Analysis of ZIM Integrated Shipping Services: a shipping company that makes investors happy.

Today we are going to take a look at the shipping company ZIM Integrated Shipping Services Ltd. That thing is the current dividend yield. So let's take a look at the company, and evaluate whether this investment is worth considering.

ZIM Integrated Shipping Services Ltd. $ZIM-1.3% is a global container shipping and logistics company that operates in several segments, including Asia Pacific, Europe and the Americas. The company provides a comprehensive range of services including container shipping, logistics and supply chain management solutions.

Share Price Chart.

Market Position

ZIM is one of the world's leading container shipping and logistics companies with a global network of 77 vessels and operations in more than 100 ports worldwide. The Asia Pacific segment is the company's largest market and accounts for more than 40% of the company's vessel capacity. The Europe and Americas segments accounted for approximately 30% and 20% of the Company's vessel capacity, respectively.

In recent years, ZIM has focused on improving its operational efficiency, which has led to improved cost control and higher levels of service quality. This is confirmed by the EBITDA margins, which are increasing. ZIM's focus on customer satisfaction and personalised service has helped the company build strong relationships with its customers and strengthen its position in the market.

Graph of EBITDA margin development over the last 2 years.

Competitive advantages

ZIM has several competitive advantages that differentiate it from its competitors in the container transport and logistics industry. These include its global network, customer-centric approach, technological innovation, operational efficiency and commitment to environmental sustainability.

The company's global network enables it to provide customers with a comprehensive range of transport and logistics solutions covering a wide range of regions and markets. ZIM's customer-centric approach and personalized service help build strong customer relationships and increase customer satisfaction and loyalty. The company's investment in technology innovations, such as the ZIMonitor system, enables remote monitoring and tracking of containers, enhances cargo safety and security, and provides greater transparency and visibility in the supply chain.

ZIM's operational efficiency has improved in recent years, leading to better cost control and higher levels of service quality. The company's commitment to environmental sustainability, with a focus on reducing greenhouse gas emissions and improving energy efficiency, is helping to reduce its carbon footprint and enhance its reputation as a socially responsible enterprise.

Finance

For the last 12 months, the company reported revenues of USD 13.85 billion, an increase of approximately 29% year-on-year. In terms of net profit, it was USD 5.91 billion for the last 12 months, an increase of approximately 27% year-on-year. The company's current market capitalization is USD 2.62 billion. This means that the company has earned more than double what it is valued at in the last 12 months. The company has been able to post solid results despite the fact that shipping rates have been declining over the past year.

Global freight rates chart.

As for the company's balance sheet, it looks very solid. The company has enough cash in its accounts to pay all its short-term obligations in case of an emergency. The value of assets net of liabilities here comes out to me at about $39 per share. This means that the company is still trading below the value of its assets net of liabilities.

Whatimpressed me so much about this company was the dividend yield, which is currently at about 130%. The company has not paid dividends for a long time, but in the last two years when it has paid dividends, it has always had them covered by free cash flow.

If I do some basic math, the company's free cash flow for the last 2 years that it's been listed has been, let's say, $4 billion a year. According to Finviz, the average price to free cash flow ratio in the sector where they put this company is 30. Now, one thing to think about. A company that has a market capitalization of roughly $2.62 billion generates free cash flow of $4 billion. It is a small company and the market does not perceive it as much. So one can assume that it may be quite decently undervalued. In my view, even if it were to generate only USD 2 billion in free cash flow, which would mean a drop of about 50%, we would still be talking about the company being relatively well valued.

Conclusion

I like the company mainly because of its dividend yield, which is abnormal here. As for the price, I think it is also fairly fairly valued. However, it's a company that hasn't been on the stock market for long, so there's not much to say that this is an established dividend stock. A lot of people are predicting a good future for this company. If only because freight rates have currently stabilized and have stopped falling, which could be a good catalyst for the company. The company is also playing into the hands of the opening up of the huge Chinese economy, which will bring back more demand. Personally, I will probably buy the company for my portfolio. How big a position it will be, however, I cannot say at this time.

DISCLAIMER: I am not a financial advisor, and this material does not serve as a financial or investment recommendation. The content of this material is purely informational.

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