Chart 1: BDI's daily chart as at Nov 19, 2008 (source: InvestmentTools.com)
The results has just been announced & it is a surprisingly respectable performance. Its turnover increased by 16% q-o-q or 32% y-o-y to RM217 million. Net profit increased by 24% to RM143 million from RM115 million recorded in the previous corresponding quarter. When compared to the preceding quarter, net profit has declined by only 35%.
While Maybulk has enjoyed a gain of RM159 million from the disposal of a product tanker (Alam Comel), it has also suffered from unrealized losses from its investment in quoted securities amounting to RM62 million.
A closer look at the revenue table (below) shows that Maybulk was able to enjoy shipping rates in 3Q2008 that were higher than those in 2Q2008. How did Maybulk manage to secure such high shipping rates? One possible answer is that it has entered into long-term charter at higher rates than the prevailing spot rates, before the market downturn. When would these charters end? Would the counter-parties back out of such charters when the prevailing spot rates are nearly 90% lower?
From Chart 2 below, we can see that Maybulk's share price has slid off a lot since making a high of RM5.45 in November 2007. The stock has recently broken below its strong horizontal support of RM2.45 & it may drift lower to test its long-term uptrend line support at RM1.92-2.00.
Chart 2: Maybulk's monthly chart as at Nov 19, 2008 (source: Quickcharts)
The management of Maybulk has done a very good job. With the sharp downturn in shipping rates- brought on by the global economic slowdown- the true test is still ahead. For those who have the stock, I think you may hold onto it since the share price has dropped to such a low level. For those looking to buy, I think you should wait for another 1 or 2 quarter(s) for more clarity.
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