UnderTheBalanceSheet

$ZIM Highlights

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM

Great news seeing the market's positive reaction to Glickman stepping down, even with the union strike going on. Frankly, this is excellent news. He caused a lot of damage to the shareholders due to massive conflicts of interest. Let's hope more people clear out after him.

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM
"Calcalist has learned that the party originally intended to be the Israeli partner in the deal was Udi Angel, through his investment firm, XT. Although all terms had been finalized with Angel, a delay in signing the agreement led Hapag-Lloyd to begin last-minute negotiations with FIMI just two weeks ago. These talks matured into a binding Memorandum of Understanding, as FIMI was prepared to accept several clauses that Angel had hesitated to approve."

Udi Angel was formerly married to Liora Ofer, the daughter of Yuli Ofer, the couple has a son and a daughter and divorced in 1995. Their son, Ori Angel, was appointed CEO of Ofer Shipping in October 2007.

Angel joined the Ofer Shipping Group (owned by the Ofer Brothers Group) in 1975 and was appointed CEO in 1980.

Major Business Milestones:

1999: He was a partner in the acquisition of Israel Corporation from Shaul Eisenberg.

1999-2003: He served as the Chairman of Zim Integrated Shipping Services.

2012: Together with Idan Ofer, he initiated the rebranding of the company as XT Group. Angel and Ofer hold equal shares in the company.
Current Roles and Holdings
Today, Angel serves as the Active Chairman of XT Holdings and Chairman of the group’s various subsidiaries. The group’s primary operations are in shipping, real estate, and high-tech.

His primary holdings include:
50% ownership of Ofer Ship Holding (through which he shares ownership of Ofer Shipping and Ofer Hi-Tech with the Sami Ofer family).

4.6% stake in Israel Corporation.

[Dmitriy Kozin 🇺🇲🛢️⚓ @dmiko789]

The new number for $ZIM is $4.2 billion🚀

[גולן חזני @HazaniGolan]

אני אוהב להיות זהיר וכשיש ספק לגבי מספר תמיד בוחר ברף התחתון. גם בצים היה כך אתמול, אבל מתברר שהפעם הייתי זהיר מדי והמחיר הסופי יהיה כ-4.2 מיליארד דולר.
העיסקה אושרה הערב בדירקטוריונים של שתי החברות. מחר ימשך המו״מ מול העובדים, ייחתם הסכם, ואז אישורים

https://t.co/b8OwiuvvNt

[Svilenko @svilenko_BG]

@christankerfund You're gonna love this $ZIM talk: https://t.co/hUkS3GrMGF

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM
*31.12.24
330 ports
more than 100 countries

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM operates across five distinct Geographic Trade Zones:

- Pacific
- Cross-Suez
- Atlantic-Europe
- Intra-Asia
- Latin America

ZIM calls at over 300 ports in more than 100 countries. Given that ZIM accounts for 2%–2.5% of global market share, its Israeli operations represent only a minor fraction of its total global activity.

While ZIM’s routes pass through Israel only within two specific zones, Cross-Suez and Atlantic-Europe it should be noted that a substantial portion of the activity within these zones does not involve Israel at all.

The company does not disclose the specific percentage of volume or revenue originating from, or passing through, Israeli ports within these segments.

Trade Zone Definitions:

Cross-Suez: Covers all major international shipping ports in the East Mediterranean, the Black Sea, China, East and Southeast Asia, and India.

Atlantic-Europe: Covers major international shipping ports in the East and West Mediterranean, the Black Sea, Northern Europe, the Caribbean, the Gulf of Mexico, and the East and West coasts of North America.

Attached Data:

- Percentage of total TEUs carried for the period.

- Percentage of total freight revenues from containerized cargo.

It is difficult to ignore the potential conflict of interest and the suspicion of financial arrangements between the management team whose MBO proposal was rejected and the union.

[InvestyMan @InvestyMan]

As a reminder: $ZIM has by far the highest share of LNG vessels in their fleet (currently 40%) which brings competitive advantages.

