SAC Capital analyst Tracy Lim sees Samudera Shipping Line (SSL) as currently having “some pricing power”. The company will also be riding the wave of higher freight rates, which boosted its revenue for the 1HFY2021 ended June by 19.6% y-o-y to $209.1 million.
During the half-year period, SSL also reported higher net cash of US$80.9 million ($109.4 million) as at June 30, from US$51.3 million as at Dec 31, 2020. This was due to the sale of some of SSL’s vessels and higher profitability in the 1HFY2021.
In an unrated report, Lim expects that the cash will be used to purchasing more vessels when prices drop.
“Its solid cash position also gives room for other expansion opportunities,” she writes.
Looking ahead, Lim expects higher freight rates, as well as the strong demand for goods to continue to be key drivers for better profitability for the company.
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To this end, she sees the global demand for goods to remain elevated despite the resurgence of Covid-19 infections, on the back of the continued US fiscal stimulus, “at least until its scheduled end in September”.
That said, near-, as well as longer-term headwinds include port congestions and the impact of high freight rates on charter-in costs when existing contracts are due.
As at 2.39pm, shares in Samudera Shipping Line are trading 0.5 cent lower or 1.2% down at 43 cents.
