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Hi Vestry,
Sadly the return of the UCLA route has been very short lived indeed.
There was 1 programmed for mid April but has now disappeared all together. None arrived in the past couple of weeks & none are programmed to at least 10th May.
LOTM
Monthly figures are out for March, some good numbers all around the Wilson & Sons business.
LOTM
Hi Vestry,
Thanks for the story, helps explain the return of the UCLA route at Salvador that's gone missing the past few month's.
Only 4 ships on the list & one of them has been cancelled & No ships listed after 3rd April.
So will wait to see if this actually firms up or turns out to be another on/off route.
For the record UCLA has been on the Salvador list of routes for many years, it only dropped off it a few months back.
LOTM
Here is a news story that is 2 days old
there are others about investment in logistics software
https://www.porttechnology.org/news/wilson-sons-expands-service-to-central-america-and-us/
being very patient with this
Thanks, Vestry!
Do you have links to the other 'trade expansion' stories, pls?
I'm interested in finding out whether the Gulf Arabs (mainly Abu Dhabi/AD Ports) are 'in the mix'.
TIA and ATB
WIlson Sons finished Friday at an all time high in Brazil . My calculation for the NAV of OCN is now double the present share price . I often wonder why Brazilian investors dont buy through the London Stock market . There were also two news stories of trade expansion in the region that gave me confidence that even if the Take Over bid did not materialise , that the profits from the ongoing business would sustain the share price I bought some more at 1342p
To be honest I'm still getting over the shock of what I found out & wrote yesterday.
I never actually imagined it was quite that bad.
I wish I had done that research a number of years ago, it might have helped galvanise other shareholders to do something about it.
Anyway I was thinking about it a lot more yesterday & made me realise this.
The 2 families & directors got shareholders in 2007 to part with 42% of Wilson & Sons for all of $206M or $11.50 per share back then.
Today that same 42% of Wilson & Sons is valued in the market at roughly $439M (roughly $3.50 per share adjusted for the additional 6 new shares they got for every original one so effectively $24.50 per old share).
Now there needs to be some sort of adjustment for the shares Wilson & Sons sold themselves during that process to raise their own cash for investment.
But its not a pretty picture & that's before you take into account all those dividends that have paid out over the years to the 42% holders, that we could have received instead.
The group has considerable borrowing nowadays roughly $500M that is costing us around $35M a year in interest payments. That's a cost of $1 per OCN share per year.
Anyone outside of those with a vested interest in the cosy Hanseatic set-up, would have realised that this isn't working years ago & said, either Cash in the portfolio & pay down the debt or your simply going to track the index or index/FPAF instead.
That would have left the overall debt at say $200M, but at the end of year 1 you've saved $21M in interest payments. Use that to reduce the debt further, so your debt now stands at $180M, in year 2 the saving rises to $22.5M & your able to reduce the debt to under $160M. In year 3 your saving is close to $24M & you debt falls to $135M at the end of it. In year 4 your debt has fallen to roughly $9M PA compared to the original $35M PA you were paying & at the end of the year the debt's reduced to just $110M.
By the end of year 7 the debt has virtually been fully repaid & therefore shareholders are effectively close to $200M better off in NAV terms ie the NAV is up over $5 per share than it would otherwise have been.
At this point the dividend could be increased by $0.50 per share & the rest going into the bank account to cover/sustain the dividend when the next downturn in Brazil occurs & profits drop.
GLA
LOTM
For anyone wanting some context.
In May 2007 when OCN sold off approximately 42% of Wilson & Sons it raised $206M from doing so.
By the end of 2007 that cash along with existing cash & a small existing portfolio of shares were valued at $274M.
By the end of 2008 the valuation had dropped to $212.4M.
So depending on your view you could say that in the intervening 16 years the investment portfolio has gained all of 10% to 30th June 2023, or if you want to allow for the 2008 downturn the gain over the 15 years is around 38%.
FPAF was at approximately 300 at the end of 2007 (yes it was a small part of the portfolio even back then) & dropped to @ 190 by end of 2008. Since then depending on which one you want to go by its either risen by roughly 675% or 1050%
So saying they've cost us $300M over that time might be a considerable understatement....
GLA
LOTM
So how will the investment portfolio have performed in the 2nd half of 2023 ?
