Maritime stocks hit hard at year-end, analysts say

Maritime transport firms hit hard by gloomy freight sector (Photo by
Maritime transport firms hit hard by gloomy freight sector (Photo by

Gloomy freight sector in the last quarter of the year is weighing down maritime transport companies, making brokerages recommend investor to dump maritime shares.

Shipping lines are in tough time as they suffer heavy losses from their core business, according to Sacombank Securities Joint Stock Company (SBS).

It’s not the good time to buy maritime shares and investors should consider selling shares in those companies, which are in red, the Ho Chi Minh City-based broker said in a report.

Sacombank’s securities firm named five listed maritime companies investors should dump in the upcoming time. They include Dong Do Marine Joint Stock Company (DDM), Hanoi Maritime Holding Company (MHC), Vietnam Ocean Shipping Joint Stock Company (VOS), Vinaship Joint Stock Company (VNA), and Transport and Chartering Corporation (VFR).

Profit from shipping business of DDM is very low as the firm bought vessels at high price. DDM lost VND16 billion (US$800,000) in the first nine months of the year, with share price plunging to VND6,100.

SBS’s financial experts said the Hanoi-based maritime firm struggles to be back on track as the maritime industry and the stock market remain gloomy.

MHC is specific in container shipping, which suffered heavy losses last year and showed no sign of recovering in 2010. The company had to sell some assets to offset losses last year, selling its 19.7 percent share holdings in the 21-storey Ocean Park building in Hanoi to Vinalines for VND82.7 billion ($4.13 million).

Therefore, MHC will no longer have profit from the building to cover losses from its core business this year, SBS analysts said. The firm’s share price remains unchanged att VND6,100 on Tuesday, plunging 60 percent this year.

VFR notched VND19.5 billion ($950,000) from selling 365,000 shares in Noi Bai Catering Service Joint Stock Company in 2009. However, similar to MHC, VFR will have less subsidized investments to offset this year losses, which will come from the sharp decrease in shipping cost in the last quarter of this year.

The shipping firm will be hit harder this year by its bank loans in US dollar as the foreign exchange rate is fluctuating strongly, stock analysts said. VFR, which listed on the Hanoi Stock Exchange, declined 6.76 percent to VND19,300 today.

VNA is specific in tanker chartering, which was booming in the second and third quarter of this year. Nevertheless, VNA will lose around VND20 billion ($1 million) at the end of the year as the sector is getting gloomy in the last quarter. VNA earlier reported that its profit in the first nine months of 2010 came from selling three ships.

VNA, listed on the Ho Chi Minh City Stock Exchange, closed 1.42 percent higher at VND14,300 on Tuesday.

Ship rental plummets

Consumption around the world fell steeply due to the global economic recession, prompting the plummet in importing and exporting demand.

Local companies will suffer losses this year as ship rental of vessels including capsize, panamax and handysize plummeted. Economists said the maritime transport sector will only start to recover in the third quarter of 2011, when the global economy regain its healthy growth rate.

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