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Lestat, you asked:
i) Samudera has been expanding operations into the Middle-East and China over the last 2 years. How has it been doing in these 2 regions? Understand competition is quite stiff at these areas.
Our answer:
For the Middle East, at the beginning we established ourselves as a new-comer and penetrated the market to get support from customers. The period was challenging, as the competition was and is tough, like what you wrote. We started with one service i.e. Dubai-Bandar Abbas. We have now an extensive Intra Gulf service connecting all the Upper Gulf ports. We have also linked Gulf to Indian Sub Continent (Karachi, Kandla and Mumbai) and South East Asia through consortium with other major shipping lines. Therefore from a small base we managed to improve our business and are now regarded as an established player in that region. We resumed our China service with the routing of Shanghai – Hong Kong - Singapore – Port Klang – Hong Kong – Shanghai. We experienced that cargo from China is much stronger than cargo to China. To improve cargo volume to China we added some more ports of call i.e. Bangkok and Laem Chabang (Thailand) and the result has been satisfactory.
By Samudera
On Thursday, 28 Jun 2001 02:21pm
Posting #216
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Hi Lestat,
you asked:
ii)There were a no. of strikes at Indian ports in the current year, notably at Kandla and Madras. Believed Samudera's vessels call at these locations and there were delays in port calls due to these strike. Will the delays have a significant cost impact on Samudera?
Our answer:
There is no port congestion in Kandla caused by labour strikes. However, in Madras (Chennai), it has been causing significant delays to vessels operation. Consequently, in order to recover additional costs all carriers have applied congestion surcharge since then.
You asked:
iii) Year 2001 has not been a good year for shipping in general with the slowdown in global trade and increased capacity. There was also increased political instability in Indonesia and Philipines. As exports out of Indonesia comprised a significant portion of SSL's business, will this affect sales significantly?
Our answer:
In spite of the political instability in Indonesia, total throughput of containerized cargo this year is stable compared to last year. Therefore, our sales have not been affected by political instability in Indonesia.
You asked:
iv) Due to trade slowdown, there is greater competition for freight among shipping lines and many have resorted to rate cutting. Does Samudera have any measures to counter this erosion in profitability?
Our answer:
There is an Asian Feeder Discussion Group, which has been in existence for more than 5 years. This group has been useful to maintain an open dialogue among the feeder operators in order to avoid unhealthy competition. As a feeder operator, our CCAs (connecting carrier agreements) with main line operators are applied on annual basis, therefore they can help to avoid rate cutting. Internally we have intensified cost efficiency programs.
You asked:
v) Understand that SSL has a policy of holding assets light by chartering vessels for most of its services. In view of the firm vessel charter rates/service expansion programmes, will this increased operating expenses drastically?
Our answer:
The charter hire rates have not increased significantly. As a matter of fact, based on the advice from our ships broker we expect the rates to soften in the future. For any service expansion we always conduct feasibility study and implement such expansion only when the project is feasible.
You asked:
vi) Samudera has been making profits consistently but it has been ignored by financial institutions/funds. Since 1999, its share price has been sinking. Does management have a plan to market SSL and improve its profile? Unlocking of value?
Our answer:
There is a general impact from the depressed stock market situation in Singapore. Moreover, our share price may have been depressed because of a misperception about our Indonesia link. Actually political instability in Indonesia has not negatively affected our business and performance. We shall be consistently delivering this message to the investing community in order to clear the misperception.
While steering the company to the right strategic direction and keeping the business profitable are amongst the primary roles of the Board, we also recognize the importance of Investor Relations functions. We have reviewed the current situation and have made some plans in improving the public profile of the company. We tried to communicate more clearly about our business philosophies in our latest Annual Report.
We are proud to share with you that, the Management has been commended by some shareholders in producing a better Annual Report this year. Management has always been open and transparent in its communication with the investing community. We are working on making more frequent communication with the in vesting community. As a matter of fact, our holding of this forum, is part of such program. We shall be increasingly looking for more news opportunities, which would be communicated through press releases, announcements, web site postings. We shall be also looking for opportunities for press coverage of Company Profile.
In this month, Samudera was featured in Tradewinds. Last but not least, we are working on increasing the analysts coverage. Hope, I could adequately respond to your query.
You asked:
vii) Regarding future expansion plans, do you look towards organic growth or mergers and acquisition? Any plans to tie up with other lines?
Our answer:
In our expansion plans, we want to do not only geographical diversification, but also product diversification such as forwarding and logistics / distribution businesses and therefore merger or acquisition is possible.
Regarding the tie up with other lines, we have been doing it operationally and will continue to do it as we believe that this can help our expansion plans.
Thanks once again.
By Samudera
On Thursday, 28 Jun 2001 02:32pm
Posting #217
ii)There were a no. of strikes at Indian ports in the current year, notably at Kandla and Madras. Believed Samudera's vessels call at these locations and there were delays in port calls due to these strike. Will the delays have a significant cost impact on Samudera?
Our answer:
There is no port congestion in Kandla caused by labour strikes. However, in Madras (Chennai), it has been causing significant delays to vessels operation. Consequently, in order to recover additional costs all carriers have applied congestion surcharge since then.
