When the previous quarter results was released, I had an opinion that Maybulk was way over-rated for it's price. And the fact that they still paid a 30 sen dividend means it can't possibly go on forever.
The latest quarter report released by Maybulk showed improvement over it's previous quarter but still, a lot less than what it needs to continue it's trend of 30 sen dividend. Revenue improved to RM70 mil compared to last quarter's RM50 mil. Operational costs remained the same at about RM50 mil. This allowed them to post almost RM20 mil operational profits. Coupled with a RM31 mil contribution from it's associates which is Pacific Offshore Services.
Overall net profits is RM72 mil which is an EPS of 7.11 sens this quarter. That's more than 3 times less than what it earned last year in the same period.
Looking through their cash flow statements, their cash hoard was reduced tremendously after paying out RM300 mil in dividends last quarter. So this quarter, they are left with RM400mil in cash deposits with negative cash flow from their investing, operating and financing activities. If this trend of negative cash flow continues, investors can kiss their dividends goodbye. Because it is not sustainable in these economic environment where the BDI is still below 3000 points.
Their new vessels which they have ordered for long term charters are only due in 2010. With their reduced fleet size, low freight rates and lousy economic environment, they would have to scale down their dividends at least until the new ships arrived.
At current price of RM3.13, it is still overpriced. Fairer would be in the RM2.50 I would think. At least that's the price I would consider.
But without a doubt, if the BDI increases steadily in the next few months, expect Maybulk to trend together.
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