tag:blogger.com,1999:blog-28021668.post2393041486720873221..comments2023-10-12T21:12:41.408+08:00Comments on Value Investment - Musicwhiz's Journey: Musicwhizhttp://www.blogger.com/profile/10950754156386935254noreply@blogger.comBlogger36125tag:blogger.com,1999:blog-28021668.post-17888457102928122342008-02-09T01:05:00.000+08:002008-02-09T01:05:00.000+08:00Hello Touzi,Most of the ship's USEFUL life is abou...Hello Touzi,<BR/><BR/>Most of the ship's USEFUL life is about 30 years. This is merely the useful life used for depreciating the ships and is not an indication of the actual sea-worthiness of the ship(s). Of course, I agree it still cannot be compared to the actual lives of buildings and property which may extend more than 50 years.<BR/><BR/>Still, if you consider that you can make back your principle within 10 years, I do not think the issue of 20 or 50 years depreciation is that critical. It is more a case of whether the cash flows from the trust can be sustained.<BR/><BR/>Regards,<BR/>MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-3246742863713459642008-02-07T16:15:00.000+08:002008-02-07T16:15:00.000+08:00Did somebody say that ship's sealife is only 15-20...Did somebody say that ship's sealife is only 15-20 years? That is short compared to landlease. Does the 12% yield still look high compared to real estate trust?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-49029830250096185572008-01-20T21:59:00.000+08:002008-01-20T21:59:00.000+08:00Hi Simon,Some of the good sites for O&G related ne...Hi Simon,<BR/><BR/>Some of the good sites for O&G related news are:-<BR/><BR/>1. www.rigzone.com (Rigzone)<BR/>2. http://www.oilpubs.com/oso/ (Offshore Shipping Online)<BR/>3. www.energycurrent.com (Energy Current)<BR/><BR/>In addition, you can also try competitors' web pages to see what they are up to, relative to what Ezra or Swiber are planning.<BR/><BR/>Some competitors I know of include Solstad, Tidewater, Bourbon S.A., Global Industries and Cal Dive, but there are more.<BR/><BR/>Regards, MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-29955986859928723492008-01-18T18:16:00.000+08:002008-01-18T18:16:00.000+08:00hi musicwhizany good websites for o&g and e&p news...hi musicwhiz<BR/><BR/>any good websites for o&g and e&p news u can share with us?simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-84649976069846228512008-01-18T14:16:00.000+08:002008-01-18T14:16:00.000+08:00Hello TYL,No, I am not working in that industry. I...Hello TYL,<BR/><BR/>No, I am not working in that industry. I gathered all my knowledge through intensive readings throughout 2 years+, starting from Ezra and then onto Swiber. I also read related O&G industry news and some E&P news too. In addition, I also speak to Management of Ezra and Swiber to understand how the business works so as to get a better feel of the company's prospects.<BR/><BR/>Thanks for visiting !<BR/><BR/>Regards, MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-871886747233570342008-01-18T14:14:00.000+08:002008-01-18T14:14:00.000+08:00Hi Drizzt,Yes, that would be a real cause for conc...Hi Drizzt,<BR/><BR/>Yes, that would be a real cause for concern. But for now, enjoy the high yields ! :P<BR/><BR/>Regards, MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-36071176909488549562008-01-18T14:10:00.000+08:002008-01-18T14:10:00.000+08:00Hi whiz,Noticed that most of your holdings are in ...Hi whiz,<BR/><BR/>Noticed that most of your holdings are in O&G and shipping industry. Just wondering are you working in that industry too? Your knowledge on these businesses are really in-depth. Very informative =)<BR/><BR/><A HREF="http://tylequityresearch.blogspot.com/" REL="nofollow">http://tylequityresearch.blogspot.com/</A>TYLhttps://www.blogger.com/profile/06734109252343389616noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-87883382967118343052008-01-18T07:21:00.000+08:002008-01-18T07:21:00.000+08:00you will need to worry if the real interest rates ...you will need to worry if the real interest rates move above growth rates.<BR/><BR/>under that scenario it will be bad for yield stocks.<BR/><BR/>as for now, yield stocks with 7-10% div is a good mix for your portfolio.<BR/><BR/>im looking to add such to my portfolio as well.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-23216916229197829602008-01-17T17:45:00.000+08:002008-01-17T17:45:00.000+08:00Hi Simon,Yield does not have to go down. In fact, ...Hi Simon,<BR/><BR/>Yield does not have to go down. In fact, DPU can increase along with share price, thus keeping yield constant. This would be a win-win situation in terms of getting better absolute dividend, as well as capital appreciation to boot.<BR/><BR/>I think what you mean is that you assume a fixed DPU, thus as the share price rises the dividend yield will correspondingly drop.<BR/><BR/>I am optimistic that there will be more acquisitions in time to come to boost DPU. All we need now is patience.<BR/><BR/>Cheers, MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-56117545046630943692008-01-17T10:16:00.000+08:002008-01-17T10:16:00.000+08:00hi anonymous,i don't quite understand the 'earn mo...hi anonymous,<BR/><BR/>i don't quite understand the 'earn more than 12%' part. Anyway, the ship operators will definitely charge higher than the bareboat charter fees they pay to FSL, or else they cannot make money!