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Beza, likewise I have nor seen any. The EPS is highly variable and subject to many factors but to give you a direct answer for the FY April 2024-March 2025 if the Time Charter Equivalent was to remain at $13,132/day (the figure at the end of March) for the full year and all other variables , particularly vessel values remained unchanged then I would expect PAT of around $24m or EPS of around 7 cents/share.
But given the capital intensive nature of the shipping industry and particularly since ship values can quickly go up or down the conventional wisdom is that the best valuation metric for shipping companies is Net Added Value (NAV) rather than EPS or PAT. A possible alternative is discounted cashflow but this is not easy to calculate for us mere mortals and still has assumptions.
To put this into perspective, in 2021 TMI had a PAT of $252.8 m which included a gain on assets (effectively vessel values) of $245.6m so PAT before asset adjustment $7.2m. In 2022 PAT $26.2m including a loss on financial assets of -$6.4m so PAT before asset adjustment $32.6m. H1 2023 PAT -$120.2m including loss on asset values -$130.7m so PAT before asset adjustment +$10.5, for H2 (oct 2023 to March 2024) I am expecting PAT $83 m including asset gain of $72m so PAT before asset adjustment +$11m. So you can see this asset adjustment or change in ship values is a massive number and leads to massive profit swings in the business.
The shipping industry can be incredibly cyclical, this roller coaster is not for everyone. The good news is that TMI shares are trading at a 33% discount to Net Asset Value , if the shipping industry improves that discount would be expected to reduce giving a potential increase in the share price. Things could go the other way. As Sam explains below the specifics on TMI are promising. But as I have said below, TMI might be in the top quartile of shipping companies but ultimately cannot buck the market.
......plus on TMI , which is the same share but just in USD rather than GBP $119k bought and $24k sold.
After some deep thought the profit for the quarter was still lower than the dividend payment so we are still relying on vessel appreciation rather than the the usual vessel depreciation or vessel sales so we need to break this trend, but the numbers are slowly moving upwards.
Sam, I agree.
On your comment that the debt to asset ration has slightly increased this is largely due to the delivery of the new build Handysize in Feb to Grindrod costing $33.5m which pretty much offsets the money coming in from selling the older vessels. Interesting that Grindrod sold one Ultramax but with the option to repurchase back at a later stage.
Hi Sam, yes very good set of numbers. The NAV increase of 12c/share was above my expectation of 9-10c and the profit for the period of $0.01/share or about $3.3m, although still a relatively small number, was above my expectation of a slight loss to breakeven so they have done well in the charter rates.. The current share price of around 79p (99c) still represents a 33% discount to that NAV of 148c so it has marginally come in.
I agree the focus on reducing debt even further is great although it is at the expense on reducing the fleet number (generally selling the older/smaller vessels) which we cannot keep doing but I trust the management on this.
Hi Sam, thanks for the information.
I expect us to be profitable with the vessel appreciation but slightly loss making or break even without the vessel gain. Still a big step in the right direction.
Yes we have always beatthe indexes but the end of Q1/24 index was lower than the end of Q1 but as you say, fingers crossed.
I expect a close vote and we will probably just make it, again fingers crossed.
I am still expecting the NAV to be at an improved level to shaprodpri
.....So what is happening next week on the 25th? Is that the date of the extraordinary AGM for the Grindrod minority shareholders? Seems to be too early for me. The buy-out still might not go through as minimum 75% of the minority shareholders have to vote in favour. Or do you mean fri 26th when the quarterly TMI NAV and trading update are out?
the share price has had a good recovery in the first 3 months of the year and as reported by a few of you has had a few weird gyrations. At the moment it seems to be in a holding pattern waiting for the NAV news next week. I am less gung-ho than most of you and expect the operating performance still to be loss making but a good increase in vessel values to give a healthy increase in the NAV and provide a good platform for further improvement in this quarter.. BHSI is now advancing again.
On a different note, Pacific Basin has just announced a share buy back of up to $40m by the end of the year and all share bought will be cancelled rather than being held by the company. Sadly at TMI we are probably not cash rich enough to do this at the moment.
Hi Manyaana, I have mentioned Salene before but no information was forthcoming and in the current lull Ilja is not allowed to comment until the H1 accounts are out on 24/05. As you say, the Zim government introduced an export ban to encourage the added value to stay in the country but it probably just allows the domestic ferrochrome producers to buy at lower prices if they do not have to compete with the Chinese export market (intriguingly there is a small amount of Zim chrome concentrates sold in China so I am not sure how it gets out). There was discussion of a similar export ban in S Africa but they have gone in a different direction.
If I remember rightly, Salene was a relatively small scale operation based on 80,000 tonnes/year high grade chrome concentrates with a relatively small LOM of 7-10 year, but 80,000 tonnes at say $400/tonne would give a revenue of $32m/year which would probably generate a profit after tax of say $8m/year. Instead it is currently mothballed but still held in the Tharisa accounts for a rainy day. In their analysis 2 days ago, Tamesis gave Salene a risked value of $48m.
Likewise I would like to hear more on the smaller open pit possibly starting to transition to an underground mine as early as 2025 or 2026 and what this will do to overall chrome production and costs at Tharisa over the next 3 to 8 years.
