Maybulk advances on rising volume despite cautious outlook

KUALA LUMPUR (Dec 29): MALAYSIAN BULK CARRIERS BHD [] (Maybulk) share
price advanced in late afternoon trade on Thursday, climbing to a high
of RM1.59, despite concerns about a tough 2012 environment for the dry
bulk shipping industry.

At 3.57pm, Maybulk was up 13 sen to RM1.58. There were 5.09 million shares done at prices ranging from RM1.46 to RM1.59.

In a recent report, TA Securities Research said its Underweight stance
on the dry bulk shipping industry remained intact as it believed the
global shipping market was posed for a tough 2012.

'Indeed,
Malaysian Bulk Carriers Berhad (Maybulk)'s management foresee a
challenging operating environment going forward. Capacity glut and
unstable operating costs, primarily due to volatile bunker costs will
continue to threaten shipping line profit margins,' it said.

TA Research said the situation may be exacerbated by unusual weather conditions and natural disasters.

Due to the lacklustre industry outlook and the industry's chronically
low profitability, it believed the share price appreciation potential is
limited for Maybulk. It added the recurring problem in the shipping
sector was still the oversized orderbook as there would be another wave
of big ships coming to the industry next year.

'We reiterate our
Sell recommendation on Maybulk with a target price of RM1.10 based on
Sum-of-Parts valuation methodology. We believe Maybulk appears fully
valued within the sector with the recent increase in share prices.

'Potential catalysts to upgrade our target price include: (i) a strong
and sustained rebound in Baltic Dry Index, (ii) a faster-than-expected
economic recovery; and (iii) better than expected earnings contribution
from POSH (PACC Offshore Services Holdings Pte Ltd),' TA Research said.