<BR/><BR/>Yes, these are big ship liners and they can own ships if they want. But as i said, FSL is a financing company. The big ship liners may want to go asset light, hence they seek financing from FSL. in layman's terms, ship operators buy the ship, sell it back to FSL and charter the ships back from FSL, so that instead of having all the capital locked up in the ships, the ship liners can free more capital up to expand their fleet of ships even more. Plus, this arrangement is treated as off-balance sheet i.e. no debt recognised in their BS. So it's not a matter of whether there are no ships or ships being built. It's a financing company. The question u should be asking is whether can FSL get credit worthy customers and whether FSL has the funding power to finance its customers.<BR/><BR/>As for growth, on the contrary, FSL has so much growth potential! If u looked at yesterday's announcement, FSL declared that instead of targeting US$200mil of acquisition per year, they have raised the target to US$300mil simply because there is so much demand for the financing service that it offers to the ship operators.simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-36750193438647263712008-01-17T09:07:00.000+08:002008-01-17T09:07:00.000+08:00hi simon, if all borne by lessees, they would have...hi simon, if all borne by lessees, they would have to earn more than 12% given 100% payout by fsl? these are big names and surely they can own ships unless there are no ships or ships are still being build. if that's the case fsl will have limited gowth going forward?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-3468369338525622342008-01-17T08:45:00.000+08:002008-01-17T08:45:00.000+08:00hi musicwhiz, actually we should hope the yield to...hi musicwhiz, actually we should hope the yield to go down in the future. it means the price of the stock has gone up. we hope for the dpu to go up, yield to go down. =)simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-77513094992373657342008-01-16T23:58:00.001+08:002008-01-16T23:58:00.001+08:00Hello theken,Thanks a lot !Regards, MusicwhizHello theken,<BR/><BR/>Thanks a lot !<BR/><BR/>Regards, MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-3976600107960810592008-01-16T23:58:00.000+08:002008-01-16T23:58:00.000+08:00Hi Simon,Thanks for a little history regarding shi...Hi Simon,<BR/><BR/>Thanks for a little history regarding shipping trusts in USA. Hope that the yield continues to remain high and maybe even increase as time goes by.<BR/><BR/>Regards, MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-65986573861443465422008-01-16T17:46:00.000+08:002008-01-16T17:46:00.000+08:00heya, good luck with your investment in FSL.heya, good luck with your investment in FSL.TheKenhttps://www.blogger.com/profile/04335652481506522029noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-27208326820851697542008-01-16T17:26:00.000+08:002008-01-16T17:26:00.000+08:00heh. yeah. at 12% yield it is really too good to b...heh. yeah. at 12% yield it is really too good to be true because ppl don't bother to talk to management and read every word in the prospectus to understand the complexity of the business. if u want to get a taste of the performance of a similar entity, u can check out ship finance international ltd listed on nyse. it was trading at 12% when it first got listed. now it's 8%.<BR/><BR/>major refits are borne by the lessees. recessions and shipping cycles will only affect the ship liners who charter the boats from FSL. Hence, as investors, we have to be very concerned about the credit worthiness of the shipping liners.simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-49772036052827904032008-01-16T15:54:00.000+08:002008-01-16T15:54:00.000+08:00Hi Anonymous,FSL Trust is a shippinh trust, and yo...Hi Anonymous,<BR/><BR/>FSL Trust is a shippinh trust, and you can download their investor presentation dated Nov 9, 2007 for more information on how it is structured. Basically, FSL Trust acts as a finance company and arranges for sale and leaseback of vessels which are owned by vessel operators.<BR/><BR/>As evident from the presentation, FSL Trust engages in bareboat chartering which means the cost of maintenance are borne by the lessee (i.e. the vessel operators). FSL Trust will own the vessels and they are leased out on long-term leases ranging from 7 to 9 years. Thus, these leases provide stable cash flows and are unaffected by shipping cycles and recessions.<BR/><BR/>One risk that was mentioned in earlier comments is the credit risk (default risk) in case the ship operators go bust. So you may like to keep that in mind.<BR/><BR/>Regards, MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-79414434672829150252008-01-16T15:41:00.000+08:002008-01-16T15:41:00.000+08:00Hi, care to explain a little on biz trusts? and th...Hi, care to explain a little on biz trusts? and the specific model fsl is using? if fsl is a finance coy, then who owns the vessels, surely there are some major refits that will cost the owners to maintain? and since there are cycle for shipping biz, usa recession looming isn't a concern.. sorry but this seems too good to be true.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-42294861873791169362008-01-15T19:30:00.000+08:002008-01-15T19:30:00.000+08:00Hi Simon,Wow, I must really thank you for helping ...Hi Simon,<BR/><BR/>Wow, I must really thank you for helping me to answer all the queries raised by other readers who had left their comments. I think you even answered some of them better than I could ! Thanks for the extra information too which will be helpful to me in enhancing my knowledge of shipping trusts (particularly FSL Trust).