Maybulk's topline & bottomline dropped

Maybulk has just announced its results for 1Q2008 ending 31/3/2008. Its net profit dropped 40.9% q-o-q or 35.8% y-o-y to RM92.3 million while its turnover dropped 5.5% q-o-q, but increased 68.0% y-o-y to RM180.5 million.



The poorer results is mainly due to the following factors:

1. there was no exceptional gain from sale of vessels in 1Q2008 as compared to a gain of RM33.9 million in 4Q2007 or RM74.0 million in same quarter last year;
2. it provided RM20.2 million for diminution in value of its quoted equity investment for 1Q2008 as compared to a gain of RM23.8 million booked in for 4Q2007; and
   
3. Its turnover declined 5.5% q-o-q due to

• a 18.9%-drop in the average Hire Days for its Product Tankers, which more than offset the 13.2%-increase in the average Time Chartered Equivalent ('TCE') rates for the Product Tankers.
• a 4.7%-drop in the average TCE rates for its Dry Bulks Carriers, which more than off set the 3.4%-increase in the average Hire Days for the Dry Bulks Carriers

Market Outlook

From Chart 1 below, we can see that the rates for Dry Bulks, Dirty Tankers & Clean Tankers are on the rise for the past 4-5 months. They have risen to a level, either matching or nearly matching, the high recorded in 2007. These rates may not sustain if the growth of the global economy were to suffer due to slowdown in the US economy.


Chart 1: The 3-year Chart of BDI, BDTI & BCTI rates up to 21/5/2008 (source: Capital Link Shipping)

Valuation

Based on the past 4-quarters' EPS of 49 sen, Maybulk (closed at RM4.38 yesterday) is currently trading at a trailing PE of 8.9 times. At this multiple, Maybulk is still attractive.

Technical Outlook

Maybulk is still in an uptrend line, with support at RM3.90-4.00.


Chart 2: Maybulk's weekly chart as at May 21, 2008 (source: Quickcharts)

Conclusion

In view of the current high shipping rates, I believe Maybulk's financial performance could rebound. The stock is trading at an attractive multiple & the technical outlook is still positive. As such, I think Maybulk share price may still have further upside.