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Why I think Maybulk is a good defensive counter to buy/hold during this period of time.
Investors were selling Maybulk since Baltic Dry Index corrected after hitting its 10-year-high around 3200.
But if we observe carefully, the recent correction of BDI was mainly due to the drop of its largest component which is the capesize index (for the largest dry bulk ships, which tracks cargoes of 1500,000 tonnes & weights 40% in BDI). However, some may not realize that Maybulk in fact does not own any capesize ships, so it certainly won't be directly affected by the down trend of capsize index, other than the general perception of investors (or most of the time, traders) who sell their shares when they see the chart going down.
Many may have overlooked the panamax index (for middle size ships, which tracks cargoes of 60,000-80,000 tones) too. In fact, panamax index rebounded significantly since a week or two and currently going uptrend, almost hitting 3000 points. This will definitely benefits Maybulk panamax fleet, as all the 3 Kamsarmax (the largest & more advanced ships in Panamax family) owned by Maybulk, are relatively more efficient and young (all built in 2018 & 2019) and cover 55% of Maybulk total d.w.t. The higher charter rate for panamax will definitely give significant contributions to its coming financial results.
Maybulk also owns some smaller ships - the supramax which cover ~40% of its fleet total d.w.t. As long as supramax Index continues to maintain between 2000 and 2500, which is still at the high side range in the nearest 10 years frame, we can almost confirm that Maybulk will see significant raise in its coming yoy as well as qoq results.
Another reason why I give high regards to Maybulk is simply because shipping is amongst the few sectors allowed to operate during this round of MCO 3.0. Even though if lock down extended for another one or two months, Maybulk operation will not be affected much compared to other sectors as dry bulk shipping business is essential and international in nature.
That's why I think Maybulk is a good defensive counter to buy/hold at this juncture of time. Just my two cents. Hope they help.
Sharon, I believe that the selling pressure over the last few weeks has been also due to Bank Pembangunan selling off their shareholding in Maybulk. Do we know if they have completed selling or still in the midst of it? Being no longer a major shareholder (ie less than 5%) we don't have any announcement visibility into the above mentioned information
Very good analysis, maybulk financially looks improving. The only thing i'm concerned is the high short term debt which has to repay in 1 year. This indicate Maybulk has relatively lesser current ratio. Hope Maybulk's next qr can resolve this potential risk.
