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Shipping trusts look attractive as yields rise

All three trusts listed in Singapore offer annualised returns of over 9%. -ST
Lee Su Shyan

Tue, May 06, 2008
The Straits Times

THE ship has certainly come in for investors who sank their cash into one of the newer investment vehicles around - trusts centred on ocean-going vessels.

All three shipping trusts listed in Singapore have delivered healthy returns for the three months ended March 31, reflecting the still-buoyant level of global trade.

They also boast annualised yields of between 9 per cent and 13 per cent.

These entities operate like real estate investment trusts and pay out most or all of their profits to unit-holders, and they usually offer a regular stream of distributions.

The last to file its results was Rickmers Maritime. It reported yesterday that net profit had risen 54 per cent to US$8.39 million (S$11.44 million) on revenue of US$22.33 million. It also announced a higher distribution per unit of 2.25 US cents, up 5 per cent.

The trust has 10 container ships, which are chartered out on a long-term, fixed-rate basis. The portfolio will get a boost when an additional 13 container vessels start coming on stream, beginning next month and running until September 2010.

Mr Quah Ban Huat, the chief financial officer of Rickmers Trust Management, which manages Rickmers Maritime, said the trust is in a strong financial position with low gearing levels.

It recently borrowed US$627.5 million, which means Rickmers has enough funds and will not have to ask unit-holders for more money any time soon.

Its annualised yield works out to 11.13 per cent, based on yesterday's closing unit price of $1.10.

This annualised yield places it between the other two shipping trusts, which filed their results recently.

First Ship Lease Trust had revenue of US$16.6 million for the quarter, net profit of US$1.71 million and distribution per unit of 2.59 US cents.

It has a different portfolio from Rickmers - with four container ships, nine product tankers, three chemical tankers and two dry-bulk carriers.

The counter was up four cents at $1.10 yesterday, giving it a yield of about 12.8 per cent.

Pacific Shipping Trust announced a 0.97 US cent per unit distribution last month, down from 1.04 US cents previously.

Revenue for the quarter rose 4 per cent to US$8.5 million, but net profit fell to US$466,000. However, another three vessels will be delivered within the next three quarters, so the distributable amount is likely to rise.

Pacific Shipping Trust told unit-holders that the current financial market conditions have led it to set aside cash for its working capital.

It will distribute about 90 per cent of its profits, adding that its annualised yield of 9.34 per cent 'continues to offer investors attractive returns in comparison to similar investment alternatives in the market'.

OCBC Investment Research noted that after Pacific Shipping Trust takes on the three vessels, debt levels will be set to rise.

But Pacific Shipping Trust did not say that cutting the payout was to keep funds to pare the debt. 'At some point, an equity issue is inevitable,' OCBC added.

The units ended unchanged at 41.5 US cents yesterday.

sushyan@sph.com.sg

 

 
 
 
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