Valuation Case Study on Rickmers Maritime TrustValuation Case Study on Rickmers Maritime Trust

Disclaimer and Declaration

The objective of the presentation is for educationalpurposes. The full content of the presentation is forillustration purposes only and should not be used asinvestment recommendations. AB Maximus and itspresenters are not responsible for all investment activitiesconducted by the participants and cannot be held liablefor any investment loss.

The company and presenters may have personal interestin the particular shares presented.

Agenda

1)Company Background 2)Industry Overview3)Stock Classification 4)Valuation 5)Risk

Company Background

Rickmers Maritime Trust is a business trust which owns and operates containerships under long term fix rate charter to leading

container liner companies.

Company Background

Source: Company’s Annual Report 2011

Company Background

Source: Company’s Annual Report 2011

�Order Books are full

Company Background

�Daily Revenue Stream:

Revenue for 2012 USD 399,410 per day, about USD 145 m/yr. In line with past 3 years revenue.

Source: Company’s Annual Report 2011

Company Background

�Company disclosure 2012:

Source: Company’s Q2 Report 2012

Industry Overview

�Downward spiral ?

Source:http://investmenttools.com/futures/bdi_baltic_dry_index.htm#recent

Baltic Exchange Dry Index (BDI)Recent,

20 day exponential average in red.

Industry Overview

Source: http://en.sse.net.cn/indices/ccfi.jsp 4th Sep 2012

� Formation of Freight Cartel. No free fall for freight prices

Industry Overview

�Consolidation in the freight industry ( possible support for freight rates)

Financial Times Dec 21 2011:

http://www.ft.com/intl/cms/s/0/bc219524-2b1e-11e1-8a38-00144feabdc0.html#axzz25Uc2X6iK

“Two of the three big alliances of container shipping lines are to join forces

to offer joint services on the key Asia to Europe rate.

The A6 Alliance will join the Grand Alliance – whose members are

Germany’s Hapag-Lloyd, Japan’s NYK Line and Hong Kong’s OOCL – and

the New World Alliance – made up of Singapore’s Neptune Orient Lines,

Korea’s Hyundai Merchant Marine and Japan’s Mitsui OSK Lines.”

Stock Classification

�Revenue Stablized.

Source : Company Annual Report 2011

Stock Classification

�Dividend payout history.

Source : Company Q2 Report 2012

Stock Classification

� Dividend yield history

Source : Company Annual Report 2011

2011 2010 2009 2008 2007

Div per share 0.03 0.029 0.078 0.127 0.05

Share price end year 0.30 0.40 0.38 0.39 1.15

Div yield 10% 7% 21% 33% 4%

Stock Classification

�Stable Cashflow from operations

Source : Company Annual Report 2011

Stock Classification

Indicators point to this as a value stock

valued for its dividends

Valuation

�Methodology

�Dividend discount model

�Comparative dividend yield stocks

Valuation

Risk Free Rate 2.5%

Market Required Return 10.0%

Beta 0.80

Cost of Equity (CAPM) 8.5%

Risk Premium for Terminal Value Return

2.0%

Growth 0%

Current Dividend per share 0.029

Valuation

Based on Single stage Dividend discount model:

Fair value = 0.28

Valuation (Dividend)

US cents 2007 2008 2009 2010 2011

Dividend per share

5.64 8.89 3.91 2.31 2.40

Earning per share

5.30 8.25 9.62 (6.74) 9.52

Dividend Payout

106% 108% 41% - 25%

Dividend Yield based on latest dividend and current price

= $0.029 / $0.32 = 9%

*Please note that company is not obliged to give dividends!

Valuation (Div yield Comparison)

Company Div Yield Price

Rickmers Maritime Trust 9.12% 0.33

Chuan Hup Holdings 4.00% 0.25

Samudera Shipping Line 1.88% 0.16

First Ship Lease Trust - 0.13

Singapore Shipping 5.46% 0.18

Marco Polo Marine - 0.35

Golden Ocean Shipping 2.71% 0.88

Mercator Lines 1.69% 0.11

Source: www.bloomberg.com

Div yield rather high as compared with others in the same industry

Valuation (Div yield Comparison with REITS)

Company Div Yield Price

Rickmers Maritime Trust 9.12% 0.33

Sabana 8.18% 1.10

Saizan REIT 7.73% 0.16

Perennial 7.68% 0.50

First REIT 7.57% 1.03

Cambridge Reit 7.38% 0.63

Ascott Residence 7.26% 1.23

Ascendas India Trust 7.22% 0.82

Source: www.bloomberg.com

Div yield rather high as compared with other high dividend REITs

Trading Data

52 Weeks Trading Range $0.28 - $0.35

Avg Volume (3 mths) 180,950

Market Cap $135.81 mil

Main Risks

�Capacity of ships not up to date. 10,000 TEU ships taking over main Asia Europe shipping routes.

�Outlook for Shipping Industry is negative due to ship oversupply and high bunker prices.

Main Risks

�Default Risk – Moderately high

� Current ratio = 0.9x

� EBITDA Interest coverage = 2.63 x

� D/E ratio = 1.9

� Loans maturing from 2015 = $59 mil in 2015

� Cash = $53.5 mil