Posted by: donmihaihai | July 30, 2016

Time flies

Wrote about OSV players many years back. Mainly Jaya, Ezra, Swiber and CH Offshore. Ezra and Swiber were there sexiest out there. It was hard to has another view. Due to that, commented on MTQ, China Fishery and maybe another few as well.

Those were good times for them, even Jaya got out pretty well in the end and I was lucky.

It is no longer the case now and pretty much will be the same years down the road, unless peak oil with no alternative. But I think current energy supply situation changed. So unless the drop in supply mirror whale hunting, then OSV will not enjoy good time any time soon.

What about shipyard? What can they build? What is in demand? Specialised vessel? I don’t know. How big is that segment? Offshore related was the last bright side of shipping building. Which mean it is back to sunset industry again until supply and demand back to normal or better still undersupply.

But well, this is time to find bargains.

Not interested to know about order book. Whether from OSV or shipyard. Order book does not tell me the quality of these contract. In down cycle, any order won will be lousy margin.

Of course we need strong companies with strong B/S. But that doesn’t mean it has to be debt free.

I can’t see bargain in this industry. Not those listed in SGX and I am not actively searching. A long way to go.

Interested in vessel owner not shipyard.

I don’t understand how shipyards earn money over a long period. Since cheaper alternatives are available, only way is to specialize. But with cheaper alternatives popping out and expensive yards trying to specialize, doesn’t sound good.

Vessel owner is easy. They are price taker, no control on charter rate and contract pricing. But with weak players like Swiber or Ezra, give smart owner chances to buy assets at lower price.

It is not hard to see theses smart owner buyers riding the down cycle and enjoy up cycle.

 

 

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Responses

  1. Hi donmihaihai,

    I find the OSV sector are very hard to analyse. Have to know the supply/demand for the different vehicle types (jackup rig, liftboat, submersible) and their contract rates, this information is not easily available to the layman.

    Agree vessel owners are easier to analyse, we are looking for those who can survive and buy assets in the down cycle. Cyclical plays, not stocks to buy and hold forever.

    I think container shipping has at least 2 years of downturn remaining, dry-bulk will be longer, and oil-tankers are just starting their downturn. Any other sectors?

    I have a small position in Seaspan, a container ship owner, but it is a bit risky due to the company’s debt. I’ll look at Maersk later.

  2. Hi Blackcat

    I look at OSV as a pool. Doesn’t matter which type owner is owning. Just don’t see many cross sector, such as owner of container and OSV. Industry knowledge I guess.

    If liftboat rate is good, capital will flow to liftboat. If jackup is good, capital will flow to jackup. Generally speaking, it is over for every single type in OSV.

    If middle east rate is higher, vessel will sail to middle east. Unless that market is protected. by regulation.

    Pure contractor is a little harder to analyse. But Contractor has track record and technical capability will be winning in long run. Does those listed in SGX has that?

    I don’t know any other. But I do think vessel owner has lot of choice now. All vessel types are down mean cheap 2nd hand market and shipyard fighting for newbuild.

    Vessel owner needs 2 things for good return. 1st – low cost. (cheap vessel) and 2nd high rate. The future looks bright for certain vessel type if the owner is getting cheap vessels now and chances of higher rate in future is very high.


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