X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
GE Shipping: On high waters! - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 20, 2004

    GE Shipping: On high waters!

    The shipping industry has its fortunes highly correlated to those of the global trade. As such, companies from this sector usually have growth rates that are highly volatile, very much in line with the precariousness that characterises global trade in merchandise. Now, the last year has seen shipping companies benefit largely from a pickup in global trade and, consequently, freight rates. This has helped them not only in improving their topline performance but has also aided a better utilisation of their capacities (vessels). In this regard, let us take a look at the performance of Great Eastern (GE) Shipping, the largest private sector shipping company in the country.

    GE Shipping's large fleet has aided the company's growth in recent times as it has been, for instance, able to meet demand arising from rising oil demand since the beginning of the third quarter of 2004 (3QFY04). Apart from this spurt in oil demand (volumes), the company has also benefited consequently from the rise in spot freight rates (prices). Improvements in these two factors (volumes and prices) have had a positive impact on the company's performance at present. While it has been a bumper period for shipping majors in the last two years, growing concerns of an imminent slowdown in the Chinese economy could spoil the party in the future. While this could impact dry bulk rates, tanker rates are likely to decline at a slower rate due to steady demand for oil.


    Note: mdwt-million dead weight tonnes

    GE Shipping's proactive management has been one of the major strengths over the years, and especially during the period when the global economy was under a slowdown and trade took a backseat. In these testing times, the company's management was able to foresee trends and it altered the fleet mix accordingly to improve realisations.

    At the current price of Rs 135, the stock trades at a P/E multiple of 6.7x annualised 9mFY04 earnings. These valuations are at the higher end of the spectrum considering the high levels of volatility that affect shipping companies' performance. Also, while the company believes that spot freight rates shall remain strong throughout FY05 as well, we believe that oversupply situation in the industry combined with slower growth in demand is likely to affect rates going forward. In fact, GE Shipping has some aggressive capital expenditure plans for the next three years. If topline were to grow at a slower rate, higher depreciation and interest charges could impact profitability, though the implementation of the tonnage tax is a positive. Also, due to uncertainties over growth of economies of Japan and Southeast Asia (these account a large chunk of sea trade with India), there could be shocks on the demand for tonnage. Considering these facts in mind, investors need to practice caution.

     

     

    Equitymaster requests your view! Post a comment on "GE Shipping: On high waters!". Click here!

      
     

    More Views on News

    G E Shipping: Feeling Pressure From the Offshore Segment (Quarterly Results Update - Detailed)

    Aug 18, 2017

    GE Shipping reported a subdued performance on the back weak offshore segment.

    G E Shipping: A Bad Quarter (Quarterly Results Update - Detailed)

    May 9, 2017

    GE shipping registered a loss in 4QFY17 due to weak global shipping market and lower crude prices which negatively impacted the offshore segment.

    G E Shipping: Crude, Product, and Offshore Segment Drag Performance (Quarterly Results Update - Detailed)

    Feb 16, 2017

    G E Shipping has reported a 22.8% YoY decline in the topline while the bottomline has declined by 33.4% YoY.

    Cochin Shipyard Limited (IPO)

    Aug 1, 2017

    Should you subscribe to the IPO of Cochin Shipyard Ltd?

    G E Shipping: Pressure from All Segments Drags Performance (Quarterly Results Update - Detailed)

    Nov 21, 2016

    G E Shipping has reported a 20.2% YoY decline in the topline while the bottomline has declined by 24% YoY.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    G.E.SHIPPING SHARE PRICE


    Aug 21, 2017 (Close)

    TRACK G.E.SHIPPING

    • Track your investment in G.E.SHIPPING with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    G.E.SHIPPING 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE G.E.SHIPPING WITH

    MARKET STATS