You asked:
iii) Year 2001 has not been a good year for shipping in general with the slowdown in global trade and increased capacity. There was also increased political instability in Indonesia and Philipines. As exports out of Indonesia comprised a significant portion of SSL's business, will this affect sales significantly?
Our answer:
In spite of the political instability in Indonesia, total throughput of containerized cargo this year is stable compared to last year. Therefore, our sales have not been affected by political instability in Indonesia.
You asked:
iv) Due to trade slowdown, there is greater competition for freight among shipping lines and many have resorted to rate cutting. Does Samudera have any measures to counter this erosion in profitability?
Our answer:
There is an Asian Feeder Discussion Group, which has been in existence for more than 5 years. This group has been useful to maintain an open dialogue among the feeder operators in order to avoid unhealthy competition. As a feeder operator, our CCAs (connecting carrier agreements) with main line operators are applied on annual basis, therefore they can help to avoid rate cutting. Internally we have intensified cost efficiency programs.
You asked:
v) Understand that SSL has a policy of holding assets light by chartering vessels for most of its services. In view of the firm vessel charter rates/service expansion programmes, will this increased operating expenses drastically?
Our answer:
The charter hire rates have not increased significantly. As a matter of fact, based on the advice from our ships broker we expect the rates to soften in the future. For any service expansion we always conduct feasibility study and implement such expansion only when the project is feasible.
You asked:
vi) Samudera has been making profits consistently but it has been ignored by financial institutions/funds. Since 1999, its share price has been sinking. Does management have a plan to market SSL and improve its profile? Unlocking of value?
Our answer:
There is a general impact from the depressed stock market situation in Singapore. Moreover, our share price may have been depressed because of a misperception about our Indonesia link. Actually political instability in Indonesia has not negatively affected our business and performance. We shall be consistently delivering this message to the investing community in order to clear the misperception.
While steering the company to the right strategic direction and keeping the business profitable are amongst the primary roles of the Board, we also recognize the importance of Investor Relations functions. We have reviewed the current situation and have made some plans in improving the public profile of the company. We tried to communicate more clearly about our business philosophies in our latest Annual Report.
We are proud to share with you that, the Management has been commended by some shareholders in producing a better Annual Report this year. Management has always been open and transparent in its communication with the investing community. We are working on making more frequent communication with the in vesting community. As a matter of fact, our holding of this forum, is part of such program. We shall be increasingly looking for more news opportunities, which would be communicated through press releases, announcements, web site postings. We shall be also looking for opportunities for press coverage of Company Profile.
In this month, Samudera was featured in Tradewinds. Last but not least, we are working on increasing the analysts coverage. Hope, I could adequately respond to your query.
You asked:
vii) Regarding future expansion plans, do you look towards organic growth or mergers and acquisition? Any plans to tie up with other lines?
Our answer:
In our expansion plans, we want to do not only geographical diversification, but also product diversification such as forwarding and logistics / distribution businesses and therefore merger or acquisition is possible.
Regarding the tie up with other lines, we have been doing it operationally and will continue to do it as we believe that this can help our expansion plans.
Thanks once again.
By Samudera
On Thursday, 28 Jun 2001 02:32pm
Posting #217
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Hi Thedoors, you asked:
Since listing, the company's shares have fared poorly. What is management planning to do about that?
Our answer:
I believe I have answered the similar question. Please see my answer to Lestat’s question.
Thedoors, you asked:
The dividends paid by the company is very, very low. Why? I'm a smalltime holder of Samudera, but it is painful to see its share price so low, and worse to receive little dividends. Thanks for answering my Qs.
Our answer:
When making decision of a Company’s dividend policy we try to adopt a common policy practised by most public companies in Singapore. Our dividend payout policy is not too aggressive since we have several projects that need own fund/equity participations. However, besides trying to enhanced investor awareness and interest, we will look at the possibility to improve our dividend payout ratio in future. Thank you for your questions
By Samudera
On Thursday, 28 Jun 2001 02:38pm
Posting #218
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Hi Thedoors, you asked:
Gather from contacts in the industry that freight rates for the Asia-US routes have fallen by around 15% from the end 2000 levels. According to freight forwarders in Singapore, there has been a sharp 2Q drop in volume, which come on the back of a 3% drop in Q1. As a result, freight rates are likely to come under more pressure.
Q: How does Samudera stand up to such pressures? Where is your shield?
Next, trade volume growth is expected to slow down sharply in the coming few quarters. That means that container volume growth is likely to slow down (Singapore traffic already down 13% in April) at a time when container capacity is expected to rise by 11%.
Q: Will not Samudera be affected by slower volume growth?
Our answer:
Let me answer your two questions together.
The pressure on the freight rates is mainly in the Asia – North America trade as well as Asia – Europe trade. This is due to lower cargo volume resulting from economic slowdown as well as higher deployment of ships capacity resulting from delivery of bigger ships. Although Samudera does not participate in such trade lanes we may be indirectly exposed to risks of lower cargo volume. In such event we have the benefit of flexibility due to our higher usage of chartered fleet. We can and will, if necessary, reduce the capacity either by releasing the chartered ships or chartering smaller ships. This will facilitate in achieving balance between supply and demand. This is our main shield. Additionally we will also consider to cooperate/form alliances with other shipping lines.
By Samudera
On Thursday, 28 Jun 2001 02:46pm
Posting #219
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