Rickmers – SSB
RICKMERS, ssb remains a BUY with target price $2
– 4 vessels acquired for US$276m: Rickmers announced MOU to acquire 4x 4,250TEU container vessels for a total of US$276m from Polaris Shipmanagement pursuant to the right of first offer granted to them. The vessels are among the 9x 4,250TEU vessels Rickmers disclosed in their IPO prospectus for having right of first offer. The vessels will be paid for upon delivery which is scheduled between Feb and Dec 2009.
– 7-year time charter to Hanjin: Each vessel comes with 7-year fixed rate time charter to Hanjin Shipping (000700.KS) at a rate of US$25,950 per day with an option for an additional 3 years at US27,950 per day. CFO of RTM commented that each vessel is expected to contribute approximately US$9m in revenue and US$7m in EBIT per annum.
– What to expect : This is the type of acquisition we believe investors will continue to look for. Along with the recent MOU for 4x 13,100TEU vessels with Maersk, the current addition will raise total contracted fleet capacity by 170% from 40,910TEU to 110,310TEU. We expect further MOUs on additional vessel acquisitions to be announced in coming months.
– Buy for yield and growth: Reiterate our S$2.0 target price based on 7% yield and 5% distribution growth by year two and based on acquiring 10 accretive vessels on long-term charters.