Hong Kong’s Courage Investment Group has changed its tune on shipping and is considering reinvesting in vessels instead of selling down in favour of other business lines.
The former Courage Marine is down to two vessels but is now contemplating acquiring a third.
“We are looking for a supramax or an ultramax, depending on the price,” chief financial officer Carl Yuen Chee Lap confirmed to TradeWinds, laughing at the idea that the company had been planning to get out of shipping.
“We have been in the business for a long time. Now that we are buying ships, it means we are optimistic about the market.”
Any ships purchased are likely to serve established customers rather than trading in the spot market.
The company’s financial disclosures say an acquisition would be funded in part through proceeds of a recent private placement of shares to unrelated parties. The August placement brought in a net $5.4m, which was originally described to investors as intended for general working capital, 80% of it for the maritime business.
But those proceeds could be “redesignated” for funding the ship acquisition.
Taiwanese shipowner CC Hsu, principal of his family’s private Eddie Steamship, started Courage Marine as a stock-listed vehicle in 2001 and still retains a small shareholding. Since the 2015 buyout by investor and football club owner Paul Suen Cho Hung, the company has diversified from dry bulk shipping into consumer goods trading and real estate.
Suen was thought by some outsiders to be after the company’s dual Hong Kong and Singapore listings as a vehicle for his own investment projects, and to be less interested in the ships. Last year, the company looked close to selling its last vessel, but today it owns two Zhejiang Zengzhou Shipyard-built supramaxes: the 57,000-dwt Zorina (built 2011) and 57,721-dwt Heroic (built 2012). Management is outsourced.
In the first six months of this year, Courage lost a net $1.91m on revenue of $4.34m. For the comparable period a year earlier, it lost $983,000 on revenue of $3.36m.
Shipping time charter income contributed $1.2m to the top line, and merchandise trading $2.7m, with smaller sums from real estate business. The overall loss was down to financial investments and property holdings, which took a net $1.6m off the bottom line.
But ships have become more attractive to the company as markets have improved, and a shift from voyage charters to time charters has helped.
“The outlook of vessel chartering business has become more positive commencing from the second half of 2017,” the board said in its 2018 interim report.
“[The] group is therefore able to negotiate with existing/potential charterers for better charter rates which will lead to improved financial performance for the marine transportation services business.”
Expansion could be affected by the US-China trade war, but the interim report said the company hopes it can be more profitable through scale.
“Particular emphasis will be placed on investment/business opportunities linking with the ‘One Belt, One Road’ and ‘Greater Bay Area’ initiatives strongly supported by the Chinese government, which are beneficial to Hong Kong’s long-term economic prospects,” the board said.
