Links
The Wall Street Journal’s Shipping Analysts Of the Year
For a Wall Street analyst the annual Wall Street Journal Best on the Street rankings is like an AcademyAward, only worth more, certainlyto those investors who bought basis the winning analysts picks.
This year Scott Burk at JPMorgan, but Bear Stearns when his picks were made (JPM acquired Bear Stearns in a sub-prime fire sale last March) came out number one in the Industrial Transportation classification. Doug Mavrinac of Jefferies & Co came in second and Omar Nokta with Dahlman Rose grabbed the third spot.
Double Hull Tankers Follows On
April was certainly the month the shipping equity markets sprang back to life – at least for follow-on offerings. Seaspan (SSW) was out first on April 10 with an offering that raised nearly $240 million, followed by Teekay LNG (TGP) on April 17 with a $165 million offering. Then this week Double Hull Tankers (DHT) saw the positive trend and took the opportunity to position themselves for future acquisitions by raising $84 million with the offering of 8,000,000 shares at $10.50 per share in a deal led by Merrill Lynch and UBS with Dahlman Rose also acting as an underwriter. The offering was upsized by 1,000,000 shares on the back of strong institutional demand, though it priced at a relatively steep discount of 12% to where the shares were trading when the transaction was announced just one day before. The accompanying graph shows how the price performance of SSW, TGP and DHT post offering announcement compare. Continue Reading
Counterpoint!
At times, it is extremely difficult to portray the various perspectives of a transaction, particularly when it is in a public deal for obvious reasons. In light of our article last week, Seaspan’s management wanted to set the record straight and provide their insights into the process and in particular the timing and the rationale for being the first shipping public offering of the year despite the credit crunch.
Written by: carisk | Categories: Freshly Minted, The Week in Review | April 17th, 2008 | Add a Comment
Debutante
Last week D/S Norden (“Norden”) held its first Capital Markets Day in New York at the prestigious Four Seasons Hotel. The event was hosted by Mr. Ivar Hansson Myklebust, EVP and CFO, and Mr. Martin Badsted, VP & Head of Corporate Secretariat. As this was the premier event in N.Y., the crowd was relatively small but high powered and included, among others, key New York shipping analysts Natasha Boyden of Cantor, Doug Mavrinac of Jefferies, Glenn Muller from JP Morgan and Michael Webber from Wachovia. Others in the audience included investors as well as Peter Shaerf of AMA.
The company allocated three hours for the presentation and Q&A session and we are struggling how to distill the in-depth presentation and do it justice. Objectivity is also an issue as we are ardent admirers of the company’s rather unique market approach and strategy. With that said, here are our key takeaways and our favorite slides from their presentation.
Written by: carisk | Categories: Freshly Minted, Market Commentary | January 31st, 2008 | Add a Comment
Natasha Boyden Initiates Top Tankers with STRONG BUY
Cantor Fitzgerald Analyst Natasha Boyden, in a recent report, provides important and interesting information regarding Top Tankers, INC (TOPT). As a review, headquartered in Athens, Greece, TOPT transports crude oil and refined petroleum products on its fleet of 23 tankers, comprised of nine suezmaxes and fourteen handymaxes.
Ms. Boyden comments on TOPT’s “balanced charter strategy” which allows the company to manage a constant flow of revenue. Of the nine suezmaxes, three operate under time charter contracts with profit sharing arrangements and one trades under a straight time charter contract. The fourteen handymaxes are all set up under long-term time charters with profit-sharing arrangements. These, of course, help insulate the company from any dramatic fall in tanker spot rates in the future.
To ease the burden of the present high oil prices, OPEC is increasing production by 500,000 barrels per day (bpd). Because tanker spot rates depend on the supply of oil as opposed to the actual price, it is predicted that the spot rate environment will remain above the average level for the next twelve months. In addition to the increase made by OPEC, global demand for oil and economic development in China should positively affect the spot rates. The current orderbook for tankers, which as of March 2005 included 85 million dwt, “is more than sufficient to meet projected oil demand growth…” according to Ms. Boyden, though the concern for tanker investors is probably the other way around.
Ms. Boyden believes that TOPT is in a favorable position for continuous growth. During the first quarter of 2005, TOPT’s long-term debt-to-total resource ratio was roughly 50%. It is predicted that TOPT’s long-tem debt-to-total resource ratio will rise slightly to 51% towards the end of 2005 as a result of recent vessel purchases. However, this increase should not raise concern as the ratio is still in concordance with peer long-term debt-to-total capital average of 50%. Ms. Boyden estimates that TOPT will post free cash flow (net operating cash minus capital expenditure minus dividend) in 2005 of $76 million, or $2.72 per share, and in 2006 of $70 million, or $2.52 per share.
Along with her colleagues, Ms. Boyden believes TOPT’s stock is undervalued. As we go to press, TOPT’s share price stands at $15.87 per share. In addition to it’s strong charter The company is in an ideal position to benefit from increases in the spot rate environment and due to its time charter contracts enjoys a steady flow of visible revenue. Ms. Boyden gives TOPT a STRONG BUY rating with a price target of $23 a share.
