Ocean carrier ZIM fast-tracks IPO, targets $2 billion valuation

During the roadshow presentation to investors, ZIM CFO Xavier Deistriau explained that net proceeds could be used to secure long-term lease agreements for larger ships to serve the Asia-West Coast trade, to buy more containers and to invest more in digital tools. 

The prospectus said the company could charter ships with capacity of up to 15,000 twenty-foot equivalent units (TEUs) for the trans-Pacific trade.

The latest prospectus, filed on Tuesday, offers fresh details on ZIM’s business that were not included in its Dec. 30 registration statement (see in-depth coverage of earlier registration here).

Fleet size jumps on new charters

The new filing reveals that ZIM has been on a chartering spree in recent months.

Unlike its peers, ZIM does not own roughly half its fleet and charter the rest. Rather, it charters virtually its entire fleet. 

As previously reported, ZIM operated 70 vessels (including two vehicle transport ships and 68 container ships) as of Sept. 31, with all but one of those chartered. Of its chartered-in capacity, 71% had a lease duration of one year or less. Container capacity at that time was 330,300 TEUs.

The newly revised prospectus reveals that ZIM chartered 26 additional ships since Oct. 1. It now has 96 vessels (three vehicle carriers, 93 box ships). Total container capacity is 406,502 TEUs. The share of ships chartered for a year or less is 60%.

Over the course of the past three and a half months, ZIM has boosted its capacity by 23%. This chartering surge coincided with a period of historically high charter rates, implying higher lease expenses ahead.

Preliminary Q4 and full-year results

ZIM has not yet closed out its Q4 2020 financials, but the roadshow presentation and the new prospectus provided preliminary estimates.

The company is expecting net income for Q4 2020 of $342 million-$367 million. This would bring full-year net income to $500 million-$525 million, compared to a net loss of $13 million in 2019. 

ZIM expects adjusted earnings before interest and taxes (EBIT) will be $703 million-$733 million, almost five times 2019 EBIT.

The liner operator estimated that it carried 783,000-813,000 TEUs in Q4 2020, bringing the full-year total to 2.825 million-2.855 million. That’s essentially flat with 2019, up around 1%.

The big gains came from freight rates. It estimated its 2020 rates averaged $1,222-$1,234 per TEU, up 17%-18% year-on-year.

In the negative column, ZIM estimated that its outstanding debt as of Dec. 31, 2020, would be $1.847 billion-$1.912 billion, up 13%-16% from the end of 2019. Click for more FreightWaves/American Shipper articles by Greg Miller 

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