The Current Value of Puerto Bahiawould seem to limit the downside risk of FEC to almost Zero. JMO only, and I surely have been wrong The day to day price of the stock may fluctuate, but for me I am looking at it as a floor to the evenual selling price of all of the subsidiaries of the company. This is only my opinion and my dollars, I do not want to suggest what you do with your dollars, just sharing my morning coffee thoughts since I only have one risky stock to study and it has become almost a hobby.
With China's Cosco providing the majority of the funds to build a $3.6Billion port in Peru, initially for only Super container ships and no O & G facilities, gives you some idea of the high cost of building deep water ports such as Puerto Bahia. But besides super container ships, Bahia also can on/off load Super tankers, and can store large quanities of liquids and has two large heated tanks for storing heavy crude plus 6 other non heated on on site and it will soon be directly connected to a nearby refinery. The financing for Puerto Bahia and contracts were signed in 2013 when construction started so I would assume the approx $1Bil to build the current port would cost far more today.
China's plan of controlling the worlds major seaports and shipping business known as the New Silk Road has already made them, by far the leader in the shipping container business. And if you recall, back during covid there was a shortage of US port capacity and storage space creating shortages in North America of all kinds, from paper towels to computer chips, the start of the current high inflation cycle. I can recall at one point, dozens of container ships stacked off ports like Long Beach for weeks.
By controlling/owning a port, the owner of a port can allow who can enter the port and in what order. China already controls some ports in Cuba and Chinese Military ships are often seen there, but little said by the US. It also allows the owner of port to build influence and in Latin and South America China is trying to diminish US influence where they can and they have been successful in a number of countries. A port owner can also limit US (or Chinese/Russian) Military ships from entering a port and but allow their own countries military ships full access.. With Puerto Bahia being so close to the Panama Canal, plus having full access to fuel for Military ships it would seem to be to be of vital interest to both the US and China for that reason alone.
I think the port should bring at least $1Bil US but certainly not less than $500mm which is more than the company is valued currently when looking at share price. I think now that it is clearly for sale as a standalone asset, it could bring more interest and money than Frontera Guyana. The US State Dept. would be very wise to influence/assist some US company to buy the port before the Chinese or someone else does.
Here are some articles on the cost and value of seaports.
Shipping, Ports, and China’s New Maritime Empire – The Diplomat The Realities of China’s Overseas Port Push – The Diplomat
Tracking China’s Control of Overseas Ports | Council on Foreign Relations (cfr.org)