got some hymc but i got this from yahoo and it is worth a read for a long term investment in ZIM
The whole container shipping space is misunderstood and many shy away given the cyclic history of the business. Container ships are expensive to buy...it is a capital intensive business. So many investors just stay away and ignore the space. Even a PE of 2 cannot prod analysts to take interest.
ZIm has transformed itself. The asset light model with lease agreements was a brilliant move. As inflation builds, the advantages ZIM has over the completion becomes even greater.
The lease agreements for ships are ignored as analysts spend too little time looking at the data and too much time reliving the past. Atlas corp (ATCO) the old Seaspan lease out ships to liner companies like ZIM. The show ZIM as leasing 16% of their fleet. Seaspan has ordered around 70 new build ships and have leased them under long term contracts to companies like ZIM. The first 3 ships were delivered late in 2021 and the lease rates are published in their financial reporting. The three 12,200 TEU ships delivered were leased out to a customer at $24,100 per day for 18 years. Current spot rates for an 8500 TEU ship are $146,000 per day. As inflation grows the value of these contracts grows. I don't know who signed those contracts but they got one heck of a deal. I do know ZIM signed a deal to lease ten 15000 TEU ships from Seaspan in Jan 2021 when rates and inflation were very low. ATCO (Seaspan) signed fixed price deals with ship builders and have locked in their own risk with build contracts, lease contracts and financial debt deals that deliver them a utility type return. Zim has great deals and no one can compete with these contracts as ship building costs have escalated and interest rates are on the rise. Even as rates exploded Zim signed for an additional 15 ships, 7000 TEU and if you look deep enough you will find they leased those ships for 12 years at $41,000 / day. All 25 ships are LNG fuel capable ships so that ZIM can help customers meet their ESG commitments. In addition you can see all the ships ZIM leases off of Seaspan are well below spot market rates, many forward fixing arrangements were negotiated before rates accelerated.
While many simply view the low PE as temporary the neglect to look deeper into the future and the advantages ZIM has negotiated and positioned the company for. The CEO and management team have really done an expellant job not only to capture the current market but to position the company for the future.
The cash ZIM generates is outstanding with forecast 2022 EBITDA $1 billion higher than an outstanding 2021. Froward PE is below 2. ZIM purchased containers early in 2021 with the proceeds of the IPO and made the first 10 LNG capable ship agreements. Yes the market exploded and ZIM got lucky, but the management moves were made not for 2021 but for the out years 2023 and beyond.
ZIM is a long term success story disguised as a flash in the pan to many. The time to buy is now, next week, next month and next year. Inflation only builds the business case for ZIM
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