Maybulk proposed 1-for-4 Bonus & 30-sen Dividend

Yesterday, the proud ship Maybulk sailed through the Red Sea & became one of the rare gainer on the Bursa, with good volume to boot. And, why not? The stock has reported a very set of result for its FYE31/12/2006. Even though its net profit has dropped from RM651.2 million to RM312.3 million, the decline was due to the absence of exceptional gain, unlike FY2005 where it had enjoyed a gain of RM412.2 million from the sale of vessels. If this gain is excluded, you will see that Maybulk's operational profit has increased by 30.7% from RM238.9 million to RM312.3 million. The improved performance is attributable to higher chartered rates and lower administrative expenses.

The company has proposed dividend totaling 30 sen per share (which includes a special 18-sen dividend) as well as a 1-for-4 Bonus Issue.

Based on its FY2006 EPS of 30 sen & its closing price of RM3.42 as at yesterday (Feb 28), Maybulk is trading at a PE of 11.4 times. I believe that Maybulk has a fairly good chance of repeating this performance this year as the charter rates are still very strong (see Chart 1 below).


Chart 1: Baltic Dry Rates' Daily Chart (recent chart)

I've called a BUY on Maybulk when its share price first broke above its downtrend line in August 2006 (here) when it was trading at RM2.20. I've reiterated the call again on Feb 2 when it surpassed its all-time high of RM3.10 (here). I still believe there are further upside to this stock. But, wuth the share price at RM3.42 & (or, trading at a PE of 11.4 times), that upside is probably in the region of 20-30%.


Chart 2: Maybulk's daily chart from Mar 2006 to Feb 28, 2007



Chart 3: Maybulk's daily chart from Jan 2004 to Feb 28, 2007