10 Jun '12, 1am

CH Offshore exploding trade receivables

But it is interesting to think about why CH Offshore is having problem with their receivables. That is charterer rate, contract and cyclical nature of the industry. An offshore vessel has a lifespan of about 25 years. Offshore industry has a long cycle which mean each vessel has the chance of securing one cycle of good charter rate, I think the maximum are 2 cycles. Having long term contract at above market rate is good but like buying market bottom, it is only after that we know the rate is good. Still remember the party where the fashion was announcing how big is the contract and how long is the duration. Where are they now? The problem CH Offshore is facing look precisely CH Offshore locked in super good rate and their customer is having problem paying at that rate. With that CH Offshore is facing the problem of walking away from the contract or continue.

Full article: http://www.investmentmoats.com/singapore-stocks/ch-offsho...

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