Rickmers – DBS

BUY S$1.53 STI : 3,228.66
Price Target : 12-Month S$ 1.80
Reason for Report : Initiating coverage
Potential Catalyst : Acquisitions

Acquisition pipeline from Sponsor

Contracted fleet of ten vessels with staggered deliveries up to Feb 08. As at IPO, RMT’s initial portfolio consisted of five container vessels with a total capacity of 20,460 TEUs. A sixth vessel, CMA CGM Azure, was recently delivered ahead of schedule with another four to be delivered by Mar 08. As such, RMT’s fleet capacity will almost double, rising from 20,460 TEUs as at IPO to 40,910 TEUs in less than twelve months from date of listing. Following the delivery of these vessels, the average age of the vessels will be 1.1 years. These vessels are/ will be on long-term, fixed rate time charters to leading liner companies, such as Maersk Lines, CMA CGM and Italia Marittima (part of the Evergreen Group).

Pipeline. RMT recently entered into an MOU to acquire four 13,100TEU vessels, which will raise its contracted fleet capacity by 128% to 93,310 TEUs. The vessels will start to contribute from between Aug and Nov 2010 and will be chartered out to AP Moller-Maersk for ten years. Established reputation and relationship of the Rickmers Group. Rickmers Group is a leading container vessel owner and has developed strong relationships with some of the world’s largest container liner shipping companies such as Maersk Line, CMA CGM, CSAV, MSC, NOL, Evergreen, OOCL, NYK, Hamburg Sud and Hapag-Lloyd. RMT is able to leverage on
this.

Attractive growth platform – Right of First Offer/non-compete arrangements with Rickmers Group. RMT will be the exclusive vehicle of the Rickmers Group for acquiring, owning and operating containerships of at least 3,450 TEU. The Rickmers Group will also give RMT an opportunity to negotiate with and acquire from third parties, ahead of all other Rickmers Group members, any containerships of at least 3,450 TEU that have charters of more than one year.