Investors fled Israeli liner operator Zim for the second straight day on Thursday amid continued softening in freight rates and “conservative commentary” from its management team.
The shares were on a trajectory to close below $10 for the first time since late December after Zim reported its second consecutive loss-making quarter on Wednesday and warned that rates could tumble quickly if the Red Sea crisis is resolved.
Its shares were down 8% to $9.27 after plunging 14% on Wednesday.
“Even with freight rates spiking to meaningfully profitable levels across the main lanes, and no visible end in sight to the Red Sea dynamics, cautiousness has taken hold,” wrote Jefferies lead shipping analyst Omar Nokta in a client note on Thursday.
“The recent easing in freight rates since reaching their peak in February has brought pessimism back into the container equities, with limited expectations of a potential bounce in rates again once the market moves past the post-Lunar New Year void and closer to peak season in June.”
Jefferies has a “buy” rating and an $18 price target on the Haifa-based and New York-listed company.
Zim has traded as high as $25.12 per share and as low as $6.39 in the past 52 weeks.
It made a net loss of $147m for the fourth quarter of 2023, compared with a net profit of $417m in the same period a year earlier.
Net loss for the full year, including a $2.06bn non-cash impairment loss, was $2.69bn — massively down from net profit of $4.63bn for 2022.
“Overall, we estimate Zim burned $330m of cash during the quarter and $540m for the year,” said Nokta in another client note.
Zim chief financial officer Xavier Destriau said on Wednesday’s earnings call: “There are several scenarios that can play out. We don’t control the timing of the Red Sea crisis.
“But irrespective of what happens there, there’s a lot of tonnage that’s going to hit the trades in the second half of 2024.
“That in itself will put pressure on the rates. That’s why the first half will be better than the second half.”
