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Candidinvestor/Sam, I agree with both of you. Paying 6-7%/year on debt is a massive cost at the moment particularly when the business cycle is down and net profit is running below these levels. But you are right that you cannot sell off all of the family silver. Like a lot of thinks it is all about timing , also the ships sold are the older less efficient vessels and in the coming years with current and particularly future environmental requirements tightening the costs of running these older vessels will increase relative to newer vessels.
Hi a valid point but at the moment second high prices are very high so a good time to capitalise selling older Chinese ships . In fact a number of the larger ship owners at the moment are doing the same . Anything that lowers debt and average daily charter rate a move in the right direction
Mike et al My concern is that they are selling off vessels to pay off debt. Can't keep selling the family silver to pay for dividends and bring down debt
Thanks Mike, also I saw grindrod results due next week
Sam,
wow another holiday and for a month!
I am seriously envious- enjoy😎
Great time to go in our winter and their summer especially after the rugby!
I know you will not be able to resist checking , like us all .
Hi Mike, fully agree with your thoughts . Recent board meeting in South Africa. Focus of the company is very much on getting the combined daily charter breakeven point lower through paying down debt etc etc. As mentioned I bought more today and will reinvest the dividend to reduce my average price. Off on holiday to South Africa for a month so am going to try and resist looking too much .... but will invariably fail .
The BHSI has been falling for the last 2 weeks and is now down 10% in the last month (down about 5% YTD). Normally there is a dip about one month before the Christmas period which generally only improves after the Chinese New Year but it seems to have started earlier this year. Our vessels have benefitted from good soya/grain harvests but this is probably now dipping a little. Still concern worldwide on where the world economy is heading and this is reflected in the current malaise with world stock markets.
TMIP is profitable at these levels although at current levels it is still far away from what would be considered a reasonable return on investment and there are still questions about vessel values and if the dividend can be maintained if time charter rates do not pick up until after the Chinese New Year. Everything is very cagey and we just have to grind things out, quarter by quarter which should see that NAV discount gradually shrink. As said below, TMIP is doing all of the right things like reducing debt and cutting costs but as I have said before this is a highly cyclical business and you can't buck the trend although you can remain in the top quartile of shipping companies.
The restrictions in the Panama canal is actually good news for us when vessels are paid by the day rather than the journey and it does tie up more capacity so that there is less slack in the system.
Hi Sam, I agree with your thoughts on this SP. It's very irritating that there seems little reason for such market drops as we have experienced recently with TMIP. However, part of these drops has been caused by going ex dividend and also the issues with the restrictions on vessels passing through the Panama canal. In addition I am a tad cynical over the seeing ability of some large commercial investors that try and at times do succeed in apparently manipulating some SPs. A deep breath is required and wait patiently whilst I hope to see some sense in the SP.
Just seen a couple of other company sites. All moaning that their buys this morning are being listed as sells. Hardly encourages the London market !
Made two purchases this morning here …. But both showing as sells. A tad annoying
Hi , personally I see it as an opportunity . Expensive debt is being paid down , economies of scale are coming through . Three listings are not cheap but think they will in time address that . I am waiting for sone money to clear which hopefully will happen tomorrow and then buy sone more . Plus reinvest the dividend later this month . At the moment the market is all over the place . I have a couple of companies that are doing well but the share price has fallen for no clear reason and resulted in a dividend approaching 20 per cent ! On this occasion I am following warren buffets advice. Buy when others are selling . But it takes guts and faith ….. which I believe is not misplaced .
I am not sure what to make of the current share price. Is there something I am missing on my perception of this business?
At a 9.5% Divi, and with the recent news on fleet and debt and at a discount to NAV of 30something% is this a great opportunity to top up? Or am I blind to some potential nasty surprise?
Reported today: https://www.bbc.co.uk/news/business-67281776
"It is expected to increase the cost of shipping goods around the world."
