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Higher oil prices and consumption are particularly good news for ship broker ACM Shipping.

The market is certainly in its favour. Figures from the Energy Intelligence Agency show projected annual growth in Western European annual oil consumption of 0.2% between 2003-2015. North American consumption is expected to grow by 1.4% a year over that period.

However, it is countries such as China and India where the real growth is projected. Chinese oil consumption is forecast to grow at 6.5% a year and Indian consumption by 3.6% a year. This means that demand for tankers to transport the oil will also increase.

That's where ACM comes in. It is one of the top three tanker brokers in London - in volume terms. London remains a key city for shipbroking and ACM already covers all the continents. It has offices in India and Singapore and intends to open in Dubai, Geneva and Moscow.

ACM was founded in 1982 and it has been profitable every year since. Its latest figures show revenues increasing from £13.5m to £19.6m in the year to March 2008. Profits before amortisation jumped from £2.24m to £5.48m. The weak dollar took the edge off the growth rate. This is a highly cash generative business and the cash figure increased six-fold to £3.57m. However, bonuses were paid after the year end.

ACM makes its cash from spot (single voyage) brokerage and time charters for the vessels. It also generates fees from the sale and purchase of new and second hand vessels plus managing negotiations about demurrage, which is an additional charge relating to delays in loading or unloading cargo.

Spot and time charter brokerage made up nearly three-quarters of last year's revenues. That is a lower percentage than the previous year because sale and purchase fees generated 24% of the total, against 6% the previous year.
The shipbroking sector is fragmented and ACM believes there opportunities for earnings enhancing acquisitions.

Harris & Dixon, a broker specialising in small tankers, is being acquired for £2.5m. This is the one area that ACM didn't cover and it will move into the London office. ACM chairman Peter Sechiari says the deal was done on a multiple of around eight, which means it should be earnings enhancing.

ACM plans to move into the LPG/LNG tanker market. Chief executive Johnny Plumbe says that the LPG/LNG tanker market "will increase tremendously over the next decade".

ACM is also keen to move into the dry bulk cargo business so that it can offer services across all the sectors.

Clarkson and Braemar Shipping Services are similar businesses to ACM but are both much larger than it.

ACM is more highly rated than its peers, which reflects its focus on oil tankers. House broker Noble forecasts profits of £6.13m in 2008-09, putting the shares on 11 times prospective earnings. Clarkson is trading on a prospective 2008 multiple of less than eight for this year. It is involved in litigation with Russian shipping companies, which hasn't helped its share price. Braemar is a little dearer with a 2008-09 forward multiple of just over 10.

The shares have risen from the December 2006 placing price of 162p to 253.5p - not bad in what has been a tough period for most AIM shares.