It only gained $12.7M in the 1st half of 2023 compared to the loss of $50M for the whole of 2022.
As I have said on multiple occasions, Hanseatic are not worth employing they are useless to say the least, fund selection over the years has been abysmal other than them finding Findlay Park American Fund (FPAF) which has consistently performed well.
Unfortunately at times Hanseatic has sold down part of this FPAF holding possibly because it has become such a heavyweight in the portfolio compared to all the other rubbish round about it. If they hadn't sold it down it would probably have made up around 17% of the overall fund at the end of 2021 compared to the actual holding at that time of 11.2% ($39.264M)
FPAF didn't have a good 2022 that's for sure losing 22.4% of it's value during that time (1900.9 to 1474.3 from the FPAF website).
The OCN holding dropped in value to just $24,154M that's a massive drop of 38.48% so for at least the 3rd time in our history Hanseatic has sold a significant chunk of the FPAF holding around $8.75M in value this time round.
During the 1st half of 2023 FPAF regained in value (from 1474.3 to 1708.5) that's 15.88%. In the portfolio it only gained in value to $27.754 or 14.9% so another very small sale might have taken place in between.
In the 2nd half of 2023 FPAF increased in value (from 1708.5 to 1898.6) to virtually the same price it was at the end of 2021 a gain of 28.78% on the year.
So instead of OCN recovering virtually all of what would have been the FPAF losses of $8.8M in 2022 (out of that $51M total loss) we're going to find out that the recovery was far less than that amount next week at around $7M.
So far in the 1st 2 months of 2024 FPAF has risen further to 2016.7 an increase of 6.22% on the December number. That would have translated into a gain of over $2M on the 2021 valuation, but sadly we'll be seeing a lot less than that amount of gain.
Hanseatic's card is marked -
The OCN directors have cost OCN shareholders $300M+ over the years with this pathetic portfolio of mutton dressed up as lamb. Get it sold & invest the money in the index instead or happy for 15% of it to stay in FPAF & the rest in the index.
Yes the directors of OCN should get a slightly increased fee for doing this but the annual savings will amount to $5M in the fees saved that go to Hanseatic & those running all these under performing funds.
I'm also looking out for any slight of hand regarding the Wilson & Sons dividends that have already been payed to OCN but not passed on to us yet & how they might have been used to prop-up the investment performance at the tail end of 2023.
GLA
LOTM
Thanks for this!
Hopefully, there'll be an update shortly, to factor in the end 2023 numbers...
pp 22 and 68 list 'recent acquisitions'and seemed to suggest 'open to offers/look what we've got';
pp 54 shows geographic expansion plans (S/T Uruguay and Guyana, longer term Colombia, Ecuador, Peru). Curious that there's no ref to the J/V in Chile (?);
pp 17 and 32 show existing connections. I look at the gap across to Congo (Pointe Noire), where expansionist AbuDhabi Ports has just taken a 30 year concession and wonder if they're in the frame...
ATB and GLA
Wow Wilson & Sons have just released a new presentation which is like 112 pages long with lots of expansion opportunities.
Well worth your time studying it I'd say.
https://ri.wilsonsons.com.br/en/
Just click on the link from there.
GLA
LOTM
What premium do people feel is in the current price for the strategic review being executed positively?
Realise the share price has strengthened a lot in the past year (how time flies!) but the performance of Wilson Sons and their outlook has improved significantly. Even the investment portfolio should be humming along nicely.
My target price here for a positive outcome was around £19 but it feels like that could be moved higher and the downside for status quo also.
I think we are close to an announcement
..."Andy Murphy at Edison Investment Research has a value realisation of 2,564p per share on the group’s equity.
For the year to end December 2023 he estimates that group revenues will have risen to $472.6m ($440.01m) with a massive pre-tax profit of $107.2m ($38.5m), lifting earnings to 159.2c (loss 51.9c), while maintaining its 70.0c per share dividend.
The year now underway could see it boost revenues to $521.7m, taking profits up to $135.5m, earnings of 214.7c, enabling a 100c a share dividend.
My View – Looking For 1,600p Very Soon
Within the next four weeks or so we should be seeing the group declare its 2023 Final Results, which going on the Edison estimates should be well received.
