Compass Maritime Case Study
Executive Summary
This report will show the methodology, analysis, concerns and final solution to the proposed problem of pricing the Bet Performer, a capesize bulk carrier. The Bet Performer is an 11 year old vessel, featuring 172,000 deadweight ton capacity, originally built by Nihon Kokan Kabushiki-Kaisha of Japan. The most recent sale of this ship occurred in 2006 for $70 million. After a series of regression analyses including a multiple regression analysis accounting for the recent rise in the Baltic Dry Index, I have arrived at a recommended price of $109.2 million. This value accounts for all of the variables provided and gives our client the best chance at securing the Bet Performer for its current market value.
Problems Faced
Compass Maritime is facing a difficult decision regarding how to price the Bet Performer. There are many factors that must be included in the final decision, including the age of the ship, its deadweight ton capacity, the original shipbuilder, as well as the mechanicals underpinning this particular ship. The type and build of the ship is only one issue facing Compass Marine. Another issue faced is determining what qualifies as a comparable ship, and what qualifies as a ‘recent’ transaction. According to the data presented, there have been forty-eight ships sold in the previous seventeen months. Although this appears to be a substantial amount of transactions from which to procure data, the recent surge in the Baltic Dry Index for Bulk Carriers and the associated surge for capesize ships demands attention and should be factored into the analysis as well. Also the data provides only a small portion of specifics relating to the comparable ships. Factors such as confirmed time charter contracts, location of the ship, loading equipment, and other specifics which could affect the prices of these ships has been left out.
Methodology
When determining a price for a ship such as the Bet Performer, it is important to utilize various
This report will show the methodology, analysis, concerns and final solution to the proposed problem of pricing the Bet Performer, a capesize bulk carrier. The Bet Performer is an 11 year old vessel, featuring 172,000 deadweight ton capacity, originally built by Nihon Kokan Kabushiki-Kaisha of Japan. The most recent sale of this ship occurred in 2006 for $70 million. After a series of regression analyses including a multiple regression analysis accounting for the recent rise in the Baltic Dry Index, I have arrived at a recommended price of $109.2 million. This value accounts for all of the variables provided and gives our client the best chance at securing the Bet Performer for its current market value.
Problems Faced
Compass Maritime is facing a difficult decision regarding how to price the Bet Performer. There are many factors that must be included in the final decision, including the age of the ship, its deadweight ton capacity, the original shipbuilder, as well as the mechanicals underpinning this particular ship. The type and build of the ship is only one issue facing Compass Marine. Another issue faced is determining what qualifies as a comparable ship, and what qualifies as a ‘recent’ transaction. According to the data presented, there have been forty-eight ships sold in the previous seventeen months. Although this appears to be a substantial amount of transactions from which to procure data, the recent surge in the Baltic Dry Index for Bulk Carriers and the associated surge for capesize ships demands attention and should be factored into the analysis as well. Also the data provides only a small portion of specifics relating to the comparable ships. Factors such as confirmed time charter contracts, location of the ship, loading equipment, and other specifics which could affect the prices of these ships has been left out.
Methodology
When determining a price for a ship such as the Bet Performer, it is important to utilize various