ZIM - ZIM Integrated Shipping: Do Not Bet On Uncertain Dividend Yields

2024-02-13 11:00:25 ET

Summary

• It is no secret that ZIM is a beneficiary of the ongoing Red Sea crisis, with the Drewry’s World Container Index already rising to $3,786 per 40ft container.
• We suppose part of the exuberance is warranted, with 13% of its total TEUs carried through the Cross-Suez in 2022, accounting for 14% of its freight revenues.
• However, anyone hoping for rich FQ4'23 dividends may be disappointed indeed, with things appearing to be promising only from the FQ1'24 earnings onwards.
• Readers must also note its immense lease/ loan liabilities, with the ZIM management likely to focus on its near-term fleet renewal and balance sheet deleveraging.
• This alone exemplifies why ZIM will remain tightly tied to the macro global events, with the extreme volatility and variable dividend payouts likely to burn anyone who attempted to time their entry points.

We previously covered ZIM Integrated Shipping ( ZIM ) in November 2023, discussing how the prolonged macroeconomic recovery and container fleet oversupplies contributed to its impacted TEU rates and top/ bottom line....

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