Singapore Shipping Corporation Limited: 71.9% Net Profit Growth – Financial Analysis and Investment Recommendation

Business Description

Singapore Shipping Corporation Limited (“SSC”) is a Singapore-based company engaged in investment holding with core operations in ship owning, ship management, shipping agency, terminal operations, warehousing, and logistics services. Its subsidiaries are involved in these diversified activities which spread across multiple facets of the shipping and logistics industry.

Industry Position and Competitors

SSC operates within the maritime shipping industry, which is highly competitive and cyclical. Its primary competitors include other global shipping companies and regional logistics service providers. SSC leverages its diversified service offerings to maintain a competitive edge and capture market share in the shipping and logistics sectors.

Revenue Streams

SSC’s revenue is primarily generated from:

• Lease revenue from ship owning and management
• Service income from shipping agency, terminal operations, and logistics services
• Additional income from specialized projects and agency services

Customer Base and Supply Chain

The company serves a diverse range of customers, including importers, exporters, and other logistics providers. Its supply chain involves the operation and management of vessels, coordination of terminal operations, and provision of warehousing services.

Competitive Advantage

SSC’s competitive advantage lies in its comprehensive service portfolio, strategic geographic location, and established relationships with key stakeholders in the shipping industry.

Financial Statement Analysis

Income Statement

For the six months ended 30 September 2024, SSC reported:

• Revenue of US\$25,296,000, representing a 10.6% increase from the previous period (US\$22,879,000).
• Net profit of US\$7,678,000, up 71.9% from US\$4,467,000 in the prior year.
• Basic and diluted earnings per share increased by 72.8%, from 1.11 US cents to 1.92 US cents.

Balance Sheet

As of 30 September 2024:

• Total assets stood at US\$196,027,000, with a reduction in property, plant, and equipment value due to depreciation.
• Net assets increased to US\$127,646,000 from US\$123,323,000 as of 31 March 2024.
• Bank borrowings decreased to US\$26,552,000 from US\$29,207,000, reflecting progressive repayments.

Cash Flow Statement

For the six months ended 30 September 2024:

• Net cash flows from operating activities were US\$11,811,000.
• Net cash flows from investing activities were US\$5,423,000.
• Net cash flows used in financing activities were US\$6,427,000.
• Overall, cash and cash equivalents increased by US\$10,807,000.

Dividends

SSC paid a final tax-exempt (one-tier) dividend of 1.0 Singapore cent per share, totaling US\$3,076,000 during the period.

Key Findings

Strengths

• Strong revenue growth of 10.6% and net profit growth of 71.9%.
• Significant increase in earnings per share by 72.8%.
• Stable cash flow with a substantial increase in cash and cash equivalents.

Risks

• Exposure to industry cyclical and competitive pressures.
• Operational issues leading to off-hire of vessels in the ship owning segment.

Special Activities

SSC continues to evaluate investment opportunities while maintaining zero net gearing after accounting for cash reserves.

Investment Recommendations

For Current Holders

Given the strong financial performance, substantial profit growth, and positive future outlook, it is recommended to hold the stock. The company’s stable cash flow and strategic initiatives suggest potential for further growth.

For Potential Investors

For those not currently holding SSC stock, it is advisable to buy. The company’s impressive earnings growth, prudent financial management, and promising industry position make it an attractive investment opportunity.

Report Date

This financial report is for the six months ended 30 September 2024, and the report date is 7 November 2024.

Disclaimer

This analysis is based on the financial report provided and is intended for informational purposes only. Investors should conduct their own research and consider their financial situation before making any investment decisions.