SET-listed Precious Shipping Plc (PSL) has announced plans to buy up to 20 second-hand ships over the next six quarters for US$18-20 million apiece.Khalid Hashim, the managing
director of Thailand's second-largest dry bulk carrier, said the price will be discounted from their market value of $23 million due to oversupply.
Meanwhile, the Japanese situation, the uncertain US economic outlook and declining Chinese imports of iron ore and coal have dampened the outlook for the overall shipping industry, he told a briefing at the Stock Exchange of Thailand yesterday.
"We are targeting the purchase of around 20 second-hand ships with an average age of five years by the end of next year," said Mr Hashim.
PSL has earmarked $180 million in cash for some of the used ships and a $450-million credit facility for the rest along with some new ships including three to be delivered in the second half of this year.
The company now operates a fleet of 21 vessels after selling off 25 ageing ships.
The Baltic Dry Index (BDI), the most closely watched measure of shipping costs, is expected to stay close to the current level over the next six to eight quarters, given the negative outlook, industry analysts believe.
The BDI is now at 1,300 points and is not expected to pass 2,000.
"The situation in Japan will normalise in the next quarter or two before reconstruction work begins three or four quarters later, which is when cargo shipments should see a strong rebound," said Mr Hashim.
The company's first-quarter net profit plunged 72% year-on-year to 109 million baht as revenue slid 9% to 734 million due mainly to lower freight rates and increased interest expense.
Bualuang Securities has revised down its forecast for PSL's 2011 net profit by 13% to 1.14 billion baht after the company's first-quarter earnings fell short of the market consensus.
PSL shares closed unchanged yesterday on the Stock Exchange of Thailand at 18.5 baht in trade worth 20.23 million baht.