In fact, this is the fourth time Starship has hit an IPO, having tried in 2008, 2011 and 2016, but failed due to poor market conditions and poor profitability. In 2004, the company's largest shareholder, Kenon Holdings, controlled by the Idan Ofer family, took it private with a 32% stake.
As a shipping company that tells the story of "light assets", Starship ranks as the tenth largest container shipping company with an actual control capacity of 406,000 TEU, and the leased capacity is as high as 98.9%. The latest data from the prospectus shows that Starship has only one own ship and no new ship orders.
In the prospectus, Starship also mentioned that an important use of the raised funds is to invest in ships and containers.
The market conditions in 2020, especially the rising freight rates in the second half of the year, have laid a solid financial foundation for Starship's IPO road. For the third quarter, the company posted a net profit of $144 million, compared to just $5 million in the same period in 2019.
Of course, while the freight rate is running at a high level, the chartering market is also rising. Container ship rents have hit a 12-year high, according to Clarksons and investment bank data. Traditional Panamax 12-month charter rates are in excess of US$25,000/day, and feeder containers are also fetching up to US$18,000 per day.
Unlike freight rates, which change with supply and demand, ship charters are not as flexible, especially when capacity is tight, and lessors will not only demand high rents, but also extend the lease period, such as from weeks or even years. Wait.
This has happened since 2005. At the time, container ship rents were at record highs and even smaller vessels were being chartered for as long as five years, but freight rates began to decline before the 2008 financial crisis.
Most of the major container shipping companies that have flourished over the past 20 years have used a combination of owned and chartered vessels to hedge against volatility.
Yixing Shipping is now in a very favorable market environment, the number of ship orders is much lower than that in the last market recession, and the company's operations are more stable.
In fact, according to the prospectus, from October 1, 2020 to January 19, 2021, 26 new ships were chartered by Starship, of which 16 were placed on intra-Asian routes and 4 were placed on trans-Pacific routes. , 3 ships were launched on the Atlantic to Europe route.
As of January 19, Starship has actually controlled 96 ships, except for one self-owned ship, the rest are leased ships. It is worth mentioning that 60% of the chartered ships have less than one year remaining on the charter period.
At present, Starship has not disclosed its financial results for the fourth quarter of 2020, but relevant forecasts have been made in the prospectus.
The company expects a net profit of $342 million to $367 million in the fourth quarter of 2020 and a net profit of $500 million to $525 million for the full year, compared with a net loss of $13 million in 2019. Adjusted EBIT is expected to be between $703 million and $733 million, nearly five times 2019 EBIT.
In terms of container volume, the liner company estimates that in the fourth quarter of 2020, the container transportation volume reached 783,000 to 813,000 TEUs, and the annual container transportation volume reached 2.825 million to 2.855 million TEUs, basically the same as in 2019, an increase of about 1%. . Average shipping rates ranged from $1,222/TEU to $1,234/TEU, an increase of 17%-18% year-over-year.
In terms of debt, as of December 31, 2020, outstanding debt is expected to be $1.847 billion to $1.912 billion, an increase of 13% to 16% from the end of 2019.
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