Yang Ming Marine Transport Corp yesterday announced that its board had approved plans to raise NT$5 billion (US$164.38 million) to bolster its financial condition and capture opportunities from an anticipated rebound in the cargo shipping sector.
The company is to issue 500 million new common shares with a face value of NT$10, reserving 10 percent of the subscription rights for employees with the remainder to be made available to the public and current shareholders, it said in a statement.
Last year, Yang Ming Marine initiated a 53.27 percent cut in capitalization to NT$14.04 billion as it racked up massive losses amid a precipitous supply glut-induced downturn across the global cargo shipping sector.
The cut was finalized amid protests during a six-hour-long shareholders’ meeting in December last year.
Following the reduction, the company has set its sights on raising NT$10 billion to complete its overhaul and improve its competitiveness.
The company in February raised NT$1.61 billion in funds through a round of private placement of 161.33 million new shares at NT$10.48 per share, with subscribers being industry peers and the government, which increased the state-held stake of the company from 33.3 percent to 36.62 percent.
Yang Ming Marine gave an upbeat outlook for this quarter, as the high season for the cargo shipping sector coincides with continued economic growth recovery across the globe.
Revenue last month was NT$11.6 billion, 22.86 percent higher than a year earlier, the company said, adding that revenue in the first half rose 15.56 percent annually to NT$63.5 billion.
It attributed the gains to sweeping cost-cutting measures implemented last year.
Yang Ming Marine reported a net loss of NT$901 million in the first quarter of this year, translating to losses per share of NT$0.53, an improvement from a net loss of NT$14.9 billion and net losses per share of NT$9.22 at the end of last year.
Yang Ming Marine shares yesterday dipped 1.08 percent to NT$13.75 in Taipei trading.
Separately, HSBC Global Research on Tuesday gave a reserved outlook for Yang Ming Marine.
“We see the company continuing to struggle to break even given its sub-scale operations and high leverage,” said Parash Jain, who heads HSBC’s Transport Research, Asia Pacific department.
Despite plans to raise equity through private placements, Yang Ming Marine is expected to see elevated interest expenses amid ballooning net debt, Jain said.
On the upside, the company could benefit from faster-than-expected recovery in freight rates between Asia and the US and Europe, as well as accelerated ship scrapping, consolidation and deferred new vessel deliveries, which would ease oversupply concerns, HSBC said in a report.
The report said that the Shanghai Containerized Freight Index (SCFI) this week slid 3 percent from last week.
Spot rates for trans-Pacific routes also saw modest declines this week, with Shanghai to the US’ east and west coasts dipping 3 percent and 2 percent after advancing 17 percent and 26 percent respectively last week.
Asia to Europe and Mediterranean spots fell 5 percent, retreating from gains ranging between 8 percent and 15 percent a week earlier, the report said.
Source: Taipei Times