We should also get some confirmation on just how well the current year is perceived by the group’s Management.
But of much more interest, just what is going on in terms of the ongoing Strategic Review and the number of offers that were previously mentioned for both parts of the company.
That helps to give the low p/e and healthy yielding shares, currently 1,335p, quite a bit of a sparkle valuing the company at just £472m.
Despite them having risen from 820p last June and having already seen quite a swift ascent, I now fix a Target Price of 1,600p on the shares, hoping for some early positive news.
At that time is it possible that we might also get a more enlightening detail on the strategic review and its potential outcome, especially if any of the offers have progressed?
https://masterinvestor.co.uk/equities/wading-in-play-in-overseas-waters/?mc_cid=18f5b17c20"
Apols for editing/formatting...
GLA
..It looks to develop its businesses by maximising economies of scale and efficiency and improving the quality and range of services that it provides to customers.
Major Strategic Review Now Well Underway
On 12th June last year, the group responded to some Brazilian media speculation by stating that:
“The Board notes recent Brazilian media speculation to the effect that the Company is negotiating the sale of its 57% owned subsidiary, Wilson Sons SA.
The Company confirms that it is undertaking a strategic review involving the Company’s investment in Wilson Sons.
That review, which will consider all potential strategic options, is currently at an early stage and there can be no certainty as to its outcome.
The Company has not received any formal proposals from any third party with regard to a potential transaction involving Wilson Sons.”
The Board recognises that there are divergent views among the group’s shareholders regarding its non-correlated asset holdings.
The review is intended to provide a platform for it to optimise the asset mix, to enhance returns, and to drive growth in the longer term.
On 15th November last year, the group issued its Q3 Quarterly including an Update on its strategic review regarding its investment in Wilson Sons:
“The company has retained Banco BTG Pactual S.A. as adviser to Ocean Wilsons Overseas Limited, the holding company for the Group’s indirect investment in OW Overseas (Investments) Limited and in Wilson Sons.
The company confirmed that BTG Pactual has received a number of indicative non-binding offers for its indirect investment in OWOIL and in Wilson Sons.
“As the strategic review process remains ongoing, there can be no certainty as to its outcome and the indicative non-binding offers received by the company are highly conditional.
The Board continues to evaluate all potential strategic options and will update shareholders further in due course.”
The Equity
There are some 35.36m shares in issue.
The larger investors include Hansa Investment Company (26.45%), ICM Investment Management (12.95%), Dynamo Internacional (4.99%), City of London Investment Management (4.94%), Unicorn Asset Management (3.04%), Menhaden Capital Management (1.02%) and Chelverton Asset Management (0.85%).
Two Board members also represent large holdings – William Saloman (13.18%) and Christopher Townsend (11.42%), both of whom are Directors of Hansa Capital.
Analyst’s Views
A consensus of analysts suggests an average Price Objective for the group’s shares is 1,675p, with the highest view seeking 1,750p a share.
Continued...
Hat -tip to Mirabeau for this :
"...Wading ‘In Play’ In Overseas Waters
Today I am going international with a feature on an undervalued group with a London and a Bermudian quote – Ocean Wilsons Holdings (LON:OCN).
On the face of it I believe that the shares of this £472m capitalised group are trading well below their value at the current 1335p – yes unusually for me a heavier market capitalisation with a very heavy share price – but it looks cheap to me, which readers will identify in due course.
With results due within the next month, it is expected to report a 10% uplift in 2023 revenues to £372m, with a 178% better profit of £84m.
For this year that could rise by another 10% in turnover to £411m, with a 27% increase in pre-tax profits £107m.
The Business
The company’s principal activities are the management of a diverse global investment portfolio and the provision of maritime and logistics services in Brazil.
In outlining its Purpose and Strategy the company robustly states that its objective is, through its investments, to create long-term capital growth without pressure to produce short-term results at the expense of long-term value creation.
It operates through two primary investments – Ocean Wilsons (Investments), an actively managed investment fund, and Wilson Sons, a Brazilian maritime services company.
The maritime services segment provides towage and ship agency, port terminals, offshore, logistics and shipyard services in Brazil.
The investment segment holds a diverse global portfolio of international investments with an investment strategy of a balanced thematic portfolio of funds and is a Bermuda based company.
