Rickmers

Rickmers: 4Q10 results. Revenue at US$36.8m, down marginally 4% yoy. Net profit at US$20m, +30% yoy, though boosted by US$7.3m of write back for vessel impairment.
For the full yr, revenue flat at US$147m; net loss of US$28.6m vs net profit of US$40.7m the previous yr, mainly due to restructuring costs in 2Q and 3Q10...

The major restructuring appears to have passed. Mgt notes all financing issues have been resolved, and has even accelerated payment of loans. We suspect the Trust may be on the cusp of a turnaround…

Mgt positive on outlook, says fundamentals indicate a continued uptrend for 2011, with container supply growth at 9% to lag trade growth at est 9.9%. Rickmers’ fleet is fully employed throughout 2011 at avg daily time charter rate of US$25750/vessel. Charter rates of certain vessels are now back to pre-crisis levels…

Co will pay US 0.6cts div this qtr, +5.3% yoy. Full yr div amounts to US 2.31cts, which translates to ~7.2% yield. There is potential for div to grow once debt levels normalize. We note OCF of at least US$100m (~S 30cts) for each of the past 2 yrs, while qtrly payout ratio is only at 14%, down from btwn 46-91% pre-crisis.
Stock trades at just 0.4x P/B…

Key risks: weakening USD, solvency risk due to high leverage, recent CFO changes, change of non-exec director, health of parent Rickmers Hldg GMBH.