This post has been de-listed
It is no longer included in search results and normal feeds (front page, hot posts, subreddit posts, etc). It remains visible only via the author's post history.
Unless you have been living under a rock, you should know that shipping industry is on fire, see freight rates:
Shipping costs quadrupled YoY. Why? One big reason - supply chain disruption. It is called "chain" for a reason, think about it. Breakdown:
- Port congestion (ships anchored because no capacity to unload these containers anymore)
- No containers where they are needed - ships often return empty.
- Lack of drivers
- Oil prices
Before covid, container shipping was already on the rise, then world went on a full stop - not ordering or making any ships, not mining coal, not delivering it, people laid off. Now all of a sudden we are back in business - retail is strong, people not going on holidays, spending money on goods online, all the government spending. Supply chain is very sensitive and it worked like a clock, but now it is disrupted everywhere - some factories don't have this to produce that, others are missing something else. In other words increased demand met the limited supply. Normally shipping is a very competitive industry with thin margins, but oh boy this year is different.
Ports are fucked. This infrastructure is underdeveloped. And they don't care - they make money, better than ever, why solve backlog? Why invest in technology and staff, if things are as good as never before.
Port of LA stats:
https://www.portoflosangeles.org/business/statistics/container-statistics
Okay, so shipping is booming - why $ZIM?
$ZIM if perfectly positioned to capitalise on these rates. They are asset light company, they are leasing ships and are earning HUGE amount of money from existing contracts:
With a market cap of 5.5B!!!
Right now they have around 20$ per share in CASH
Next earning ( -17Nov) they will report around 10$ EPS PER QUARTER
These guys are earning 1$ per shares PER WEEK
While their price is 46$ a share. They will distribute these earnings among shareholders in 2022:
From latest ER https://investors.zim.com/overview/default.aspx
They have reported this on August 19, see where the price went from then:
The stock price peaked even before the rates did. If you ask me - what happens when shipping rates drop all os a sudden? It does not matter, they have already booked their profits for years to come. They have already earned a billion $ this quarter but haven't reported it yet. Their P/E is 2.8, and will come down dramatically once they report in a few weeks.
Latest news on rates:
Check out full DD of J Mintzmyer (he tals about ZIM last 5 minutes of video) and see the twitter of this shipping guru.
Need more confirmation? Go listen to ZIM's ER last quarter. Journalists were congratulating them as if a man gave birth to himself.
TL;DR: Shipping is the hottest sector of 2021. Supply chain disruptions, port congestion - it does not look like things will be resolved overnight. Even if they would - doesn't matter, some companies are best positioned to profit, I am all in on ZIM shares and contracts. They will eventually have more money in bank, than they are worth. We know this because we see the freight rates.
Positions: many shares and call debit spreads for Jan. Earnings (17-Nov) will be a strong beat, keep an eye on rates, this might get even crazier.
UPDATE 17-Nov - ER day:
Sweet earnings, Jefferies upgrade to 80$.
Subreddit
Post Details
- Posted
- 3 years ago
- Reddit URL
- View post on reddit.com
- External URL
- reddit.com/r/wallstreetb...