$ZIM invested pretty early into LNG and at very cheap long term charter rates (up to 12yrs) with buying options.

https://t.co/Gv06qlhwgU

[Chucky b @Chuckyb22074706]

EU VLSFO last week was $464/mt while 2026 ramp-up of EU-ETS(emission costs) fees/added costs this week went from $220/mt to $319/mt; nearly 50% incr. $ZIM fleet is way ahead of the curve on LNG.
https://t.co/BYDOmlXfRi #shipandbunker

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM
It seems the assumption that everyone is clueless was misplaced.

[Eli Glickman @eli_glickman]

ZIM’s Q3 #financialresults reflect the resilience, focus, and #resultsdriven mindset of the people who make ZIM what it is.

Read the full press release >> https://t.co/z5ZGmyPe9l

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM
Which values are we talking about here? And which people? Are you referring to Oren Kaspi, the union chairman?
Only three days before they start a strike? Are you actually encouraging them?

Glickman, your conduct is absolutely disgraceful. I’ve never seen anything like this in any other company. It is time to put an end to it.

[Eli Glickman @eli_glickman]

As we enter the new year, I look back with pride at how ZIM navigated global uncertainty and industry challenges, standing strong with our #ZFactor in action.

Looking ahead, we're guided by a strong strategy, clear values, and the people who make it all possible.

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM
While the calculation relies on simplified assumptions and is not precise, the actual figures do not differ materially. The objective is to illustrate the distortions created by IFRS 16 in long-term lease transactions.

When such leases are capitalized using a relatively high discount rate, the income statement in the early years reflects an expense that is materially higher than the actual cash payment.
Conversely, in the later years, the cash payment exceeds the recognized expense.

In addition to the figures presented, three factors contribute to cash flow exceeding reported profit:

1. Vessels with variable or step-up charter rates: Actual cash payments in those years are lower than the expense recognized on a straight-line basis.

2. Down payments: These total approximately $490 million, creating an annual non-cash depreciation expense of roughly $40 million.

3. 13-year container leases: Similarly, the P&L expense exceeds the actual cash outflow in the initial years of the lease.

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM operates across five distinct Geographic Trade Zones:

- Pacific
- Cross-Suez
- Atlantic-Europe
- Intra-Asia
- Latin America

ZIM calls at over 300 ports in more than 100 countries. Given that ZIM accounts for 2%–2.5% of global market share, its Israeli operations represent only a minor fraction of its total global activity.

While ZIM’s routes pass through Israel only within two specific zones, Cross-Suez and Atlantic-Europe it should be noted that a substantial portion of the activity within these zones does not involve Israel at all.

The company does not disclose the specific percentage of volume or revenue originating from, or passing through, Israeli ports within these segments.

Trade Zone Definitions:

Cross-Suez: Covers all major international shipping ports in the East Mediterranean, the Black Sea, China, East and Southeast Asia, and India.

Atlantic-Europe: Covers major international shipping ports in the East and West Mediterranean, the Black Sea, Northern Europe, the Caribbean, the Gulf of Mexico, and the East and West coasts of North America.

Attached Data:

- Percentage of total TEUs carried for the period.

- Percentage of total freight revenues from containerized cargo.

It is difficult to ignore the potential conflict of interest and the suspicion of financial arrangements between the management team whose MBO proposal was rejected and the union.

[Z @ZeeContrarian1]

$ZIM Buyout or No Buyout - same same
$ZIM can be sold whole or in pieces. Either way, the key point is that the board finally appears aligned with shareholders—and the market still isn’t pricing that in.

Most activists I’ve spoken with actually prefer selling parts rather than the entire company. Why? Because instead of selling the whole business for, say, $30 only for the buyer to later unlock $70 of asset value-the board can do that unlocking itself.

In that scenario, $30 isn’t the exit price. It’s just the starting point.

[UnderTheBalanceSheet @UnderTheBalance]

To clarify, we are referring to two distinct categories of assets under the 'Containers' heading:

1. The Q3/2023 Acquisition: A $1B transaction executed in the third quarter of 2023 (as referenced in the attached conference call transcript).

2. Fully Depreciated Assets: A separate and additional fleet of containers that have already been written down to zero on the balance sheet.

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM

Attention should be drawn to the strategic timing of the container acquisitions, which took place during an industry downturn when prices were at their lowest.

Furthermore, the acquisition itself was executed as an opportunistic transaction.
Notably, the company has omitted any mention of the containers' substantial fair market value, which significantly exceeds their current book value.

