Samudera Shipping stock surges on buoyant earnings

Shares of Samudera Shipping Line jumped more than 25 per cent yesterday to close the day at 72 cents after the container ship operator reported strong results for the full year to Dec 31 the day before.

Thanks to sky-high freight rates, the Indonesian controlled but Singapore-listed company posted second-half net profit of US$91.8 million (S$124.3 million), up from just US$74,000 in the same period in 2020.

Second-half revenue came in at US$317.9 million, up 84 per cent on the US$173.1 million recorded a year earlier.

The company posted net profit of US$128.6 million for the 12 months to Dec 31 compared with US$7 million for the preceding year.

This came on the back of a 52 per cent surge in revenue to US$527 million, from US$347.9 million.

Earnings per share were 23.9 US cents, or about 32.4 Singapore cents.

This enabled it to pay a special dividend of 12.75 Singapore cents per share on top of a final dividend of 0.75 Singapore cent.

That takes total dividends paid for the year to 14 Singapore cents after including an interim dividend paid earlier in the year.

Samudera runs a regional container shipping business which provides feeder services between Singapore and other regional ports in Asia.

It also operates a bulk and tanker business which transports dry bulk, liquid and gas cargo, while its logistics arm does freight forwarding, warehousing and agency services.

Demand for container shipping, which accounts for 95 per cent of Samudera's business, is expected to remain high and keep freight rates elevated this year.

"The severe congestion at ports around the world, along with the resulting network and supply chain disruptions and capacity shortage, is expected to persist throughout most of 2022," the company said.

"This will continue to exert upward pressure on freight rates amid the ongoing pandemic. Demand for shipping services should remain robust with the gradual reopening of economies globally."

Charter rates are now being negotiated one to three years ahead at historically high rates.

And, with Russia having invaded Ukraine, leading to the closure of Ukraine ports and sanctions on the Russian economy, a tightening of the global supply chain crunch could further ratchet up rates.