KUALA LUMPUR (Feb 23): Unfazed by the tough market conditions that the shipping industry is faced with, Malaysian Bulk Carriers Bhd (Maybulk) said it will move forward with fleet renewal activities in its current financial year ending Dec 31, 2015 (FY15).

This was because the company feels it is important to remains competitive, even in trying times, said Maybulk (fundamental:1.05; valuation:1.6) chief executive officer Kuok Khoon Kuan.

“Why are we investing when the market is bad? It is important to remain competitive. We can’t just sit on our [cash reserves] without expanding or renewing our fleet,” he told a press conference today, after announcing the group’s FY14 financials.

The group had on Feb 12, 2015, purchased two 81,800 deadweight tonnage (dwt) Panamax bulk carriers, which is estimated to be delivered in 2018.

Kuok said Maybulk has set aside some RM400 million in terms of capital expenditure, to be utilised for expansion within the next three years.

Maybulk slipped into the red for its fourth quarter ending Dec 31, 2014 (4QFY14), with a reported net loss of RM21.78 million, against a net profit of RM13.88 million in 4QFY13. For FY14, the group’s net profit had dropped by 72.7% to RM 12.15 million, from RM44.53 million in FY13, mainly due to its weaker dry bulk segment and lower contribution from its associate, PACC Offshore Services Holdings Ltd (FY14: RM36.72 million, down 24.52% from FY13's RM48.65 million).

Revenue for 4QFY14 increased by 3.03% to RM59.57 million, as compared to RM57.81million in 4QFY13. Its dry bulk segment constituted approximately 76% of its FY14 revenue of RM255.72 million. Revenue for FY14 had increased by 3.63%, as compared to RM 246.74 million in FY13.

According to a note by MIDF Research today, The Baltic Dry Index, which provides an assessment of the price of moving  major raw materials by sea, had dropped to a 27-year low of 522 points on Feb 16, 2015, mainly due to a slowdown in China’s manufacturing.

“Once the holiday season is over, we are hoping that the [Baltic Dry Index] would improve, as right now, there are many companies in the drybulk business which are going under due to this [low Baltic Dry Index],” he said.

Maybulk shares closed up 0.73% or 1 sen to RM1.38 today, with a market capitalisation of RM1.38 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)