Written by: carisk | Categories: Freshly Minted, Market Commentary | June 30th, 2005 | Add a Comment
Cantor Initiates Excel with Strong Buy
It’s not just the bankers that are keeping busy these days. The analysts have been turning out an incredible amount of research to monitor and analyze changes in the shipping equity markets. Excel Maritime has moved further into the mainstream of shipping stocks with a report issued by Natasha Boyden of Cantor Fitzgerald rating the company a “Strong Buy” with a target price of $20. We can only imagine what Ms. Boyden or any other analysts would have said had they tried to initiate coverage on the company last year, which not only possess a substantially smaller fleet but also saw shares trading upwards of $60.
Natasha Boyden Keeps Busy and Bullish, Inspires Business Week
The ever-affable Natasha Boyden’s initiation on U.S. flag tug and barge transporter Maritrans last week has scored the company good press and a sharply increased share price. Business Week ran an article this week entitled “Smooth Sailing For Maritrans’ Tankers And Tugs”
Natasha Boyden, now of Cantor Fitzergald, this week initiated coverage on DryShips with a Strong Buy recommendation and a price target of $28. She is using 4.8x 2005 cash flow.
Written by: carisk | Categories: Freshly Minted, The Week in Review | March 31st, 2005 | Add a Comment
Cantor Fitzgerald Initiates Maritrans, Hornbeck with STRONG BUY
Cantor Fitzgerald initiated coverage this past week on U.S.-flag operating companies Maritrans and Hornbeck Offshore Services with a STRONG BUY. The report follows only a month or so after Fortis initiated coverage on Hornbeck and Seacor with a BUY rating, demonstrating a growing interest among investors and analysts in this segment of the marine market. Seacor, of course, has now been bought. But the coverage in question is another step in Cantor Fitzgerald’s growing involvement with the marine industry. Having helped to bring both tanker and dry bulk companies to the public markets in the past year, it is only fitting that the group should turn some attention to the offshore industry.
Analyst Natasha Boyden notes in both reports that, due to 1990 Oil Pollution Act requirements that eventually require oil-carrying vessels to be double hulled, she expects approximately 33% of the U.S.-flag industry fleet to be retired between 2005 and 2007. Such requirements will be very bad news for companies that operate fleets of older vessels, but for companies that operate relatively young fleets to high standards, this means an opportunity to increase market share and utilization rates.
Considering high barriers to entry, attributable in large part to “rising steel prices, operational and technological barriers to entry, and the high cost of building new vessels under Jones Act requirements,” Ms. Boyden believes that the advantages thus gained by high quality operators will not be short-lived. Add to that the Energy Information Administration’s predicted U.S. petroleum product demand growth of 1.5% annually over the next 20 years, both Maritrans and Hornbeck could be looking at very favorable supply and demand dynamics.
Tug and tank barge company Maritrans (NYSE: TUG), with 15 vessels, boasts the industry’s largest fleet and represents approximately 20% of overall market capacity. With low costs, leverage to the spot market that Cantor expects to be strong and sustainable, and a debt-to-cap ratio of 39% and falling, the company has a lot going for it. As such, Ms. Boyden targets a P/E valuation of 18x, a significant appreciate from the 14.3x at which it has been trading, which leads to a price target of $24 compared to a share price of$18.09 at press time.
Hornbeck (NYSE: HOS), by contrast, operates a fleet of 24 new-generation offshore supply vessels (OSVs), which make up approximately 16% of the domestic new-generation fleet. The fleet is also exceptionally modern, with an average age of only four years compared to the entire U.S.-flagged fleet average age of 24 years. As Fortis analyst Dan Barrett also noted in his report, modern OSV vessels are not just important because they comply with regulations being phased in and have less maintenance needs, but they also have more capabilities than older vessels that typically make them significantly more efficient when they are employed and lead to higher utilization rates.
Nevertheless, Hornbeck has been trading at a significant discount to peers and as such, Ms. Boyden convincingly argues, represents a very good value. To achieve the Cantor’s $29 price target, she uses EV/EBITDA due to the capital intensive and cyclical nature of Hornbeck’s business. The analyst recommends a valuation of 10.5x as opposed to the 8.9x at which the company has recently been trading – the share price now stands at $24.51.
