KUALA LUMPUR: Malaysian Bulk Carrier Bhd's (Maybulk) share price advanced on Tuesday as analysts upped its share price as demand for dry bulk shipping seen outpacing supply growth.
MIDF Equities Research revised target price from a Neutral with a target price of 59 sen to RM1.04.
At 11.54am, it was up three sen to 81 sen. There were 11.98 million shares done.
The FBM KLCI fell 4.89 points or 0.28% to 1,720.35. Turnover was 727.44 million shares valued at RM656.21mil. There were 272 gainers, 414 losers and 310 counters unchanged.
The research house said the Baltic Dry Index (BDI), which measures charter rates across dry bulk ship sizes and routes bounced off its low of 290 on 10/2/2016 to hit 429 (+48%) on March 31, 2016.
“While the current BDI is still -40% below 2015’s average of 718, we believe there could be room for upside as Chinese steelmakers’ increase demand for higher grade imported iron ore (79% of iron ore consumed in China is imported).
“Meanwhile, dry bulk shipping overcapacity issues are set to ease with forecasted net capacity addition of +1.3%, versus a higher +2.4% growth in demand. This bodes well for Maybulk,,” it said.
MIDF Research said China factory activity was back on an expansion mode. The manufacturing purchasing managers index (PMI) rose into expansionary territory ( more than 50) at 50.2 in March 2016, the highest level since June 2015 and after seven months of continuous contraction.
It pointed out manufacturing activity in China is an important gauge to the health of the dry bulk shipping industry as China is the largest importer of dry bulk commodities such as iron ore (production of steel) and coal (generation of electricity).
MIDF Research said iron ore prices at the port of Qingdao rose +40% off its lows of ~US$40/mt in January 2016 to trade at US$55 a tonne as at end-March 2016.
The sharp rise in prices despite declines in iron ore imports (as of February 2016) and crude steel output (as of Dec 2015 data) could be reflective of higher anticipated demand for iron ore while supply remains largely constant.
MAYBULK (5077) - Maybulk climbs as demand for dry bulk shipping picks up
http://www.thestar.com.my/business/business-news/2016/04/05/maybulk-climbs-as-demand-for-dry-bulk-shipping-picks-up/
