$ZIM - Playing spot exposure of containerships

Is it just me, or does it seem to be finally finding support here at 55?

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Too bad I missed my fill on the 60c yesterday. Looks like it’s trying to re-enter the previous 1yr channel.

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Indeed, it seems $55 turned out to be very nice support. It bounced off of the 200SMA, and the trendline support too.

ZIM chops around a few bucks many days, as seen from the ATR graph (red), so we should still get a chance to enter in the high 50’s if we haven’t already.

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https://twitter.com/joeriwestland/status/1516402743421853709/photo/1

Saw this yesterday which is probably an indication that Q1 results will be strong although there is still uncertainty around forward container rates. Mintzmeyer has also indicated he went back in ZIM around the low 50s

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Might be worth a watch if you’re in / looking to get in ZIM or other shipping names

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Created a separate DAC thread as it now seems to be a play.

As expected, shipping rates continue to fall - Drewry’s Index dropped almost another 1%.

ZIM down 10%. No doubt oversold; will grab another lot if it hits $45.

Well well… J Mintzmyer went in heavy on both ZIM and DAC today. Fwiw, his one-month targets feel too aggressive - I don’t think it reflects the headwinds we’ve talked about, though he’s probably on mark for the same prices but 6 months from now.

image

Maersk, the #2 containership operator in the world that is about 10x the size of ZIM, released this trading update:

Mærsk A/S (APMM) has realized a financial performance for the first quarter of 2022 ahead of previous expectations with a revenue of USD 19.3bn, an underlying EBITDA of USD 9.2bn and an underlying EBIT of USD 7.9bn. The strong result is driven by the continuation of the [color=#1338BE]exceptional market situation[/color] within Ocean, which has led to a [color=#1338BE]7% decline in volumes and an average 71% increase in freight rates[/color] compared to Q1 2021.

As a consequence of the strong Q1 results, the [color=#1338BE]expectation that the current market situation will continue in Q2 combined with higher contracted rates[/color], APMM now expects the full year 2022 to be stronger than previously anticipated. Consequently, the full year guidance for 2022 has been revised upwards. Underlying EBITDA is now expected to be around USD 30bn (previously around USD 24bn), underlying EBIT is expected around USD 24bn (previously around USD 19bn) and a free cash flow above USD 19bn (previously above USD 15bn).

The current earnings guidance is still based on an [color=#1338BE]assumption of normalization in Ocean early in the second half of 2022[/color]. Based on volume developments in the first quarter, APMM has revised downwards its outlook for the growth of global container demand from 2-4% to -1/+1%.

(Source)

To the extent that ZIM has much spot rate exposure, they should benefit similarly.

Earnings for ZIM are about 3 weeks away (May 20). Since I have commons already, will wait for FOMC on May 3 in case market corrects downward between now and right after.

Btw good news is prices seem to have stopped responding as much to the Container Indices that continue to drop:

Imagine if China starts relaxing lockdown just around earnings and those Shanghai routes tick up again …

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That is a huge traffic jam around Shanghai right now… Taken from Marine Traffic:


(Filtered to only show Cargo & Tankers)

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I opened a position in SBLK just now as sympathy to this thesis, 5/20 32c for 0.70. They beat their earnings Wednesday, which seems to be a theme in shipping this quarter. Gonna get back into ZIM as well soon (wasn’t sure whether to post this is in community call outs, but this thread seemed more appropriate)

Edit- Should mention there’s a gap up from that ER report that could be filled (I believe in gap fills, so it would be disingenuous to only mention them when they’re looking good for a position I’m in/looking at). This definitely could wick down to $27 again before 5/20, though I also plan to average in to this one with one other call before opex

ZIM holding strong with some of the bleeding today. I picked up a small position May 20, 55c

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ZIM confirmed earnings release pre-market on 5/18.

Stock is up 8% already today and we can expect it to keep climbing until earnings. I’m waiting till tomorrow to initiate calls just in case we have a bit of downward movement after FOMC. Either way, will initiate calls tomorrow or at the latest, day after.

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I will probably get in on this as well. Last Quarters were a big hit for me. I didn’t enter til after ER might look to June calls for divi run.

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To make sure it’s clear, the dividend this quarter will be in the $2-3 range. I would expect much less of a run/dip for the Q1 than the much larger Q4 div.

With that said, I think ZIM and other shipping stocks were pushed down too far lately and they have a run coming…

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ZIM continues to perform beautifully compared to the rest of the market.

Yesterday would have been another good day to buy, but today is second best, so have set a limit buy for 6/17 75C. ZIM does +/- 5% easy on any given day so hoping for a better price. Will release before earnings in two weeks.

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This filled easily near close on Friday, and is down 50% already, what with ZIM falling 14% and its not even 11.30am (!), so got another 6/17 75C for 1.25. Earnings are in 10 days, ish. Assuming there’ll be a bounce around there, unless market completely capitulates.

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GSL, a ZIM peer (ish), had amazing earnings:
https://seekingalpha.com/pr/18783722-global-ship-lease-reports-results-for-first-quarter-of-2022

  • Global Ship Lease press release (NYSE:GSL): Q1 Non-GAAP EPS of $1.91.
  • Revenue of $153.63M (+110.5% Y/Y).
  • Generated $94.5 million of Adjusted EBITDA for the first quarter 2022, 2.1 times Adjusted EBITDA of $44.2 million for the prior year period.

Phenomenal numbers for a $850M market cap company.

ZIM and DAC should follow during earnings next week.

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Looking at GSL, it’s shares really didn’t move up much at all on the positive earnings. In fact, after a very brief rally to ~$24, it crashed to around $21.50 where it still sits about 2 days later.

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Shot:

Chaser:
https://twitter.com/mintzmyer/status/1525881186131714048

Also, rates kept steady last week and Shanghai to LA actually crept up a wee bit.

ZIM earnings 5/18 pre-market. Should be good. Wouldn’t be surprised if it sees $70.

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Thanks @The_Ni , I am holding some shares and calls so looking forward to that possibility of $70.

To place this here on shipping, longer term outlook based on Allianz (larger insurance carrier for shipping cos). More of a part of our Ukraine forum but still applies to Zim.

https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/shipping-safety-22-ukraine-war.html