Overcapacity and high fuel prices continue to haunt the shipping industry. According to ship owner Goldenport, the first three months of 2012 were among its toughest in six years as a listed company. Still, despite the choppy outlook for charter rates, we're sticking with our buy advice (79p, 29 March 2012).
Goldenport "traded well" during the quarter and 62 per cent of its available fleet is booked for 2012, generating steady cash flow. A strong balance sheet is reassuring, too. Fleet expansion, however, looks to have been put on hold. Instead, older ships will be scrapped and the proceeds used to buy newer vessels. Interestingly, at a scrap rate of $450 per lightweight tonne, analysts estimate that Goldenport's fleet is worth 120p a share as scrap value.