Certain containers have already been fully depreciated to zero. Consequently, regarding the $1B transaction, the company holds assets with a market value vastly superior to their recorded carrying amount.

[UnderTheBalanceSheet @UnderTheBalance]

https://t.co/cPKQ96JXCb

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM
ATLAS (Seaspan) is a public company, otherwise, this information likely would never have been disclosed in ZIM's reports (or perhaps only after activist shareholder action).
As expected, ZIM does not share these details with its investors. One has to wonder why.

25 LNG Vessels:

- 10 vessels: 15,000 TEU
- 15 vessels: 7,700 TEU

The two most significant costs in the Cost per TEU are:

- The energy cost
- The vessel cost (charter/ownership cost)

These NEWBUILDS - DUAL FUEL LNG vessels offer tremendous energy savings relative to the industry.
They are also the least exposed to IMO fines.
And now you find that, in ZIM's case, they are also chartered at a much lower price than same sized vessels in the industry.

Terms:

A 12-year charter with purchase options for all 25 vessels.
At what price? They didn't provide the details only hints that the options are deep in the money.

How deep? Why would they withhold the details? Uncertainty ---> resulting in a low share price.

The Vessels:

15 vessels listed as 7,000 TEU (though according to their specs, they are 7,700 TEU).

This appears differently across various sources: 7,000 / 7,700 / 8,000.
According to the specs, the capacity is 7,700 TEU.

The Charter Contracts:

The contracts are for 12 years with 2 options:

Purchase: To acquire the vessel 9.5 years after delivery (approx. 8 years remaining).

Extension: To extend the charter contract by two years for the 15,000 TEU vessels, and by 1.5 years for the 7,700 TEU vessels.

Both options are deep in the money, and ZIM will have to decide which one to exercise.

Daily Charter Rates by Type:

For the 15,000 TEU vessel: Charter cost is ~$46,575/day.
(10 such vessels = 150,000 TEU total capacity).

For the 7,700 TEU vessel: Charter cost is ~$34,246/day.
(15 such vessels = 115,500 TEU total capacity).

Do your own market checks.
However, pay attention to two significant parameters:

1. These are NEWBUILDS
2. These are DUAL FUEL LNG vessels

After running your checks, note that the ROU asset regarding these very cheap charters cannot actually be revalued.
however, it would be appropriate for the company to provide a Mark to Market disclosure for such a material asset.

Consider how heavily these deals "weigh" on the company, as its long term charters are counted as debt on the balance sheet.

Currently, they constitute the majority of the company's lease liability.
Since the market counts them as debt, management leverages IFRS 16 to present this as "Net Debt," unlike its past presentation format (as shown in a previous post, attached in the comments).

Thought we were done? Just wait.

ZIM has previously noted the Down Payments for these vessels:

For the 15,000 TEU vessels:
The company paid $17M per vessel.
For the 7,700 TEU vessels:
The company paid $20M per vessel.

Total Down Payments Paid: $490M (This is $20M higher than the raw calculation, likely due to slight cost adjustments).

Now, pay attention to the following interesting point:

This $0.5B sits on the balance sheet under ROU assets. It is not part of the daily payment the company actually pays out. There is an amortization of the ROU asset over the charter period on a straight-line basis [without cash outflow].
Therefore, these factors bolster the company's cash flow (adding to points I’ve mentioned before and some I haven't yet), causing it to exceed the company's accounting profit.

This situation will intensify from quarter to quarter due to additional effects. We, of course, are interested in the real cash flow the company generates.

Until Q3/24, these vessels had their own slide under "NEWBUILDS," which was naturally removed afterward.
What happened in Q3/24? Kenon was still a shareholder and liquidated its holdings in December 2024.
By the time the Q4/24 presentation was published, the MBO was reportedly already in significant planning stages.

I'll leave you with a small riddle:
At what vessel value was the deal done on its first day?

[UnderTheBalanceSheet @UnderTheBalance]

$ZIM

Seaspan options to purchase:

15,000 TEU: Signed February 2021
7,700 TEU: Signed July 2021

What are the option terms and the hidden value they represent?
Which other vessels have purchase options, and under what conditions?
These options are recorded at zero book value.