Picking the right time for an initial public offering is critical to its success. Having a stable company, however, is even more critical. If a company can demonstrate that it has a good business model and the track record to support it, success will likely be had right from the get-go.
Safe Bulkers inc., an oceangoing shipper of dry bulk goods, operates globally with 11 Japanese built ships. Its primary shipping products include iron, coal and grain. In typical shipping fashion, the company operates primarily on time and spot charter bases. Time shipping charters are ship hires of over three months while spot hires are less than three months.
On May 26, 2008, the company registered for an initial public offering. Its suggested initial offering was between $20-22 per share. After opening, the price of the stock has dipped slightly and is currently finding its footing. From a general perspective, even though dry bulk carriers have seen prices charged for hiring periods increasing, a slight dip in favorability for dry bulk shippers has also been seen. Although speculative in nature, it might be suggested that current emotional tendencies in the pricing of oil, along with Australian conditions, may have something to do with current favorability.
Regardless of what the markets may be doing at this particular point in time, the company does appear to have a solid balance sheet to its credit. For whatever reason, the company can point to remarkable numbers on its balance sheet. Net income, revenue and gross profit are stratospheric in their increases over the last several years. To further stifle the market’s current concerns, one needs only to look toward the company’s operating margins of 73% (down slightly) against its operating margin of 127% (up significantly.) There are likely many reasons for this occurrence, but many might be traced to the revenues generated from the company’s leading customers; Cargill, Bunge, Daiichi, Chuo Kisen and their subsidiaries. As the company goes public, the fundamental demand theory applies. Customers need the raw product and it needs to get to them somehow.
Let us hear your thoughts below:
