JP Morgan Had Diana Shipping At Neutral
Last update: 11/20/2008 6:48:03 AM(END)
Dow Jones NewswiresNovember 20, 2008 06:48 ET (11:48 GMT)
Dear Woodstock: Its not the numbers that you are so wrong about its the conclusions. Dianna does not have a dearth of cash because they are going to retain the dividend, which this quarter amounts to about 70 million dollars. In other words, by retaining the dividend for one year they can pay off all of their long term debt and still buy some boats at about one quarter of replacement costs. Moreover, because they are such good managers, they have excellent relationships with their lenders who would be more than happy to extend them credit in order to expand their fleet at these price levels. And finally, they are mostly immuned to defaulting contracts because of the long term relationships that they have built with their prime client base.
If you look carefully, Woodstock, you will see that Dianna signed contracts with their best customers at levels well below the spot market prices during the peaks. And now, they have just signed a contract with Cargill at prices well above current spot markets. You see, Woodstock, Dianna did not enter into ridiculously long term contracts at ridiculously high rates with questionable customers that are sure to default because they are not foolish men, and it pays to invest with men who have proven themselves to be not foolish.
Nothing erroneous. I pulled it straight from Diana Shipping web site. Look under the fleet and you will see all the ships and 8 of 14 Pana's ending in 2009 and 3 of 6 Capes ending in 2009. The later dates are options of the chartering company, not Diana and you can bet your bottom dollar they won't extend.
I got the debt and cash STRAIGHT from the last quarterly SEC filing.
What part of that do you think is wrong? Perhaps you should alert Diana to fix their web site or to report to the SEC they lied.
I like how you said I was so erroneous it wasn't worth trying to correct me. What a copout. I used facts and their is nothing to correct. Hard for you to go hunting with no ammo ain't it?
DSX will be okay, but its not a screaming buy and waiting to gobble up all other companies fleets. DSX has its own worries, like dearth of cash and high debt to cash ratio (severe leverage that is killing all the banks right now).
Woodstock, I'm sorry to say this, but so much of your information is inaccurate and so completely incorrect, I don't even know where to begin, and to correct everything and try to educate you about the dry bulk industry, Diana's position in relation to the other shippers you mention, would take far too long. But please, please, do some serious research before posting all this erroneous information. I know you mean well in trying to share, and I'm not trying to insult you, it's just frightening how misinformed you are about so much of what you talk about. I'm sorry to have to say that, but you need to educate yourself further before sharing information that can be ultimately be misleading to anyone who believes what you are writing. Have a nice weekend.
The cash to debt ratio will get more than lipstick after Diana suspends the dividend for few quarters (many rolls). Dianas charterers are "end users" minimizing the potential for contract default.
"I was first and foremost replying to the previous post of "almost no debt" which of course is horribly wrong when viewed versus cash and market value. Now, is the debt mostly covered? It would appear so..."
...no argument there...,
add to that 3 of 6 capes spot charters up by June 09 as well. So they are well covered...for 6 more months. After that DSX has less than 40% of its fleet on charters, still better than most peers, but only slightly so. I can't recall now, but I think NM has better charter coverage than DSX and maybe the only dry bulker that does. EGLE too? EGLE has horrendous debt though, the worst in the industry, so its teetering on that point rock off the short while waves rock below, just a foot or two away.
I simply stated factual numbers and drew conclusions from debt, cash and equity. Yes, DSX has charters, but why are they any more secure from defaults than any other shipper? They won't make what is being projected and regardless of what they make they have major debt. I was first and foremost replying to the previous post of "almost no debt" which of course is horribly wrong when viewed versus cash and market value. Now, is the debt mostly covered? It would appear so, but so is several other shippers. DSX shouldn't have to sell any ships, while others will, but DSX is just slightly better off than the rest of the industry and certainly not some behemoth in waiting.
If you notice I did put on a buy rating, but in no way is this a guaranteed rocket stock. It very well could fail depending on how long and how bad the world economy goes down and stays down. The charters will default at an exponential rate if it stays bad long enough as the companies that reserved the charters run out of funds to pay them. DSX is not immune even
WITH the precious charters.
I am well aware of ship ages and time charters, but none of it matters much in this environment. Even new ships are selling for next to nothing, so the value of their fleet is plummeting like other shippers. Time charters are to be defaulted on at same rate across the industry, and Diana shipping is not special in this regard. Also, DSX has quite a few charters ending early next year (8 of 14 Panamax) and those ships would be docked at current spot rates so DSX revenue is likely to be nearly cut in half in 6-8 months. If spot rates rebound, DSX will benefit in 6 months and then you can feel certain DSX will survive, but not until then not with a heavy debt-load (not unlike most drybulk companies of course, not bashing DSX alone).
All that said, I only see one or two drybulk companies being bought out or declaring bankruptcy. Most of the major ones (not any major judging by market values) will remain afloat long enough to begin seeing small profits on spot charters.
And in a couple of years there will be reason to celebrate--as this company is being run properly by experienced Greek shipping executives, who know what competition is all about, and are going for the Jugular Veins of their competitors and have loaded their guns to do so. Have you ever been to a big old Greek wedding?---go to one some day--and then continue to invest in this company--Their DNA is right on. But it hurts right now--I have been trying to catch the falling knife and am bleeding but will hang in there. Please do the same--so we can go to that Greek wedding celebration., that may be sooner than later.
This is a good sign. It means that JPM sees a let up of all the bleeding in the markets that we have seen. According to the way the markets have been treating this stock you would think it was worthless. However, this upgrade is a sign that the world is not going to end by the end of November. If stocks were to continue bleeding at this rate the market would be at zero in two weeks (im not kidding do the math).
this is the time folks. In 5 years when this stock is over $100 you'll be one of the guys that bought at the bottom. Why $100? Because DSX cut it's dividend because they see opportunity in the market on distressed assests. If they can take advantage of others misfortune they will arise out of this the top in the industry. Look at DRYS....it may go banckrupt unfortunately (I own shares). But the point being the number of players will shrink and the strong will come out bigger and stronger and lead the market.
So it's time. Load up.
The broker also upgraded Diana Shipping Inc. (DSX:diana shipping inc com
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DSX 8.55, -1.67, -16.3%) to overweight from neutral, saying the company is the best positioned company in the sector to weather a prolonged downturn.