Written by: carisk | Categories: Freshly Minted, Market Commentary | March 24th, 2005 | Add a Comment
General Maritime Announces Dividend Policy, Picks up Premium
General Maritime Announces Dividend Policy, Picks up Premium
In what we can only assume is an effort to drive up the General Maritime share price in advance of Frontline’s potentially hostile take over, General Maritime has adopted a dividend policy. The play here is that dividend yield paying stocks like Knightsbridge and NAT are being valued on a multiple of dividends, which is significantly higher than the tanker companies that pay small dividends (less than 5 percent) or no dividends at all. The chart on page 2 illustrates this phenomenon
GMR Shares a BUY, with Potential to Reach $53, $62…or Even $76
Based on an NAV of $41.83/share, as estimated by Jefferies, General Maritime would be worth over $76 if it was valued the same way as NAT, and even if it was valued like the more modest yield play Knightsbridge, the share price would still go up over $62. Analysts were quick to match General Maritime’s shift in strategy to a shift in target valuation. Even before the dividend policy announcement, Dahlman Rose & Co. analyst Harvey Stober had initiated coverage on General Maritime with a BUY on January 19, noting that: “With cash accumulating quickly, GMR has the wherewithal to institute a significant dividend or major share repurchase program.” Not long after, General Maritime announced just such a plan. Morgan Stanley quickly moved its target P/NAV for GMR up to 150%, upgrading the company to Overweight V with a target share price of $53. The more bullish Jefferies & Company set a target price at $62, close to what GMR would be at VLCCF’s valuation. What we did not see in the reports, however, was a mention of Frontline.
A Future with FRO? Depends on the Price
Peter Georgiopoulos and Jeff Pribor spoke confidently of making accretive acquisitions and growing the company in their conference call, and for the most part questions from listeners revolved around the details of their plans. Only Natasha Boyden of Cantor Fitzgerald ventured to directly ask about the situation with Frontline and whether this action would have an impact. To this there was a pause, followed by a cautious “I don’t know” before the more confident answer that this strategy change was the result of a long study and careful consideration of company strategy. But then just yesterday Bloomberg TV reported that General Maritime would be interested in a merger with Frontline, saying that Peter Georgiopoulos commented that the rival oil tanker operator would have to pay heavily in cash if he wished to purchase the company.
Whether or not this is in the cards, Mr. Georgiopoulos and Mr. Pribor have already succeeded in having their company reevaluated by leading analysts – Magnus Fyhr and Douglas Mavrinac at Jefferies and Mark MacLean and Ole Slorer at Morgan Stanley – and have watched their stock price shoot up an astonishing 9.81% to $44.65 in just one day. Not only that, but the terms of the dividend policy specify the Board of Director’s intent to establish reserves for maintenance and capital expenditures probably equating to around $100 million in 2005. So while they immediately picked up the premium in share price, the company should have a grace period before it actually has to pay out any cash.
In what we can only assume is an effort to drive up the General Maritime share price in advance of Frontline‘s potentially hostile take over, General Maritime has adopted a dividend policy. The play here is that dividend yield paying stocks like Knightsbridge and NAT are being valued on a multiple of dividends, which is significantly higher than the tanker companies that pay small dividends (less than 5 percent) or no dividends at all. The chart on page 2 illustrates this phenomenon
GMR Shares a BUY, with Potential to Reach $53, $62…or Even $76
Based on an NAV of $41.83/share, as estimated by Jefferies, General Maritime would be worth over $76 if it was valued the same way as NAT, and even if it was valued like the more modest yield play Knightsbridge, the share price would still go up over $62. Analysts were quick to match General Maritime’s shift in strategy to a shift in target valuation. Even before the dividend policy announcement, Dahlman Rose & Co. analyst Harvey Stober had initiated coverage on General Maritime with a BUY on January 19, noting that: “With cash accumulating quickly, GMR has the wherewithal to institute a significant dividend or major share repurchase program.” Not long after, General Maritime announced just such a plan. Morgan Stanley quickly moved its target P/NAV for GMR up to 150%, upgrading the company to Overweight V with a target share price of $53. The more bullish Jefferies & Company set a target price at $62, close to what GMR would be at VLCCF’s valuation. What we did not see in the reports, however, was a mention of Frontline.
A Future with FRO? Depends on the Price
Peter Georgiopoulos and Jeff Pribor spoke confidently of making accretive acquisitions and growing the company in their conference call, and for the most part questions from listeners revolved around the details of their plans. Only Natasha Boyden of Cantor Fitzgerald ventured to directly ask about the situation with Frontline and whether this action would have an impact. To this there was a pause, followed by a cautious “I don’t know” before the more confident answer that this strategy change was the result of a long study and careful consideration of company strategy. But then just yesterday Bloomberg TV reported that General Maritime would be interested in a merger with Frontline, saying that Peter Georgiopoulos commented that the rival oil tanker operator would have to pay heavily in cash if he wished to purchase the company.
Whether or not this is in the cards, Mr. Georgiopoulos and Mr. Pribor have already succeeded in having their company reevaluated by leading analysts – Magnus Fyhr and Douglas Mavrinac at Jefferies and Mark MacLean and Ole Slorer at Morgan Stanley – and have watched their stock price shoot up an astonishing 9.81% to $44.65 in just one day. Not only that, but the terms of the dividend policy specify the Board of Director’s intent to establish reserves for maintenance and capital expenditures probably equating to around $100 million in 2005. So while they immediately picked up the premium in share price, the company should have a grace period before it actually has to pay out any cash.
The Official Guide To Marine Finance Providers
Shipping Index