Reef milled and PGM production were marginally up on my expectation which are all the better given that the stripping ratio deteriorated to 14.0m3:3m . The chrome number is a little disappointing but I take the comment from Ilja at face value if Vulcan has been down for maintenance/repair and I see the Cr2o3 ROM grade this quarter is only 18.1% compared to 19.1% the previous quarter which is 5.2% lower which just reflects the grade we are digging out of the ground this quarter just happens to have a lower chrome content plus we are still having to buy- in about 25% of the ROM we are milling and I suppose that is variable depending on where you buy it in from. The Company has said that it aims to stop having to buy-in ROM by the end of this year which suggests reef mined should get back to the levels of 18-24 months ago. As Stemis has mentioned below, the Company is still on target to achieve the guidance numbers for the FY. So just a minor blip.
Yes, the cash is lower than expected but let us wait for the full H1 numbers to see where it has gone.
I assume there was no weekly chrome price yesterday as China had a public holiday last Friday?
Jan-March production numbers out tomorrow ,I am expecting 1.37m tonnes ROM milled (the average of the last 2 Jan-March quarters) which should generate PPGM's about 34,500 oz and chrome 434,000 tonnes. Hopefully ROM milled shows signs of improving and net cash is holding up.
Sam I totally agree. If it goes ahead TMIP will own all of Grindrod. I am not sure if it automatically means a delisting? But that might be next.
At USD 14.25 for each Grindrod share that is 35% premium to the closing share price yesterday of USD 10.54 and probably a 5 to 10% premium to NAV.
Sam is right, the Quarterly NAV and trading update is out on 26th April. Although I am expecting an operational loss , I calculate that vessel values have actually increased by over $23 m giving a Quarterly increase in NAV of 9 to 10 cents share so that the current share price is trading at a 28% discount to NAV and good enough to protect the dividend. So to answer Rylidan's comment I think the share price is at the right value at the moment.
Grindrod took delivery of the brand new Handysize vessel in late Feb so it will be interesting to see how that is performing.
Although the BHSI has traded down in the last 7 sessions, yesterday according to Hellenic Shipping , 10 year old Handysize values were up a massive 3.3% in a week. The full Year accounts to 31st March 2024 are out on 19th July.
GLA
Sotolo, to be fair the current share price is still up 5.45% since the share buyback was announced. And as Pedobull mentions below, a total buyback of $5m is currently just 2.3% of the total share value. Peel Hunt have until 21st Feb 2025 to complete this so if they spread it out over April 24-Feb 25 (11 months) then it is $455,000/month.
But overall fantastic news and a clear signal by the Company.
Interesting that the CFO below mentions "capital discipline" a couple of times so we are not going to have the minimum 15% NPAT dividend policy change dramatically and he mentions we are still working on the "necessary third-party financing" for the first phase of Karo.
Today is the last working day of HI so the final part of the PGM Fair Value calculation will be based on todays PGM basket. Fingers crossed for a good Q2 production report in April!
Thanks Ilja, I see that the non-exec directors own a combined 104,500 shares.
And thanks for the latest chrome/The improvement in the Tharisa PGM basket price will give us a positive Fair Value adjustment in the H1 results of several millions.
Stemis, I accept your comment about consolidated accounts so that you would expect Tharisa to pay either way. But PP has suggested patient capital and advised that the $160m investment in Karo Mining Holdings (KMH) would be external ECIC supported funding ring fenced against KMH. Yes, Tharisa could have afforded to do this but the point is that we were told the risk of this $160m would be taken by external investors and ring fenced solely against KMH and not Tharisa. And what would it say about prudent investment at Tharisa if external investment is not found for the $160m presumably because of the poor commercial case and high risks but then Tharisa jumps in and invests the $160m
The other factor is if Tharisa shareholders are getting value for money. As at the end of Sept 2023, Tharisa has invested a total of $135.3m in KMH but the net assets of KMH were only $83.427m ( $29.528m attributable to Tharisa and $53.899m attributable to Medway/Leto). So Tharisa has invested $135.3m in KMH but owns only $29.528m in assets. While Tharisa owns 75% of the shares in KMH it only owns 35.4% of the assets.
In my opinion we need to see more transparency in the dealings between Tharisa and its related parties (Leto/Medway/Chariot). Much has been said recently about the Pouroulis family owning 42% of the shares in Tharisa but it would be good to know roughly how much skin in the game the non-executive directors have.
Feynzz, I totally agree with you about the operating cash flow, the Tharisa mine continues to be a money machine.
Back on 22nd Feb, Ilja confirmed that Tharisa's total investment after completing the 75% ownership in Karo Mining Holdings was $135.3m but we know this 75% will increase to 80% sometime this year but we do not know the exact cost or exactly when, which by past experience I am expecting to cost us roughly $75m, although it would be good to have the formula for this.
As you say, we have been told that $160m of ECIC supported external investment will be ring fenced against Karo and so will not cost Tharisa anymore. Presumably if this $160m external investment is not found then Karo simply stays on hold (which still incurs costs). But as you suggest, having already got this far could Tharisa reconsider and decide to invest the $160m directly? If not then I agree we could afford a share buy back or more progressive dividend policy, even though PP has called for patient capital. So our total investment that we have already committed to, could be around $210m ($135.3+~75) by the end of this year or around $370m if we were to decide to invest the $160m if it is not found from external investors. The recent improvement in the Karo PGM basket is a step in the right direction but we possibly need a further 25%+ increase to make Karo commercially viable.
In their weekly summary 2 days ago Hellenic Shipping News reported that 10 year old Supramax had increased a massive 3.0% in value and Handysize 0.5%. If that is replicated throughout our solely owned fleet of 30 Handysize and 7 Supramax (ignoring the 3 chartered in vessels) this means the vessel values have increased around $6m in 7 days, equivalent to 1.8 cents/share.
BHSI now up for the last 21 days in a row.