Seaspan's Dividend X-ray

• Report this Comment On November 21, 2011, at 12:43 PM, psl8er wrote:

  Why are you so sure that Seaspan's earnings will improve when it gets all its ships delivered?

  Sure its revenues will increase but so will its expenses including debt service. Its ships are all chartered out to Chinese companies at fixed rates which are only marginally profitable.

  It is a leasing company that is trying to become a principal owner of container ships in a market that is grossly overtonnaged.

• Report this Comment On November 21, 2011, at 1:36 PM, pl2358 wrote:

  psl8er, you need to look more closely at the numbers.

  First, the container ship market is not grossly overtonnaged. In fact, it's the opposite. You are confusing the container shipping market with the dry-bulk shipping and tanker shipping market. Those two markets are overtonnaged; the container ship market is right now at least 40% undertonnaged, based on a modest 2% yearly growth for the next 5 years.

  Additionally, the reason why Seaspan is not making money is simple: they are taking losses depreciating the value of their ships. They are doing that so that they can avoid taxes, like any other corporation is doing.

  Seaspan is actually making a profit on their long-term charters. And by building their fleet out to almost double their size of two years ago, they will be increasing their revenue by sheer volume alone. They are required to pay a percentage of their profits back to shareholders as revenue, so if the total goes up, the amount a shareholder will get goes up, unless they dilute their shares. They've been doing that a little with their preferred share issue, but they will easily be able to increase their dividend. Which, it should be pointed out, is a much higher return than you or I can get in a fixed-rate account.

  It is buying new ships. It has the youngest fleet of major shipping container companies in the world. It will have lower costs per ship because it's ships are newer and will cost less to operate. Plus, before it builds a ship, it requires the company where the shipyard is to pony up some of the financing to build the ship. When somebody has skin in the game, they tend to pay attention a little bit more and are more proactive with making sure that things run smoothly regarding their loans. And, Seaspan gets the loan cheap.

  Obviously, I own Seaspan stock. They are a good company that should start making a lot more money in the future.

• Report this Comment On November 22, 2011, at 12:33 PM, ajstudebaker wrote:

  SSW had a nice advance earlier this year, but it is now down substantially from the high it reached in early April.

  I'd want to see what the company calls "normalized converted EPS" start growing before I invested in it again.

• Report this Comment On November 23, 2011, at 5:41 PM, imacg5 wrote:

  Monday, 21 November 2011 | 00:00

  Containership owners have seen billions of dollars wiped off the value of their fleets over the past year.

  Massive overcapacity has squeezed not only freight rates, but also the value of steel floating on water, the latest service from VesselsValue.com shows.

  The world’s largest container ship owner, AP Møller-Maersk, has seen the value of its containership fleet fall 24% in the past 12 months. Its 222 vessels currently in service are now worth $9.1 billion, compared with $12 billion at the start of November last year, according to VesselsValue.com.

• Report this Comment On November 23, 2011, at 6:13 PM, imacg5 wrote:

  GLOBAL deliveries of new containerships have surpassed one million TEU since the beginning of 2011 with 154 vessels delivered and 280,000 TEU more to come by the end of the year, says Alphaliner.

  "Non-deliveries" due to cancellations, deferrals and slippage have fallen to 8.5 per cent, only twice their long-term historical levels, as the bulk of the delivery deferrals was negotiated in 2009 and 2010," the Paris-based maritime consultancy said in its weekly newspaper.

  "2009 and 2010 were exceptional years as the financial crisis led owners and carriers to defer the deliveries of a significant part of the order book, as well as to cancel part of their orders. Such crisis-driven initiatives were not to be repeated in 2011. Cancellations have actually been marginal this year with no impact on deliveries scheduled for 2011," said the report

  Scrapping and conversions of older box ships since January 2011 have reached 65,000 TEU, with a further 15,000 TEU expected to leave the cellular fleet during the last three months of this year. As a result, the annual net growth rate of the containership fleet in 2011 is expected to reach 8.4 per cent, it said.

  So far this year, 37 ships of more than 10,000 TEU have been delivered, accounting for 47 per cent of the total capacity delivered, and all of these vessels have joined the Asia-Europe trades, with this route absorbing 64 per cent of this year's new capacity at 640,000 TEU, including smaller ships of 6,500 t 10,000 TEU.

  The Asia-Europe trade lane now offers a total capacity of 236,000 TEU, or year-to-date growth of seven per cent. Larger ships have pushed out smaller ones, aggregating 400,000 TEU, a situation that is combined with depressed freight rates

  It noted that the Latin America trades have absorbed 169,000 TEU, or 17 per cent, of the vessel capacity delivered this year. Altogether, the trade has absorbed 250,000 TEU of additional capacity this year, including both new ships and vessels cascaded from other trades, mainly from the Asia-Europe and transpacific routes.

  The Middle East trade has absorbed 50,000 TEU while intra-Asia routes account for 29,000 TEU.

  Deliveries are expected to hit 1.4 million TEU and 1.8 million TEU, respectively, in 2012 and 2013, most capacity coming from ships larger than 7,500 TEU, the report said.

• Report this Comment On November 23, 2011, at 6:18 PM, imacg5 wrote:

  Worldwide Orders for New Container Vessels Reach USD 57 Billion

  Wednesday, 12.Oct.2011, 23:00 (GMT+3)

  Ocean carriers and charter shipowners have placed orders worth $57 billion for new container vessels over the next four years, with about half of the value of orders made as the industry emerged from a slump in 2009, said Alphaliner.

  Ocean carriers and charter shipowners have placed orders worth $57 billion for new container vessels over the next four years, with about half of the value of orders made as the industry emerged from a slump in 2009, said Alphaliner.

  The carriers’ and shipowners’ ordering spree of $27 billion for new container vessels prior to the collapse of Lehman Bros. added to $30 billion of contracts already in the pipeline, the container market analyst said. Of the orders for new ships through 2015, ocean carriers account for $35 billion and charter owners $22 billion.

  “The carriers’ first action after emerging from the worst recession in container shipping history ever, was to order even more capacity,” Alphaliner said. “New orders were placed in an already over-supplied market.”

  The capital commitment on new vessels by 19 of the largest ocean carriers exceeds $33 billion.

  MOL and NYK are the only top 20 carriers without outstanding new vessel commitments on their own account. But the Japanese lines have signed charter deals for 13,000-14,000 20-foot equivalent container units newbuildings with their alliance partners “to not be left out of the expected capacity growth.”

  As ships ordered in 2010 and 2011 are between 25 percent and 30 percent cheaper than vessels contracted before the crisis, their owners will benefit from a significant cost advantage to ships ordered in 2006-2008.

  Maersk Line is the biggest spender with new ship commitments estimated at $6.5 billion, largely accounted for by its 20 Triple-E class 18,000 TEUs ships costing $190 million each.

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