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Courage Marine: Profit warning.

Tuesday, May 3, 2011

Courage Marine's management issued a profit warning, expecting 1Q 2011 to turn in a loss: "The Board of Directors of the Company wishes to inform Shareholders that, despite efforts by the Group to secure deployment of its fleet, fleet utilisation was low during the first quarter of 2011. The Chinese New Year holidays in February resulted in a decrease in our fleet utilisation over the period. In addition, the Japanese quakes, tsunami and nuclear power plant disaster had temporarily halted the shipment of cargo to and from Japan, which resulted in a temporary over-supply of vessels within the Asian region. In addition, freight rates during the period remained generally low, with the BDI averaging around the 1,500 level during such period." Read announcement here.

I took the opportunity to divest most of my investment in the company at 22c/share when the price spiked on news of dual listing plans by the management. This was on 18 Jan 2011. I still retain a small investment in the company despite dismal BDI numbers as I want to see if dual listing would help reflect the value of the stock more accurately. Well, we win some and we lose some. Here is the latest BDI chart:


Technically, the counter had been range bound with resistance at 19.5c and support at 17c. Today, price broke support and touched 16.5c briefly before closing at 17c.


Gapping down today, we could see gap fill happening at 18c and that would be a good price to reduce exposure or to divest completely. Sell at resistance, that is what I would do. Panic selling would not do us any good.

2 comments:

ortho said...

Hi AK,
Would you consider 16.5c as a good price to load more Courage Marine?

AK71 said...

Hi ortho,

Fundamentally, the company has a strong balance sheet with very little debt. However, its fortunes depend heavily on the BDI which is extremely weak. We can only hope that the BDI has bottomed.

Technically, 16.5c seems to be the immediate support. Momentum oscillators are still in decline. I am not adding to my long position for now.

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