CP Ships carries an impressive track record: Well-managed global player has shown consistent profit growth

Money Digest, Dec, 2001 by Global Securities

CP Ships Limited (TSE: TEU; Recent price: $16.50) provides ocean and related inland container transportation services. It is one of the most profitable container shipping companies in the world and ranks among the top 10 in size. CP Ships operates globally and employs 3,900 people in more than 200 offices in 64 countries around the world.

Its principal markets are TransAtlantic, Australasia, Latin America and Asia. Within these markets CP Ships operates in 24 trade lanes, most of which are served by two or more of the company's six brands: ANZDL, Canada Maritime, Cast, Contship Containerlines, Lykes Lines and TMM Lines. In the majority of its 17 core trade lanes, CP Ships holds the number one or number two position.

Strong revenue growth

CP Ships has built an impressive track record. Between 1996 and 2000, the company's revenues grew at an average annual rate of 36%, compared to the industry average of 9%.

The company also acquired eight other companies over the past six years. In 2000 CP Ships initiated a four year, $1.25 billion capital investment programme. Approximately $1 billion of the programme is intended for the replacement of short-and medium-term chartered ships, largely inherited from acquisitions, with new and pre-owned ships. The remaining $250 million is intended for expansion of CP Ships' fleet of temperature-controlled containers and to replace more expensive leased containers with owned containers.

While the company is well-managed and has shown consistent profit growth, the slower economic growth around the world is bound to affect the shipping industry as well. However, once the current economic problems are over, the company will likely prosper.

Conclusion

By many financial measures CP Ships compares very favourably with other companies in the same business. CP Ships is currently trading below its book value and has a strong balance sheet.

If you are a value investor and are looking beyond the current recession, you may want to consider adding CP Ships to your portfolio.

CP Ships Limited


TSE Symbol                 TEU
Recent Price            $16.50
Revenue             US$2635 ml
Net income           US$135 ml
Earnings Per Share     US$1.64
Debt/Equity               0.11
PE Ratio               6.6 est
Indicated Dividend     US$0.16