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ZIM Shipped A Monster 20% Dividend, At A Low Valuation

Deep Tech Insights profile picture
Deep Tech Insights


  • Zim (NYSE:ZIM) Integrated Shipping Services is one of the top 20 global shipping companies.
  • The firm has recently (March 22nd) announced a gigantic $17/share dividend, which equates to a massive 23% of their share price.
  • ZIM's net cash generated from operations has increased by 5 times to $2 billion in Q4,2021 compared to the prior year.
  • ZIM has benefited massively from rising shipping costs & volume, Is the stock still a buy? or Has this ship sailed?

Logistics Team Walking Together in Inland Port

xavierarnau/E+ via Getty Images

ZIM Integrated Shipping Services (NYSE:ZIM) is one of the top 20 global shipping companies which operates on the world's most popular trade routes. The firm has benefited massively from rising freight costs which Bloomberg

This article was written by

Deep Tech Insights profile picture
Senior Investment Analyst for Hedge Funds. Interviewed Hedge Fund Managers and CEO's. Investment Strategy: Focus on Deep Dive Valuation, G.A.R.P (Growth at a Reasonable Price). Masters in Equity Valuation, 755+ Companies Analysed.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (180)

ESW3 profile picture
Bodes well for the industry, and for $ZIM:

Container shipping jackpot continues: CMA CGM profits soar

French carrier CMA CGM posts net income of $7.2 billion for Q1 2022

ESW3 profile picture
More optimism:
Clarksons Platou tips ‘multi-year upcycle’ as newbuild prices could rise 20%
Newbuilding constraints support re-drawing of global trade map
“Shipping is a cyclical sector with booms and busts, although the previous peak was a long time ago,” said Clarksons Platou analysts Frode Morkedal and Even Kolsgaard.
But they added: “Based on high commodities demand, restricted shipyard capacity, and a re-routing of the global trade map, we believe the industry has started a multi-year upcycle. Let the festivities begin.”

@ESW3 maybe the shipping industry is learning what the oil industry is learning the oversupply of ships actually hurts thebottom line and they are keeping a lid on new ships aquisition.
Let's see gorgeous numbers tomorrow!
valuinvst profile picture
@Tippsology they were. stock down.
@valuinvst yes they were...Ms. Market isn't taking any prisoners.
Philipsonh profile picture
Has ZIM set a dividend date policy or is it still paying only special dividends ? I sure have missed this information. Thanks
ESW3 profile picture

"Commencing from the third quarter of 2021, the Company intends to distribute a dividend to its shareholders on a quarterly rather than on an annual basis. The quarterly dividend will be paid at a rate of approximately 20% of the net income derived during such fiscal quarter. The dividend payable on the fourth quarter of the fiscal year is expected to be at such rate that the cumulative annual dividend amount to be distributed by the Company (including the interim dividends) will total 30-50% of the annual net income (including in respect to 2021). All future dividends are subject to the Company’s Board discretion and to the restrictions provided by Israeli law."

ESW3 profile picture
I summarized $ZIM's dividend history / policy in a spreadsheet; here's a .jpg image of same:

Philipsonh profile picture
@ESW3 Thank you for guidance. Howard
Desert Wolf profile picture
So what is ZIM Worth??? Now that the Run Up to the $17 Sp Div is Over and ZIM Trading at $55
ScottMitchellFL profile picture
@Desert Wolf Considering they'll make more than $60/Share on income in 2022, had $30/Share of cash on their balance sheet coming into the year, and paid a $17 dividend (60+30-17) I'd say that if they weren't a state controlled company, a private equity group would have already bought them for $73/share.

Honestly, at this point, why doesn't the company just buy all of its' stock back? Or, why doesn't the management team do a leveraged buyout? Or, why don't they use the cash on their balance sheet and buy $DAC or $TRTN or $TGH?