<BR/><BR/>As for Ryan, I think the change was done on Nov 30, 2007 to enable the traded currency for FSL Trust to be in SGD instead of USD, hence the sudden "jump" in the share price. I do not know of the rules regarding the USD and SGD dividend and how it will be dispense. Perhaps I can ask my broker about it.<BR/><BR/>Regards,<BR/>MusicwhizMusicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-26868158605999159162008-01-15T14:46:00.000+08:002008-01-15T14:46:00.000+08:00ryan, the dividends are in USD. maybe you will get...ryan, the dividends are in USD. maybe you will get a cheque in USD... I am really not sure how it works...I am not vested as there are some restrictions in my company, so i have no experience in this...anyone else care to enlighten us?simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-42395716887146890892008-01-15T14:34:00.000+08:002008-01-15T14:34:00.000+08:00to simon,noted my mistake, thanks. The dividends c...to simon,<BR/><BR/>noted my mistake, thanks. <BR/><BR/>The dividends could be USD or SGD. <BR/><BR/>My question: Can the dividend (USD) be channelled to a "USD-saving account" like HSBC multi-currency account, to wait for the future appreciation of USD dollar?<BR/><BR/>Can instruct cdp to deposit my dividend (in USD) to one account and other dividend (in SGD) to different account?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-5955466400979890882008-01-15T13:43:00.000+08:002008-01-15T13:43:00.000+08:00to ryan,i think that was when FSL started trading ...to ryan,<BR/><BR/>i think that was when FSL started trading in SGD instead of USD. u might want to check the SGX announcements.simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-10567155500054230992008-01-15T13:41:00.000+08:002008-01-15T13:41:00.000+08:00to gimz,it is already indicated in the lease agree...to gimz,<BR/><BR/>it is already indicated in the lease agreement that the lessee will have to return the ship to FSL in the same condition as they receive at the beginning of the lease. any breach will have to be compensated to FSL. Moreover, FSL conducts yearly inspection of the ship to make sure it's in proper order.<BR/><BR/>as for market downturn and oversupply of ships, I want to reiterate again, FSL is NOT a shipping company. It is a financing company, hence it is not susceptible to shipping cycles.<BR/><BR/>anyway, if u r not convinced, FSL already indicated there will be no force sale of the ships during market downturns. in fact, they will be chartered by a subsidiary of Schoeller holdings at a spot rate until it is attractive to enter into a long term lease again. in any case, if you do an NPV analysis of the ships, 80%-85% of the value of the ships that FSL bought at is already locked into the long term lease. since we know these ships are new, there is still a useful life of around 15-20 years after the first lease ends, meaning the ship can be leased out a few more times. I also want to add that, although it is quite irrelevant, a lease of 9-12 years long is good enough to ride out any shipping cycles, which itself is actually shortening<BR/><BR/>if is any comfort, if u r familiar with the shipping industry, no ships will be left to rot at the dock. i understand that for REITS, no tenants means the shop will be empty, but it just doesn't work that way for ships.<BR/><BR/>i know nobody raise this yet, but i'll talk abt depreciation. ships will be sold not on the depreciated value but on how much charter income it get bring in. so a ship of 20 years old can be sold at multiples of its buying price if its sold during the shipping upturn just because it can bring in high charter income during period.simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-24666814587222437702008-01-15T13:25:00.000+08:002008-01-15T13:25:00.000+08:00To kit,yup. i agree FSL is not the best if you hav...To kit,<BR/><BR/>yup. i agree FSL is not the best if you have a 3-4 bagger stock lying somewhere else. But with 12% yield, you can actually get back your capital in 8 years time (and the FSL's fixed leases are 9-12 years). Even if USD depreciates to 1:1 with SGD, the yield will still be a whopping 8%.simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-43530055481286693172008-01-15T13:22:00.000+08:002008-01-15T13:22:00.000+08:00i wrote a very long comment, but it seemed to have...i wrote a very long comment, but it seemed to have disappeared. sheesh.<BR/><BR/>anyway, to java guru.<BR/><BR/>1. when u say automatic feeder, you mean rickmers has a visible pipeline of ships to acquire? i think that's where the misunderstanding is. shipping trust are not REITS. you don't need a sponsor to supply you ships. the lessees are the very sponsors themselves! in fact, the more independent the shipping trust is, the better as it reduces conflict of interest with other competing shipping companies.<BR/><BR/>2. do you know why rickmers can only distribute 75%? it's because they have to save 25% for future capex requirements, not for acquisitions. you don't use distributable income for acquisitions, that's not allowed if im correct. anwyay, capex requirements are due to shipping regulations, hence rickmers has no fixed dividend policy. so don't be surprised if distributable drops to 50% if there is a drastic change in regulations. anyway, for FSL, additional capex to ships are borne by the lessees.simonhttps://www.blogger.com/profile/01511349808077597074noreply@blogger.com