Rickmers Maritime (RIMT.SI)

Buy: 8% Distribution Yield, Expect 20+% Cash Flow/Unit Growth

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staggered to March 08), with potential to grow the fleet by 10-15 ships per year,

we believe. Distributions per unit could grow from an 8.3% initial yield level.Shipping trust with growth ? Initial 10-vessel IPO (five day one and five

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peers. Operating risks for time charters may come from fluctuating lubricating

oil costs. Current asset prices are high and may move lower.Risks ? Singapore liquidity in the units may prove less than trading in US

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that have received investor interest based on yield and growth. Singapore

shipping trusts are building momentum only now, and we would look for more

interest following recent listings, despite some concerns over liquidity initially.Key existing models in the US ? Seaspan and Danaos are two recent US IPOs

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distributable cashflow yield is about 11-12% given a lower payout of about 75-

78% (full payout less supportive of sustainable growth). Yield pickup against

comparable US-listed companies is around 200 basis points.Differentiating characteristic ? The trust?s yield is about 8.3% annualized, but

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now) could show IRRs around 12% and add about 2.4% in distributable cash

flow per ship (24% on 10 x 4250TEU ships), with ships from parent and market.Acquisition catalysts ? Potential acquisitions of long-term charters (seven years

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distribution growth by year two and based on acquiring 10 accretive vessels on

long-term charters.Buy for yield and growth ? S$2.0 target price based on 7% yield and 5%

Rickmers Maritime said it is taking early delivery of a 6th containership - out of a contracted 10 - that will increase revenue by US$2.3 million and distributable cash flow by US$0.75 million for the 9 months ending Dec '07. The vessel was expected to be delivered in Oct '07, but will be delivered in Jul instead. It is currently under construction at Dalian Shipyard in China and will be on an 8-year time charter to CMA CGM.