Maybulk Latest Quarter Report

Maybulk Performance review: ( from quarter report)

Group revenue for the nine months to September 2007 is RM417.2million. This is a 25% increase compared to the previousyear’s nine month revenue of RM333.6million.

On a segmental basis, revenue from the dry bulk segment for the period ending 30 September 2007 is up RM59.8 millionshowing a 23% improvement against the corresponding period in 2006. Whilst total hire days are reduced due to disposal of vessels, the strong freight market has more than compensated for the reduced hire days. The revenue for the tanker segment is up RM21.7million reflecting a 31% improvement compared to that of September 2006 boosted by increased hire days due to the delivery of 3 new tankers in 2007.

Profit after tax for the nine months to September 2007 is RM417.9 million - a 94% increase compared to the nine months ofSeptember 2006. This is due to strong dry bulk market, the addition of the new tankers and the RM133.5 million gains (last yearnone) on disposal of vessels.

From above statement, i am assuming that Maybulk management has been doing terrific job as they have sold another ship and netting a gain of RM28M, the price of the ship has been going up due to the increase of BDI.(Sold during price of ship going high and buy back again durng price of ship going down). After BDI hitting high on November with more than 11000, it has drop to 9897 for now. ( As speculator starts taking profit).

This has trigger the fall of Maybulk price from 5.20 high to 4.76 currently. Some of the Equity research firm has set a TP for Maybulk with RM4. Although the earning has been improved, but the profit earning did not meet their forecast, so they trigger sold for this counter. Current EPS stood at 54sen, with price at 4.76, PE = 8, excluding profit for the sales of ship, which is around RM133.5 million gains. Stripping this gain off, the net profit would be only 255millions, divided by 1000 m shares, leading to 36.6sen core profit from shipping line, Thus the Pe would be around 13. ( Please be reminded that they cannot always sell ship to earn so it would consider a one off gain and should not be calculated in the net PE )

a PE 13 would be a fair value to me considering the cash that Maybulk contains now. A good dividend yield as high as 7.2% can be expected with current price. A RM4.50 is definitely a buy. I will wait for that price. ( i have sold maybulk at price 4.6, 4.78 and 5.05 last time )