Precious Shipping Plc plans $550m ship-buying scheme
Set-listed Precious Shipping Plc (PSL), Thailand's second largest dry bulk carrier, will start its $550-million buying programme for second-hand ships when shipping rates fall to 2,000 points on the Baltic Dry Index. The Baltic Dry Index (BDI), the most closely watched measure of commodity-shipping rates, is expected to slide further later this year enabling PSL to bargain for cheaper-priced ships in the market, managing director Khalid Hashim said yesterday.
The BDI has fallen from 4,291 in March to 3,159 as of Tuesday.
"We are expecting the rates to decline further when significant supply of new ships arrives the market later this year, but not to the level of as low as (660 points) seen in December 2008," Mr Hashim said.
"And when the rates fall to the 2,000 level, it would give us good opportunity to get second-hand ships aged five to nine years at a price of below $25 million each."
Of the $550 million in capital it requires, PSL has secured $350 million in loans for buying 12 second-hand ships over the next 12 months. The remaining capital would come from internal cash and proceeds from selling old vessels in the current fleet.
The carrier has sold 16 ageing ships, bringing its existing fleet down to 28.
PSL also confirmed another $400 million in credit facilities for 18 new ships to be delivered from 2010 to 2013. PSL plans to expand its fleet to 60 vessels within the next four years.
PSL posted a second-quarter net income of 1.08 billion baht, down from 1.24 billion in the same period last year. Net profit for the first half fell to 1.92 billion baht from 2.24 billion.
"The half-year results are in line with our expectations," said Mr Hashim, adding that the rest of 2009 and 2010 would remain challenging for the shipping industry in general.
This year China and India have been the major contributors to the global freight market. Their imports of iron ore, accounting for half the global figure, were almost 300 tonnes in the first half, compared with 444 million tonnes for the whole of last year.
Given the International Monetary Fund's global economic growth forecast of -1.3 percent this year, global trade could shrink by 11 percent before becoming barely at 0.5 percent next year. Surging oil prices would further reduce economic activity.
Kim Eng Securities forecasts PSL's earnings at 3.23 billion baht for 2009 with a 26-ship fleet, down from 4.93 billion last year with 44 ships.
The BDI has fallen from 4,291 in March to 3,159 as of Tuesday.
"We are expecting the rates to decline further when significant supply of new ships arrives the market later this year, but not to the level of as low as (660 points) seen in December 2008," Mr Hashim said.
"And when the rates fall to the 2,000 level, it would give us good opportunity to get second-hand ships aged five to nine years at a price of below $25 million each."
Of the $550 million in capital it requires, PSL has secured $350 million in loans for buying 12 second-hand ships over the next 12 months. The remaining capital would come from internal cash and proceeds from selling old vessels in the current fleet.
The carrier has sold 16 ageing ships, bringing its existing fleet down to 28.
PSL also confirmed another $400 million in credit facilities for 18 new ships to be delivered from 2010 to 2013. PSL plans to expand its fleet to 60 vessels within the next four years.
PSL posted a second-quarter net income of 1.08 billion baht, down from 1.24 billion in the same period last year. Net profit for the first half fell to 1.92 billion baht from 2.24 billion.
"The half-year results are in line with our expectations," said Mr Hashim, adding that the rest of 2009 and 2010 would remain challenging for the shipping industry in general.
This year China and India have been the major contributors to the global freight market. Their imports of iron ore, accounting for half the global figure, were almost 300 tonnes in the first half, compared with 444 million tonnes for the whole of last year.
Given the International Monetary Fund's global economic growth forecast of -1.3 percent this year, global trade could shrink by 11 percent before becoming barely at 0.5 percent next year. Surging oil prices would further reduce economic activity.
Kim Eng Securities forecasts PSL's earnings at 3.23 billion baht for 2009 with a 26-ship fleet, down from 4.93 billion last year with 44 ships.