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# EXCEL MARITIME CARR Message Board

• webuchadnezzar webuchadnezzar Dec 5, 2007 12:12 AM Flag

## Book value of EXM's ships

EXCEL MARITIME CARRIERS LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT SEPTEMBER 30, 2007 (UNAUDITED) AND DECEMBER 31, 2006 (AUDITED)

EXM reports their asset value of their ships as follows:
Vessels, net: \$433,416,000
EXM reports their total assets as follows:
Total assets: \$571,424,000

So we see how they carry these ships on their books. But they don't always update that when ship prices rise.

Used ship prices have roughly doubled in the past 2 yrs! Looking up the kinds of ships EXM has, I have come up with my own very rough estimate of their vessels' value based on the following website:

http://www.brs-paris.com/index.php?page=drybulk#

Note that 5 year old Panas and Handys are bringing prices of ~\$91M and ~\$72M, respectively.

The used ship prices here assume your ships are of a given size. Knowing smaller, older ships are worth less, I have ballparked values of USD\$80M to each of the Panamaxes and \$50M to each of the Handymaxes.

Using last month's interview with the CEO, he stated the current value of the 2 EXM Supermaxes at \$80M apiece, so that number should be very current.

This gives me a total of
10 Panas @ \$80M = \$800M
6 Handys @ \$50M = \$300M
2 Supers @ \$80M = \$160M

Therefore, my estimated total value of EXM's ships is now ~\$1260M.

Then subtract their roughly \$205M worth of debt, and let's call their book value more like \$1055M.

Right now, their market cap is <\$944M. Not even book value. And this is a stock making \$18 profits per SHARE per QUARTER!

Yahoo shows a price to book value of \$2.81/\$1, but as you can see, that number looks pretty frickin' conservative.

If you don't buy this stock, don't come crying to me later. It is seriously undervalued below \$74.

-web

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• ==================oil tanking============= ship tanker rising//////////////////

• One entry found.
Main Entry:
comยทmodยทiยทty
Pronunciation:
\kษ-หmรค-dษ-tฤ\
Function:
noun
Inflected Form(s):
plural comยทmodยทiยทties
Etymology:
Middle English commoditee, from Anglo-French commoditee, from Latin commoditat-, commoditas, from commodus
Date:
15th century

1: an economic good: as a: a product of agriculture or mining b: an article of commerce especially when delivered for shipment <commodities futures> c: a mass-produced unspecialized product <commodity chemicals> <commodity memory chips>

2 a: something useful or valued <that valuable commodity patience>; also : thing, entity b: convenience, advantage

3obsolete : quantity, lot

4: a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price5: one that is subject to ready exchange or exploitation within a market <stars as individuals and as commodities of the film industry โ Film Quarterly>

http://www.m-w.com/cgi-bin/dictionary?book=Dictionary&va=commodity

• Why is that description a negative for the dry bulkers, and why would it cause you to ignore the tremendous earning power of those assets? Is it because the ship values already reflect this earning power? Just asking.

You said, "I don't see them worth more than the sum of their ships in a commodity type industry like this."

• Commodity simplies means little or no differentiation between the product or service offered. Industry participants in a commodity type industry are price takers. Commodity type companies are not necessarily unprofitable. Over the long run, prices for a commodity product in a perfectly competitive industry will normalize around a level that will allow industry participants to earn a reasonable return on invested capital. While no truely perfectly competitive industries exists, international shipping is about as close as it gets.

• Web,

You helped make my point, there are few, and those that you mentioned are still very successful.

Out of the dozen, or so, dry bulkers, four will likely be close to 50% net margin in 2008. Another four will be around 40%, and the rest, maybe around 25% to 35%, for 2008. This is just off tht top of my head, and the newer companies will take a little longer.

• 'Commodity' to me suggests a product that is available from several sources, with little or no differentiation from one supplier to the next.

It's probably fair to say that is what shipping is.

However, this is a commodity where supply is far outstripped by demand. China and India are importing and exporting like mad.

Shipping ports in India are jampacked right now. They plan to increase their port capacity by leaps and bounds going forward. Port capacity in India severely limits exports and India๏ฟฝs port capacity utilization now exceeds 90%. To service its increasing trade requirements, it needs to double that capacity over five years, at an estimated investment of \$100 billion to \$120 billion. Perhaps this will relieve port congestion and necessitate fewer ships, but who knows? Perhaps it will support an even larger bulk fleet.

-web

• Other than the fact that they transport commodities, I don't see the point of your comment: "commodity type industry". Please explain.

I usually think that term indicates a consumer product is available in almost every store, at a low price and returning very low profits, or a loss, to the manufacturer. That would not describe the drybulk shipping industry. On the contrary, they are VERY profitable, and growing profits rapidly.

• The highest margins I've seen in the past were

I don't follow those anymore though

-web

• Do you know of another industry where they get 50% net profit margins, and VERY low taxes?

• nice analysis there

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