ZIM Integrated Shipping: A Contrarian's View

Summary

  • The prevailing bullish sentiment on ZIM Integrated rests upon a few pillars: cheap valuation (0.62x PE), high current dividend (107%), and reasonable profitability ahead.
  • Upon close examination, every one of these pillars is questionable. Freight rates have normalized dramatically already.
  • I expect the normalization to continue into 2023 and lead to a forward P/E in the ~15x range in the next year or so.
  • The dividend simply won’t sustain, and the cut may come sooner than many bulls expect (probably as soon as in 3 to 6 months).
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One not like other, Contrarian, On contrary, opposite, be against the trend and be non-conformist

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Thesis

The prevailing sentiment on ZIM Integrated Shipping Services (NYSE:ZIM) is quite bullish, both within the Seeking Alpha community and also beyond. Take SA authors' ratings as an example. As shown below, a total of 18 authors rated the stock in the past

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Seeking Alpha data

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Drewry's data,

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Seeking Alpha data

dividend cushion

Author based on Seeking Alpha data

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This article was written by

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** Disclosure: I am associated with Sensor Unlimited.

** Master of Science, 2004, Stanford University, Stanford, CA 

Department of Management Science and Engineering, with concentration in quantitative investment 

** PhD,  2006, Stanford University, Stanford, CA 

Department of Mechanical Engineering, with concentration in  advanced and renewable energy solutions

** 15 years of investment management experiences 

Since 2006, have been actively analyzing stocks and the overall market, managing various portfolios and accounts and providing investment counseling to many relatives and friends.

** Diverse background and holistic approach 

Combined with Sensor Unlimited, we provide more than 3 decades of hands-on experience in high-tech R&D and consulting, housing market, credit market, and actual portfolio management. We monitor several asset classes for tactical opportunities. Examples include less-covered stocks ideas (such as our past holdings like CRUS and FL), the credit and REIT market, short-term and long-term bond trade opportunities, and gold-silver trade opportunities. 

I also take a holistic view and watch out on aspects (both dangers and opportunities) often neglected – such as tax considerations (always a large chunk of return), fitness with the rest of holdings (no holding is good or bad until it is examined under the context of what we already hold), and allocation across asset classes.

Above all, like many SA readers and writers, I am a curious investor – I look forward to constantly learn, re-learn, and de-learn with this wonderful community.

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.

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