This stock is so undervalued! This is getting ridiculous.
@ScottMitchellFL shaking my head every day it drops. This is beyond silly.
foo_star profile picture
@Tippsology $34/share in cash per
datastudio.google.com/... and I think that's legit. So question is about capital allocation. Div policy is pretty new so may be awkward to update it again so soon, but what are they going to do with the cash?
Thanks, @Ben Alaimo for the nice article. Do you have any thoughts on the recent price movement and the effect of all these mounting pressures from multiple black swans (Chinese covid lockdown, Ukraine war, and now US recession talk). Would appreciate your feedback.
Some good info. Thank you.
Trucker fleet news is actually positive, but of course getting misinformed. There was an increase in the number of Truck Drives. This is strong news for the industry. In return this pushed down the numbers.
@Tippsology i think, the market thinks more and more about an upcoming recession and a global economic slow down and less consumer spending.
Dividend less 25% tax now in the account! Thanks ZIM !!
Sphygmomanometer profile picture
@DABO777 Yeah. I almost fell out of my chair when I was going over my account activity for the day.
Thanks for a great article 👍🏻
Andrew Corporate profile picture
This last dividend some weaks ago was the highest dividend they will pay until next year 2023, next quarters they will pay smaller ones. So it is a special dividend.
So in the next 9 months: 3 quarters, how much more yield (/dividend yield) will we get on ZIM?
foo_star profile picture
@andrew1corporate1 Not a "special" regarding options pricing.
@andrew1corporate1 ZIM pays 20% of net income for the first 3 quarters, then in the final quarter pays a dividend in the amount that total annual dividend equals 50% of net income. Assume 2022 net income of $40, or $10 per quarter, the dividend will be $2, $2, $2, $14, for yearly total of $20. Pre-tax (25% to Israel), at today's price of $67, the dividend yield will be about 30%, or 22.5% after tax.
Quickbuck01 profile picture
Any comments in today´s market move ? I see this stock struggling to recover
Normally my funds hit my account before market. No money yet
Sartre profile picture
@kevn1111 Unfortunately my broker deposits the distributions the day after. I won't see the ZIM distributions until early tomorrow morning. I've take my broker to task but they still won't deposit distributions until the next day. My broker is part of JPM. I think the term for it is kiting. My dividends total in the 6 figures annually, it's not a small amount. However, I checked other brokers, Fidelity, etc., and they all deposit the same day.
@Sartre TDA here and I have sometimes seen them the day before if a weekend. I expected to see this morning. Nothing yet. My thought was people who DRIP would buy today. But stock is down, again.
Sartre profile picture
@kevn1111 I bought more about 10 days ago at around $68. Would love to consider buying a little more below $68 or buy DAC or KEN below (taking a hit today) $63.50.
The article says that ZIM is chartering at least 8 new vessels. That is technically correct, but is like saying that most people have at least three fingers. ZIM has agreements to charter 21 new vessels for delivery in 2023 and 2024. Importantly, it will also take delivery of five second-hand vessels in the first and second quarters of 2022, which help to push up revenues and and, reasonably, net income, this fiscal year. That, hopefully, will help to add to the big year-end dividend.
@WhineNot Excellent, thanks for sharing the links.
ScottMitchellFL profile picture
Dwery (Container Shipping Experts) see continually elevated rates through at least 2023 with significant risks of increasing. Very bullish for $ZIM $DAC

@ScottMitchellFL Thanks, great link and info. I've been wondering why all of the shippers were down, even knowing the BDI was down. There's a good article on the correlation of dry bulk stocks to the BDI at:
I have no complain about ZIM even though 25% tax withheld from my cut. That 25% ( ONE QUARTER ) is more than some of my annual preferred stock dividends.
Long ZIM.
ScottMitchellFL profile picture
$ZIM has much less cyclical risk than analysts seem to believe. This is an excerpt from $KEN (Zim's largest shareholders) press release on Friday:

"ZIM carried approximately 3.5 million TEUs in 2021 representing a 23% increase as compared to 2020, in which ZIM carried approximately 2.8 million TEUs. The average freight rate in 2021 was $2,786 per TEU, as compared to $1,229 per TEU in 2020."

So, yes, rates have doubled and may normalize several years into the future as supply chains recover and new ships are delivered. However, we're looking at a company that took 23% additional market share (keeping the rate increases out of the equation) and that is impressive. Absolutely worth more than a 1.8 P/E.
Mick Research profile picture
"Despite this, the stock is still trading at a low PE ratio"

According to Peter Lynch the time to buy cyclical companies is when the PE ratio is high, and not when the PE is low.
Bultaco-13 profile picture
@Mick Research True. A painful lesson I learned the hard way.
Mick Research profile picture
@justinmaxwell86 His starting point for analyzing cyclicals was the price-earnings ratio; usually, a low price-earnings ratio is attractive when buying stocks, but not when buying cyclicals. A very low price-earnings suggests a cyclical's good times are about to end. Unsophisticated investors continue to hold these stocks because business is still good, though change is brewing below the surface.

On the other hand, a high price-earnings suggests a cyclical stock is going through the trough and business should improve soon.

Ref: finance.yahoo.com/...
So author what is your reccomended stock price?
Rakesh.B profile picture
ZIM - My largest holding. I give management A grade in competency and shareholder friendliness. Further, stock gets an A grade in valuation - selling at less than 2 times forward p/e. I suspect dividend for this fiscal year ( for payments in next 4 quarters) will still be substantial - at least $10 based on their commitment to payout at least 30% of earnings. You can't ask for much more in a stock. They already are investing in new ships, so I am comfortable they are preparing for the eventual decline in rates, to be made up by more business. GLTA.
@Rakesh.B Hey Rakesh, thanks for the great comment. Wondering if you had any thoughts on the recent movement? Also a shareholder here, fortunately sold it pre-dividends to avoid the dividend withholding hit. I'm now considering adding to my post-dividend position--what do you think about the fact that ZIM is pretty much spot rate-based amidst all these negative pressures coming from Shanghai lockdown and recession chatter in the US?
Occulous profile picture
@Daniel Sternick From the Q4 call, TP trade accounts for ~50% of ZIM volume and they have contracted ~50% of the TP volume. So as far as spot exposure is concerned they are least exposed to the TP trade.

Regarding freight rates, they may be down from the peak in Q3 2021, but they are still significantly elevated Y/Y. At least according to FBX https://fbx.freightos.com/
pademau profile picture
also check out SBLK
Sartre profile picture
@pademau Thanks for the suggestion...Are they paying out a quarterly dividend of $2.00 per share or is that a one time event?
@Sartre it is variable. They have a specific calculation. You should be able to google and find it.
Bultaco-13 profile picture
@pademau I own SBLK & GNK …both very impressive companies with tailwinds at their back.
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