Maybulk-2013 Q4 result update

Before the Q4 announcement, we have anticipated a 30% rise in Earnings . Has this materialized? (click to recap: maybulk-2013q4 forcast)

Table 1 - 2013 Q-Q results

Table 1, shows a net profit increase from RM8.542 million to RM19.659 million, a improvement of 130%. It looks like our forecast were right. However, looking deeper into the quarter reports shows otherwise.

Table 2- 2013 Q-Q segment profit

By segment, table 2 shows profits from the bulk carrier segment recorded more losses from a loss of RM4.1 milion to a loss of RM6.3 million. The overall improvement actually came from the investment holding in POSH and the Tanker segment by 67.8% and  146% respectively.

Why did the bulk carrier made further losses while the Baltik Dry index showed a 40% rise in Q4? Is the index a poor indicator to Maybulk?

Chart 1 - BDI vs Revenue from Bulk segment

Charts 1 shows Bulk segment revenue vs BDI (Baltic Dry index) from 2010 Q1 to 2013 Q4. The revenue from bulk carriers is in tandem with the index but somewhat lagging behind by 1-2 quarter. The most recent quarter (2013 Q4) is also seem to display this pattern. (Bulk revenue dipped although the index inched higher)

Chart 2 compares the reported TCE (time charter equivalent) to BDI index for the same period. it is also positively correlates. (TCE is a standard average to gauge a profitability of  vessels. Multiplying TCE to the number of Hire days is the Bulk revenue.)

The BDI index is actually a composite of 4 independent indexes namely the Capsize, Panamax, handysize and Suprasize index. These are index for rates of different size ships. The Capesize are the largest and Maybulk do not have one. Chart 3 compares the TCE with the new BDI index with capsize numbers excluded. The correlation is even more obvious.








The above charts shows, the BDI and BDI without Capsize remain a good indicator to the profitability of Maybulk. For the recent Q4 quarter, the variation might be due to Dry Docking as well as lagging effect seen in chart 1.

What is in store for the coming future?

Chart 4 - maybulk share price vs BDI exclude Capsize

from Chart 4, month on month, Maybulk's share price is also in tandem with BDI exclude Capsize index. However, recent 2 months (2014 Jan & Feb) it is diverging from the index. For a short period, this does occurs. Over timer, it is expected, the price to normalize or the index recovers. With news flow for the listing of POSH emerging, prices are expected to be driven up. But it is to remember, the listing of POSH is a one of event. Ultimately, the BDI rates is going to dictate Maybulk's future.