Ocean Wilsons (Investments) Limited
The investment strategy for its managed portfolio is to generate real returns through long-term capital growth, whilst emphasising preservation of capital without respect to short-term moves in equity markets.
Its investment portfolio is invested in both publicly quoted and unquoted assets in diversified components.
Working alongside expert managers in specialised sectors or markets allows it to have access to the best opportunities to achieve its strategy.
This longer-term view directs an OWIL investment strategy that its investments are made in a balanced thematic portfolio of funds which leverage long-standing relationships.
Wilson Sons SA
Wilson Sons is one of the largest providers of maritime services in Brazil with activities including towage, container terminals, offshore oil and gas support services, small vessel construction, logistics and ship agency.
The Wilson Sons strategy is to grow the business on the basis of its skills and existing assets, strengthening the businesses and looking for new opportunities in the maritime and transport sector, focusing on Brazil and Latin America.
It looks to develop its businesses by maximising economies of scale and efficiency and improving the quality and range of servi
Another Brazil release that could be business as usual but is also entirely consistent with an impending transaction as an acquirer is usually wants to put their own CFO in, even if retaining key operational management, thus would likely exclude from new retention scheme when implementing.
Rio de Janeiro, 20 February 2024 – Wilson Sons S.A. (B3 Ticker: PORT3) (“Wilson Sons” or “Company”), in compliance with article 157, paragraph 4, of Law No. 6,404/76, as amended, CVM’s Resolution nº 44/2021 and other applicable legal and regulatory provisions, hereby informs its shareholders and the market in general that Ms. Fabrícia Souza, the Company’s Chief Financial Officer, will no longer be a member of the Company’s Executive Board of Officers effective 13 March 2024. Until that date, Ms. Souza will support Wilson Sons in finalizing the 2023 annual financial statements.
Mr. Fernando Salek, current Chief Executive Officer, who has previously served the Company as Chief Financial Officer, will ensure the continuity of the financial agenda, supported by the Investors Relations Officer, Michael Connell, and the controller, Marcello Torres.
The Company expresses its wishes of esteem and gratitude to Ms. Fabrícia Souza for her dedication to the Company.
Michael Robert Connell
Investor Relations Officer
OCN is sufficiently interested to have RNS'd the Edison report.
Piedro commented 'If you check back I think you will find that Edison makes a report every 6 months
or so, all of which get RNS'ed'
Thanks for the prompt.
It looks to have been
June 2021
May 2022
Sept 2022
Oct 2022 (released Nov 2022)
Feb 2024
GLA
Thanks for this link. It reads like part of a 'defence document' (timing?), doesn't it ?
Not just your quote ( cf my earlier ' SWF asset stripper' speculation) , but also this :
.."In Exhibit 1 we attempt to value OCN. Firstly, we took the last published equity value (30 June 2023), excluding minorities, of OCN of US$565.2m, or £444.1m. Secondly, we subtracted the equity value at the same date of OCN’s 57% stake in PORT3 of £206.2m, leaving an equity value of OCN (ex PORT3) of £237.9m. Finally, we added back the current market value of OCN’s 57% stake in PORT3 and arrived at a market value of OCN of £906.7m (or 2,564p/share) against a current market capitalisation of £443.8m (1,255p/share). This implies that OCN trades at a 51.1% discount to its market price value despite the bounce in the share price this year, from a low of 820p on 9 June to the current level. This calculation does not include any potential increase in the value of the investment portfolio since the last published date of 30 June, nor any additional profit accrued from its holding in PORT3 since that date..."
Followed by 'bid premium' reference :
.."PORT3 is trading on a 2023 EV/EBITDA multiple of c 10.0x, which is close to the average multiple of a group of international peers (FY23 average of 10.5x) and so we consider this to be relatively conservative given the M&A upside of this particular asset at the moment and the significant growth that PORT3 has demonstrated throughout 2023. For reference, we estimate that each 0.5x of EV/EBITDA ratio added raises the total value of OCN by £44.3m or 125p/share..."
GLA
One v interesting para in today’s Edison report, who are paid by OCN, to add to the mix: ‘Another way to highlight OCN’s value (based on the same figures) is to look at the current value of OCN’s 57% stake in PORT3 (£668.8m) and compare it to the current value of OCN (£443.8m). In effect, investors would get a controlling stake in PORT3 at a one-third discount and would receive the rest of OCN’s assets for free.’
