Samudera Shipping stock rises on the back of higher global freight rates
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Samudera is led by its chairman Masli Mulia and his son and CEO Bani Mulia (above).
PHOTO: SAMUDERA INDONESIA
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SINGAPORE - The stock of Singapore mainboard-listed Samudera Shipping Line has rallied sharply in recent weeks in tandem with a rise in global freight rates caused by the attacks on ships plying the Red Sea.
The stock closed at 73.5 cents on Jan 8, up an impressive 24 per cent from its lows at around 59 cents just a month ago. Some 10 million shares changed hands on Jan 8. The uptick coincides with a rally of its dual-listed shares on the Jakarta Stock Exchange, where its stock has risen some 27 per cent over the past month.
Samudera operates a fleet of ships transporting containerised and non-containerised cargo through various ports in South-east Asia, the Indian subcontinent, the Far East, and the Middle East.
The Middle East connection is one possibility for the stock’s rise.
“Right now, it is enjoying the tailwinds from what is happening on the global shipping front, especially in the Red Sea,” said an analyst, who declined to be named as he does not cover the stock.
“Whether the gains can be sustained over the longer term will depend on freight rates in this region. I believe most of Samudera’s contracts are locked into short-term charters.”
Spot rates on the Asia-Europe route have risen more than 173 per cent over the past month due to attacks on cargo vessels in the Red Sea by Yemen-based Houthi militants
According to Freightos, a booking and payments platform for international freight, Asia-to-North Europe rates more than doubled to above US$4,000 (S$5,300) per 40-foot container last week, with Asia-to-Mediterranean prices climbing above US$5,000.
The crisis has forced ships to reroute around South Africa, resulting in longer lead times and higher freight rates as carriers take longer routes with higher costs.
Samudera’s stock gains have tracked the rally by the stocks of global shipping giants.
The stock of Danish shipping giant AP Moeller Maersk is up 33 per cent over the past month, while Hapag-Lloyd is up over 53 per cent. In Asia, stocks of Taiwan’s Evergreen Marine and Yang Ming Marine Transport have also risen sharply over the past month.
Is there more upside to Samudera?
Samudera, led by its chairman Masli Mulia and his son and chief executive officer Bani Mulia, is a bigger player in intra-Asia shipping, where freight rates have stayed somewhat flat.
And while global freight rates are rising, they are still nowhere near the heights of 2021, during the pandemic.
Samudera was one of the darlings of the local market early in 2023, when it hit new highs at around $1.20 amid soaring rates and record profit. This enabled the company to pay record dividends of more than 30 cents for financial year 2022.
The question now – not just for Samudera, but for the global shipping industry – is how long the crisis in the Middle East and Red Sea lasts, and how much impact it will have on sea freight rates, which prior to this crisis had been somewhat depressed.
Market insiders see rates remaining elevated as long as the attacks in the Red Sea continue, putting the squeeze on global supply chains.
