Why i pick this stock?
-Diverse Revenue Sources.
With 23 ships, they consisting of seven container ships, nine product tankers, three chemical tankers, two dry bulk carriers and two crude oil tankers. In other words , our shop has many different type of bicycles to rent, bicycles that are specialised for beginners (three wheel), adults, professionals and for lovers( twin sitter) to capture the demand of the many people in east coast park, unlike other shops which only have one type of bicycle (etc: Rick marine)
-Young Fleet
As the company buys mostly new ships, its fleet’s average age is only about four years, compared with the industry’s average 9.3 years. The young fleet, combined with an aggressive growth strategy by acquisition ensures stable cash flow which will buoy its hefty dividend.
So apparently this bicycle shop of ours, was just set up, the bicycles we ordered are made from China,Korea,Japan and Romania are all very new and have been fully rented out.
-High Earnings Visibility
FSL rents out ships with very long-term contracts of about 10 years on average, This allows FSLT to maintain a high proportion of contracted cash flows while the staggered expiry profiles enable contracts to be renegotiated at different time, thus mitigating business cycle risk.
Due to some crazy event happening at east cost park, customers who rented our bicycles, wanted to rent it for 10 long hours, in doing so, contracts and ICs of the bicyclists have been signed and taken respectively :), remember the longer our customers rent from us, the more money is made.
-Bare boat Charter
(Not subject to crew and fuel cost)FSL only enters bare boat charter with its lessees which means bunker charger and lubricant oil will be borne by bare boat charterers, not FSL. Its as good as saying , the maintenance of the bicycle, like lubricating the wheels, pumping the tires, repairing any spoiled parts will be done by the cyclists themselves and not the rental shop. Thus this will result in more money earned by our shop.
- FSLT has range of financial solutions .
Against this backdrop, FSLT is able to offer a range of financing solutions which will
maximise the value of their capital and this includes 100% financing and flexible lease structures which include purchase, extension and early buy-out options, and fixed and
floating rate leases. FSLT is able to finance a range of vessels such as crude oil and product tankers, container vessels and dry bulk carriers.
-Deliciously high dividend yields...
As mentioned that the forecast DPU for FY 2008 is expected to be 10.432 US Cents per unit. This translates to about 2.61 US cents per share, or about 3.57 Singapore cents using a rate of 1.37 to the USD. This would mean a potential DPU of 14.30 Singapore cents for FY 2008;Thus, Management is taking a big risk that the unit price will adjust upwards significantly so that equity issuance can be done at a higher premium to the current market price. implying a forecast dividend yield of 12.4% at today's closing price of S$1.15 per unit."