.."their total holding would drop below 50% of the A shares.
OCN would have the cash to buy Hansa, but that would definitely fall under the category of invested interest when it comes to the 2 family's & so they wouldn't be in a position to vote on whether to approve such an offer & I'm sure the rest of us would vote to reject such a move & would be asking the directors to step down for wasting our time & money...."
All very complicated....
And from Last of the Mohicans
.."Personally if Wilson & Sons is sold, I don't see a merger between OCN & Hansa Trust happening.
Its fraught with complexity.
Hansa has 2 different types of shares in issue the voting ones & non-voting ones. The 2 family's control enough of the voting ones to keep control of it. However they don't have a majority ownership of the non-voting ones (There are a total of 40M voting & 80M non voting)
At OCN they own just over 51% of it with half of that ownership coming in the form of Hansa.
Who would make the offer for the other?
It would needs to be priced at a price that the independent directors could justify it as being in the best interests of shareholders to accept (both companies).
Hansa NAV currently sits at £427M but the shares trade at a discount of over 40% currently to that valuation & they still don't carryout buy-backs of the A shares which they have the authority to do.
Over 27% of that value comes from the OCN holding meaning the rest of the Hansa portfolio is worth £300M max & the OCN % will have increased since the end of Dec to possibly 30% or more now.
OCN has a market value of £495M currently for the 35.36M shares in issue, but the current implied NAV is over £23 per share, ie a value of over £800M at the current Wilson & Sons price.
So working backwards, the non family shareholders own roughly £400M in OCN.
The family own roughly £200M of OCN & Hansa slightly over £200M.
That means the cash value of Hansa would be around £500M in total, or over £4 per share. The 2 family own under 30M shares, so I'll assign them £120M to be on the safe side.
So the £1.1 Billion we're talking about in total is split into 3 groups the 2 family's have £320M of it, £380M of it belongs to the other Hansa investors & £400M of it belongs to the other OCN shareholders.
Leverage wise you'd say its still possible for the family's to still keep control of the empire in a convoluted structure but its going to be extremely difficult to do & the vast majority of shareholders in OCN & Hansa know what's coming.
They've seen the years of pathetic Investment performance that Hanseatic have given everyone, they are not going to put up with it, they will want cash so they can get away from them & get decent returns on there money elsewhere.
The breakdown of the assets show's that Hansa doesn't have the cash to buy OCN all it could do is offer OCN shareholders shares or a cash/shares combo, but no-one in there right mind is going to take A shares in this day & age & are highly unlikely to take even the voting shares unless there being offered full value for there OCN shares. But in doing that the 2 family's would lose control of Hansa because they only own 25% of OCN compared to our 48% & when that's converted into Hansa A shares there total holding would drop below 50% of the A shares....cont...
From Mancman1
.."Ownership looks quite complicated. I think William Salomon owns 27% of Hansa and 13% of Ocean Wilsons, and Hansa owns 25% of Ocean Wilsons. Ocean Wilsons owns 56% of Wilson, Sons. Christopher Townsend owns 11% of Ocean Wilsons. Salomon is on the Board of all three companies, Townsend on the Board of Ocean Wilsons and Wilsons.
I can't figure out how you would untangle all that and simply merge the two companies.
I imagine that highly paid corporate lawyers will come out with a solution that benefits the major stakeholders..."
"PSA Is Said to Show Interest in Port Operator Wilson Sons
Controlling shareholder Ocean Wilsons is reviewing investment
Ocean Wilsons says it’s received offers for its stake
By Vinicius Andrade and Manuel Baigorri
January 31, 2024 at 1:07 PM GMT
PSA International Pte, the port operator owned by Singapore state investor Temasek Holdings, has shown interest in acquiring Wilson Sons SA, a Brazilian port and maritime logistics company, according to people familiar with the matter.
Potential buyers in China also have shown interest, said the source......"
Maybe, baby....
Seems there was a Bloomberg article suggesting interest from PSA in Wilsons. That caused an unusual volume in the shares and a statement that OCN that there were no changes since the earlier announcements re the strategic review..