Dryships, Maybulk and Dry Baltic Index (BDI)

January 8th 2008.

That was when I was blogged on the Baltic Dry Index: Regarding the Dry Bulk Shipping Sector

One of the stock that was featured by Ms.Teresa Lo, from Invivoanayltics.com (see dry bulk shipping industry ) was DryShips.

A month later, I had made another update. Update on Baltic Dry Index

• Since the Baltic Dry Index has recorded some decent recovery (see most recent quotes above), I only think that it's appropriate that I also make an update on my past BDI postings ( Regarding the Dry Bulk Shipping Sector., Maybulk And The Baltic Index and Another update on Maybulk ).

And by March 8th, I had posted yet another update. Do They Know It's Christmas Time for ...

• Yes, since hitting the peak, the index for the Baltic Dry Index had tumbled. And as stated precisely, cargo shipments were indeed impacted by bad weather condition (severe snow storms in China to be precise) and this had put a huge damper in the charter rates. However, at this moment of time, this has clearly passed. The charter rates had certainly rebounded extremely strongly and as can seen above, the BDI closed at 8536.
  
  Yes, the plunge of the BDI from 11k has spooked the shipping shares. The index fell to a low of a 5615 on Jan 29th 2008.
  
  But the BDI is now at 8536!
  
  Oh, that's a recovery of some 2921 points or a whopping 52% from its Jan 29th lows!
  
  How?
  
  Do you reckon that Maybulk, whose earnings depending heavily on the index, should rate much higher?
  
  Ah yes, if you read Maybulk's earnings, there's a proposed 30 sen dividend. And if you use historical fiscal years as an indicator, Maybulk's dividend should go ex in April and payment would be made in May.

And here is latest update for the BDI.

Yes the BDI is now 10,354 pts! Which means the BDI has recovered an incredible 84% since its lows in January 2008.

And the following shows the trylu amazing recovery of the Index.

Why the sudden spike in this Baltic Dry Index? (Note this is just an index and it's not a tradeable thingee!)

The following Bloomberg News article offered some clues: Shipbuilding Torpedoed by Subprime Causes Cost Surge

• ``Cancellations would certainly be bullish for rates because the ships won't be there,'' Natasha Boyden, an analyst at Cantor Fitzgerald in New York, said.


• Freight rates have risen as fewer vessels have been delivered. The Baltic Dry Index, a measure of rates, has risen 58 percent in the last year as an index tracking the number of cargo ships under construction has fallen 21 percent in that time, using Lloyd's Registry Fairplay data.

And other shipping giant such as Mitsui OSk is feeling really bullish. Mitsui O.S.K. to Beat Profit Forecast on Higher Rates

• Mitsui O.S.K is benefiting from China's demand for iron ore as the country builds more cars, ships and factories. China's economy grew at the fastest pace in more than a decade last year and the country's imports of iron ore jumped 17 percent, the China Metallurgical Mining Enterprise Association said in April.
  
  ``Given the increase in rates, it wouldn't be unusual to see profits come in higher than forecast,'' said Osuke Itazaki, an analyst in Tokyo at Credit Suisse Group.
  
  Mitsui O.S.K rents 22 of its 100 large so-called ``capesize'' vessels at daily rates. It can quickly raise prices for those ships in response to fluctuations in demand. The other ships are contracted out for longer periods with fixed rates.
  
  The Baltic Dry Index, a measure of commodity-shipping rates, last week rose to the highest this year. It rose 53 percent to 10,220 in the past 12 months and touched a record 11,039 in November.
  
  `Strongest' in History
  
  ``The strongest dry-bulk commodities market in history is extending this run of higher prices,'' said Yonetani. ``Operating profit is likely to exceed our expectations.''
  
  The company plans to add 53 iron-ore carrying ships to its fleet over the next six years, it said today in a statement. Mitsui O.S.K. currently operates 125 such ships and plans to retire some of the older vessels. It had 364 bulk commodity ships in its fleet at the end of March.

And over in Thailand, folks are getting bullish on Brokers bullish on Thoresen Thai (note this a current news!)

• Given the level of the Baltic Dry Index - now above 10,000 points for the first time since December - and strong demand for dry bulk shipping, most brokers have recommended "buy" on Thoresen Thai Agencies' stock.
  
  Of 20 brokers in the Securities Analysts Association's consensus, 14 brokers recommend "piling up" TTA's stock, four brokers recommend "trading buy", while one each advises" hold" and "sell". The target price in the consensus ranges between Bt48.50 and Bt79 per share.
  
  TTA is Thailand's largest dry bulk shipper, owning 45 general cargo vessels and bulk carriers as at the end of last year. It has expanded into offshore oil and gas-related services through its subsidiary, Mermaid Maritime, which owns four offshore supply and support vessels and two tender drilling rigs.

Now let's our leading dry bulk carrier stock, Maybulk Carriers.

Firstly, the chart had been adjusted to account for the 30 sen dividend that was paid in late April.

Maybulk last traded at 4.26 and if you use the January low of 3.50 as the low, the stock had appreciated some 76 sen. Adding back the 30 sen dividend, this would mean that the stock has appreciated by some 30%.

Now let's compare Maybulk's performance to Dryships performance.

Back on Jan Dryships was trading at 52.18. It closed at 98.40 yesterday. Dryships has increased by a whopping 88.5%! (Which is about correct when one consider that BDI had increased some 84%) ( Dryships was also blogged by Chris Perruna,DryShips (DRYS) Drying up?. )

The below chart shows the incredible disconnect between Maybulk's performance and Dryships performance.

So why is Maybulk so under performing?

Is there something wrong with Maybulk?

Why is Maybulk being ignored by our local market?

How now my dearest MooMooCow?