Will you hold or sell after collecting Div?

There’s More Upside Ahead

One of the biggest positives from ZIM’s latest earnings report is the fact that the management expects the company to remain profitable in 2023 and thinks that the business will generate adjusted EBITDA of between $1.8 billion and $2.2 billion and Adjusted EBIT of between $100 million to $500 million. At the same time, it’s also important to mention that ZIM now has more than enough resources to survive the cyclical downside, while its upside could be even bigger than expected since the business had a net leverage ratio of 0x and a $279 million net cash position at the end of December.

All this means that ZIM would continue to pay dividends in 2023, as debt or liquidity are not an issue, and during the latest conference call the management once again reiterated its commitment to stick with its current dividend policy of giving away 30% to 50% of the company’s net income back to its shareholders. Since JPMorgan Chase (JPM) gives ZIM’s stock a price target of $30.40 per share, it’s safe to say that its shares have additional room for growth from the current levels.

What’s also important to note is that it appears that Sino-American trade relations continue to be robust despite the increase in tensions between Beijing and Washington. U.S.-China trade hit a new record in 2022, and the cooperation between both countries remains resilient for now. In addition, even if we assume that the relations will deteriorate in the following years, ZIM would likely be able to mitigate risks that come with such a scenario. During the latest earnings report the company’s management stated that they’ve established a new joint venture in Vietnam to tackle trade risks. 

The Bottom Line

ZIM Integrated Shipping Services Ltd.’s latest earnings report showed that its business is more resilient than ever. There are reasons to believe that the company could continue to create additional shareholder value for months to come. The only thing that could ensure that ZIM Integrated Shipping Services Ltd. fails to meet its goals is the hard recession that would lead to the collapse of freight rates. However, I don’t think that that’s going to be the case, and as such I remain bullish about ZIM Integrated Shipping Services Ltd.’s future.