members and injured at least 40 more at a U.S. military site in Jordan. The Biden administration has vowed to respond, raising the specter of a wider Middle East conflict.

&ldquo Red Sea diversions are on the rise as continued attacks on vessels in the region are prompting more shipping companies to avoid transiting the area,&rdquo said Jefferies shipping analyst Omar Nokta in a client note on Monday.

The vast majority of larger container ships already avoid the Red Sea, and detours are rapidly spreading to bulk commodity shipping.

Citing data from Clarksons, Nokta said that crude tanker transits of the region are now down 22% versus their 2023 average at the beginning of this year, they were down 5% from last year&rsquo s average. Product tanker transits are down 51% versus 2023, after being down 29% versus last year&rsquo s average at the beginning of the year, with liquefied natural gas carrier transits down 87% (from 36%) and liquefied petroleum gas carrier transits down 62% (from 23%).

&lsquo The script has flipped&rsquo for Zim

Nokta significantly upgraded his view on Israeli container liner operator Zim, maintaining that &ldquo the script has flipped&rdquo and Houthi attacks turned Zim&rsquo s business &ldquo from cash burn to cash machine.&rdquo

Nokta had previously estimated that Zim would post adjusted net losses of $260.1 million this year and $506.3 million next year.

His new forecast is drastically different. He projects adjusted net income of $751 million this year, followed by losses of $337 million next year.

&ldquo Red Sea diversions are likely to continue for an extended period, tightening capacity for longer,&rdquo he said.

Zim&rsquo s stock closed up 7.5% on Monday, on a day when most shipping equities ended in the red.

&lsquo Tanker equities should also be added to the list&rsquo

According to Evercore ISI shipping analyst Jonathan Chappell, &ldquo The adage is that one should stock up on canned beans in times of war. We clearly do not make light of these tragedies, but tanker equities should also be added to the list.&rdquo

Chappell noted that in periods of geopolitical risk, shipping stocks provide material beta (a measure of volatility versus the broader market). He presented data on outsized tanker stock gains versus the S& P 500 since the invasion of Ukraine and the Hamas attacks on Israel.



Deutsche Bank analysts Amit Mehrotra and Chris Robertson wrote: &ldquo We believe the recent attacks will result in even more ship owners and operators diverting vessels from the area, which could put further upward pressure on spot rates in the coming week.&rdquo

&ldquo We believe the companies with exposure to the mid-sized crude and product tanker segments will benefit the most from the disruptions,&rdquo they said, pointing to Frontline, International Seaways and Scorpio Tankers.