Maybulk Bhd may be loss-making but likely to see further upside

Maybulk Bhd share price has gained 10.7% in the past month to close at 31 sen on Sept 3. A consolidation phase may occur driven by bullish indicators. Maybulk touched a year high of 36 sen but fell to a low of 27 sen last month.

Investors are probably mindful about its financial performance. The ship owner and bulk carrier saw its net loss widened to RM2.7 million in the second quarter ended June 30, 2024 from RM1.5 million a year ago. This was on the back of lower revenue of RM16.7 million versus RM33 million a year earlier.

The poorer performance was mainly due to fewer drydocking days of 26.84 days and decrease of charter rates. These rates fell to USD7,833/day in Q2 2024 versus USD13,492/day in Q1 2024. The drop in charter rates was mainly crimped by longer sailing distance from drydocking shipyard in China to loading port which does not cover under long-term charter agreement.

Meanwhile, revenue and gross profit contributed by Shelving & Storage Solution Segment decreased by 9% and 1% respectively. Revenue decreased from RM12.817 million in Q1 2024 to RM11.603 million in Q2 2024, while gross profit decreased from RM2.305 million in Q1 2024 to RM2.276 million in Q2 2024.

Moving forward, Maybulk’s revenue and profit from the shipping bulkers segment is expected to improve in the second half of the year after the completion of the drydocking.

Alam Kuasa, which is only one vessel remaining, is under long-term contract at fixed contracted rate subject to bunker price adjustments and will not be affected by open market charter rate volatility.

As for its industrial segment, the local demand for industrial storage has seen a slight increase, driven by new industrial developments from both foreign and local supply chains. The export market for industrial storage is expected to improve in second half of 2024.

However, there are challenges due to cargo shortages and rising freight costs. The local market for commercial shelving is expected to improve in second half of 2024, with some distributors beginning to restock in order to address their currently low inventory levels.

That said, Maybulk is seen as financially sound, as its balance sheet is backed by net cash holdings of RM184 million. This translates to 18.5 sen per share or about 60% of its existing share price as of end-June 2024.

In terms of price/book value rating, the shares are currently trading at a multiple of 0.6x based on its book value per share of 53 sen as of end-June 2024. As such, the counter looks like a good bet in the immediate term for some upward movement.