As you know I had expected the result to be worse than the previous 2 quarters, which they were, but my initial reaction was still one of disappointment particularly with the vessel valuations which were a massive 8% reduction when I was hoping for around 1% and the annual blended TMI/Grindrod Time Charter equivalent was only $10,695/day. Krusty, no mention of dividend cover as I calculate on these numbers the gross operating profit was very slightly negative so the dividend is currently financed out of vessel sales/reserves but this will change in the current quarter.
But with a bit more contemplation, even on these numbers the actual NAV/share is around $1.31 with the share at $73.8 representing a 32% discount to NAV. But the good news here is that vessel values are back to their June vessels which adds about $66m back into NAV or about $0.20/share which means the current share price is around a 41% discount to current NAV. With charter rates back above Q1 levels the operating performance should be positive this quarter so I expect a big increase in NAV/share at the end of this quarter. Vessel sales were higher than expected but as said below, reducing debt by selling off older and lower value vessels remains prudent policy is a high interest environment.
Hi Kristy & Sam, overall I felt positive news, as you say now sold the Chinese vessels, we have yet to see the cost savings come through and the dividend is unchanged. The only fly in the ointment is the reduction in NAV which knocked the figures a tad. Debt reduction is ongoing and I was pleased to see that they they expressed the desire to continue on below the 25% . I suspect that the next quarterly report if positive could we’ll mark a turning point here, let’s hope so.
Hi Krusty , have only had chance for a quick look but thoughts as follows . Figures are to end September but charter rates only started to strengthen in August so the period of making real money was small . Also the amount of forward days sold to end year is much smaller than normal and would support the statement that they went for short chapters to now capitalise on much higher rates . I am comfortable with the debt reduction and definitely makes sense to get rid of the older Chinese vessels . But it would seem that the next set of figures are going to be the really interesting one’s
No real surprises in this morning's RNS's, slow progress towards targets on debt reduction & corporate alignment, dividend unchanged. Still selling older vessels to improve the overall fleet profile. Charter rates gradually improving, as expected. No mention of dividend cover this time, must be getting quite tight now given the lower charter rates, even after the more recent improvement. Anyway, pretty much bau as far as I can see, and market unmoved by it too. So, all good really, onwards & upwards from here!
Fascinating reading, thanks for highlighting that Sam. I never appreciated how much small things like propellor boss caps could contribute. I was reading an article this last week, may have been the Guardian but they were discussing cruise ships and the ports complaining about pollution and the lack of income from so many cruise guests. The ports were unhappy with ships that had fitted scrubbers to their exhaust saying that polluted the waters and were unhappy with LNG as well. Need to get some experts on this to agree or disagree with the various claims. Whilst writing this does anyone know why someone would sell a single share?
No worries, and finally the share price started to go up today ! Fingers crossed that the 25th will bring more positive news ! Have great weekend Sam
Thanks for pointing it out, i will read it over the weekend.
Now, the spread between buying and selling is 4.5%, it is ridiculous...
Above issued this morning . Issue of ESG report. Actually found it quite interesting and encouraging in how forward sighting the company is . Worth a look I would suggest.
As for the efficiency situation this is as much stick as carrot but the bigger vessels have a clearer route forward and the ESG future for Hanysize/ Supramax vessels is less clear.
As the old BT advert goes "it's good to talk".
Don't forget the smaller Handysize index has suffered more than the bigger vessel indices but of course you might be right and we we will find out in just Oliver a week
Good morning riverboy, your most welcome. Long may this board continue in this vein as I learn a great deal from it and enjoy it. At the end of the day the only two things that will be the big determinants of the share price are debt reduction and profit. Latest figures to be released October 25 so not long now. Will certainly be up at 7am that morning to read the RNS! Have a great day
Good morning Mike, will certainly be interesting to see the figures. Companies similar to Taylors in the USA, admittedly larger, have recently reported much better figures. Given this and the fact that economies of scale should really starting to come through, I am a tad more optimistic, but time will tell. On a different note, shipping webpages are full of articles about the benefits of fuel improvement / efficiency technology. This is something that Taylors have been involved in from the start so will be equally interesting to see how this develops.