Mitrabahtera Segara Sejati, A Tough Coal Transporter

As of FY13, MBSS’ cash position stood at USD44m, arising from cash collected from its customers coupled with a very low capex allocation as MBSS was hitting the expansion break as it was caught in the downturn cycle of the coal industry. Given its strong cash position in FY13, we expect MBSS to distribute a higher dividend of 30% (from 25%) going forward.

Comfortable backlog to secure earnings
MBSS currently has a comfortable total backlog of USD350m-400m comprising mostly long-term contracts. We see that downside risk is limited from the downturn in the coal mining industry which we see has bottomed. This leaves only upside risk for vessel expansion going forward should there be a turn around.

Market share gain despite coal downturn
Despite renegotiation fees by coal miners to MBSS during the tough times back in 2012-2013, MBSS has able to gain market share to around 14-16% from the previous 12% as it was able to gain a pie from small coal tug and barge players. This is a testament to its low cost running business, so when it reduces fees at par with its competitors, its coal customers are keen to switch to MBSS, a company known for its operational excellence.

Company Report Card
Latest Results. MBSS’s 4Q13 net profit dipped 2.4% y-o-y but grew 14.6% q-o-q to USD10m, given a peak quarter which coincided with China’s winter season. This brought FY13 net profit to USD38m (+4.9% y-o-y).

Balance Sheet / Cashflow
MBSS’ USD44m cash pile in FY13 suggests a solid dividend payout (8% dividend yield). Its net gearing has declined steadily from 56.4% in 2010 to 22.7% in 2013.