Stock market goes up and up, so does a company share. Share prices of a certain company goes up could be due to different positive factor such as anticipated better earnings, industry sentiment picking up, overall bullish sentiment in stock market, corporate exercise and etc. Whatever it is, all these are categorized as the positive catalyst for the company. Of course, there will always be good catalyst and bad catalyst, which is why we need to use our due diligence in selecting a stock for investing.
As you would know, I had been focusing a lot on the shipping industry coming into 2018. One of the reason is because I think that the industry had gone through it's worst weather in the past 2 years, and the coming recovery would be a good opportunity for investor.
Do you recall the news last year when our local media reported that the Penang sea if infested with a new breed of dangerous box jellyfish ?
According to the Star, there are 2 species of deadly box jellyfish that is previously not thought to exist here are breeding in the sea around Penang.
If you are looking to understand this situation in a funnier and friendly manner, our local content marketing site - Cilisos, had put this issue into a very fun reading manner. Cilisos - News reports of new, deadly jellyfishes on Penang beaches?! Here’s what REALLY happened.
So, as you can see, all this is no play play issue. Jellyfish is only one of the visible issue to our naked eyes, other issue such as bacteria and virus is not visible to our eyes, but already occur. I know you might like to eat those goreng-goreng jellyfish, but I bet you wouldn't want to have your hand and legs bitten by jellyfish of such species when you visit the beach right?
In order to manage this issue, the International Maritime Organization had put a rules towards international shipping lines.
Because of this, many old ships will prefer to be scrapped than to be modified because there will not be extra space to fit this system into their old design.
For the perspective of Syscorp, I would think that
1.) Syscorp will benefit from Ballast Water Management System installation as they are also involved in ship building, repair and maintenance.
2.) Higher scrapping of old container ship will help cushion a better chartering rate.
3.) Syscorp had high number of older ship which is fully depreciated. Scrapping the ship will result in a gain on disposal for the profit and loss statement. At least 40% of the ship are more than 20 years old, which account for around 110 ships.
4.) Strategic alliance in North Port to reflect operation cost saving in 2018.
As for the risk, Syscorp financial had been wobbly for the past few years, which is reflecting on it's current share price. However, with all the positive sentiment around, it is now on the management hand to make Syscorp great again.
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