Singapore Shipping Corp

[Nick]

Acquisition of Pure Car Pure Truck Carrier

The Board of Directors of Singapore Shipping Corporation Limited (the “Company” or “Group”) announces its purchase of a new build PCTC (Pure Car Truck Carrier) for a total consideration of US$80million.

Upon delivery, the vessel is expected to be deployed on a long term charter to a blue-chip shipping major.

Another deal wow ! 3 ships in 1 year - who would have guessed !

1) There was no mention of equity raising in the announcement. I am guessing 90% LTV financing can be obtained from banks. This isn't unprecedented as Pacific Shipping Trust did manage to obtained loans at that range post GFC for its M&A of 9 vessels. Gearing will shoot up but Debt / EBITDA should be alright. Makes sense to leverage in light of low interest environment.

2) Even at 5% ROA, this deal will generate US$4 mil NPAT - more than 50% of the recurring profit in FY 2014.

3) Profit growth for the next 3 years will be assured as the 3 vessels are delivered.

4) Often regarded as the sleepy sister to St****** but Ow has been working hard here:

2010: US$50 million purchase of Boheme
2011: US$16 million purchase of Sirius Leader
2013: US$12 million purchase of Cougar Logistic assets
2014: US$33 million purchase of 2 x PCTC vessels
2014: US$80 million purchase of 1 x PCTC vessel

(Vested)