Tuesday, November 10, 2009

Rickmers Maritime's problem!

Rickmers Maritime (RM) has issued a dividend. However as feared, one of their ships on lease is having its contract terminated on Feb 2010. Hence if they are unable to find another taker for this ship, or if they have to lower the charter price for the ship,this will prove detrimental to RM's income.

So..tentatively some stock brokerage firms are having a sell call on this stock.

Once again as I said, if you believe in the long term potential of the shipping industry, which I feel will definitely be strong once more, you can consider this stock. However, because of the recent news, do give it a few days for the stock to stabilize before buying.

In general, whenever news of a stock is just announced, I do recommend that you give it a few days for the market to digest the news before buying into the stock. This is because there might be many people speculating on the stocks due to the news, so if you are a long term investor, you would not want to be too affected by the immediate news. (However this is my own personal opinion, but it actually varies, depending on the news too)


TheKen said...

this is why i dare not buy any shipping trusts now even tho their yields are high

when their charter contracts expire or 'early termination', then we will see how weak the market has become, and then maybe share price will go lower again

and not forgetting usd keeps trending lower

ntuchartist said...

Yah, there is much risks involved.

But for the long term, the shipping industry will have to pick up in my opinion.

But as for the USD, I am not so sure, it might actually remain low, but if this is the case, the shipping firms will have no choice but to increase their prices, and their customers will eventually have to give in, cos everyone in the economy will be adjusting to the 'new value' of the USD.

This is because, since the value of work is the same, with a weaker USD, means the company has to get paid more USD for the same value of work.

financialfreedom said...

I will stay away from Rickmers.

They need to pay up some debt early next year.

AK71 said...

I have some exposure to FSL but not Rickmers and PST. Shipping will stay weak for some time to come. There is just too much capacity. See all the ships idling off Singapore? Scary.

Ships are also depreciating assets. All the shipping trusts are heavily leveraged. Not a good combination when the global economy is slow in recovering.


Nice post about rickmers.