Transport Sector, China and Asia-focused Research

Charles De Trenck

Event-Driven

Shipping, specifically LPG tanker shipping, made headlines this week with a takeover offer via an all-stock transaction from <a href="https://www.smartkarma.com/entities/21082" target="_blank" data-smartkarma-citation="entities:21082:1">BW LPG Ltd (BWLPG NO)</a> (in Norway, but controlled by the Singapore-based Sohmen-Pao family) for US-listed <a href="https://www.smartkarma.com/entities/19102" target="_blank" data-smartkarma-citation="entities:19102:1">Dorian Lpg Ltd (LPG US)</a>.For a quick summary of the proposed combined company of BW LPG and Dorian LPG please read the media <a href="https://www.hellenicshippingnews.com/bw-lpg-looks-to-acquire-hadjipateras-led-dorian-lpg-in-a-deal-worth-1-1-billion/" target="_blank">media stories</a> first. Then, for more on the offer direct from BW, please refer to the <a href="http://www.bwlpg.com/Media/May-2018-(1)/BW-LPG-PROPOSES-TO-COMBINE-WITH-DORIAN-IN-ALL-STOC" target="_blank">summary proposed offer</a>.BW LPG is already the largest VLGC (very large gas carrier) player, but there are good reasons for BW LPG to move on Dorian LPG. And there may be additional drivers coming into play.We look at recent history and current issues &amp; drivers in our update.

Shipping, specifically LPG tanker shipping, made headlines this week with a takeover offer via an all-stock transaction from BW LPG Ltd (BWLPG NO) (in Norway, but controlled by the Singapore-based Sohmen-Pao family) for US-listed Dorian Lpg Ltd (LPG US).For a quick summary of the proposed combined company of BW LPG and Dorian LPG please read the media media stories first. Then, for more on the offer direct from BW, please refer to the summary proposed offer.BW LPG is already the largest VLGC (very large gas carrier) player, but there are good reasons for BW LPG to move on Dorian LPG. And there may be additional drivers coming into play.We look at recent history and current issues &amp; drivers in our update.

Shipping Consolidation: BW LPG Bids for Dorian LPG in $1.1bn EV Valuation

Equity Analyst

Nikesh Shukla

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Equity Bottom-Up

Teekay Tankers Ltd Class A / Equity Bottom-Up

Losses greater than our estimate, outlook remains gloomy: Teekay Tankers’ (TNK’s) operating revenue surged 29.1% year on year in the first quarter of 2018 to USD 168.5m despite an average decline of 33.1% in realised freight rates across each vessel class. The rise is attributed to the expanded fleet as a result of the acquisition of Tanker Investment Limited and increased voyage expenses because of changes in reporting methodology. Quarterly Time Charter Equivalent (TCE) revenue slid to USD…

Losses greater than our estimate, outlook remains gloomy: Teekay Tankers’ (TNK’s) operating revenue surged 29.1% year on year in the first quarter of 2018 to USD 168.5m despite an average decline of 33.1% in realised freight rates across each vessel class. The rise is attributed to the expanded fleet as a result of the acquisition of Tanker Investment Limited and increased voyage expenses because of changes in reporting methodology. Quarterly Time Charter Equivalent (TCE) revenue slid to USD…

Will Liquidity Issues Continue to Haunt Teekay Tankers?

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Results in line with our estimate; maintain unattractive on weak outlook: TNK’s operating revenue fell 25.4% y/y in 2Q17 to USD 108.8m (in line with our estimate of USD 110.1m) on account of an average 40.2% y/y decline in spot rates across all vessel classes and on account of a contracted fleet. Quarterly TCE revenue dropped to USD 89.4m from USD 136.4m a year ago (in line with our estimate of USD 87m). Adjusted EBITDA plunged 59.8% y/y to USD 26.1m (close to our estimate of USD 26.5m) as…

Results in line with our estimate; maintain unattractive on weak outlook: TNK’s operating revenue fell 25.4% y/y in 2Q17 to USD 108.8m (in line with our estimate of USD 110.1m) on account of an average 40.2% y/y decline in spot rates across all vessel classes and on account of a contracted fleet. Quarterly TCE revenue dropped to USD 89.4m from USD 136.4m a year ago (in line with our estimate of USD 87m). Adjusted EBITDA plunged 59.8% y/y to USD 26.1m (close to our estimate of USD 26.5m) as…

DMFR – Teekay Tankers – Stormy Seas Ahead as Earnings Expected to Remain at Very Low Levels

On 31 May, Teekay Tankers (TNK US) announced that it had agreed to acquire all outstanding shares of Oslo-listed Tanker Investment Ltd (TIL NO) in a share-for-share merger. Teekay Tankers, which already owns 3.4m or 11.3% of TIL’s common shares, would acquire the remaining 26.9m common shares of TIL that it does not own, by issuing 88.9m TNK shares (3.30x exchange ratio). This amounts to an enterprise value of USD 476m for TIL’s fleet at TNK’s closing price on 31 May. TIL’s fleet comprises 10…

On 31 May, Teekay Tankers (TNK US) announced that it had agreed to acquire all outstanding shares of Oslo-listed Tanker Investment Ltd (TIL NO) in a share-for-share merger. Teekay Tankers, which already owns 3.4m or 11.3% of TIL’s common shares, would acquire the remaining 26.9m common shares of TIL that it does not own, by issuing 88.9m TNK shares (3.30x exchange ratio). This amounts to an enterprise value of USD 476m for TIL’s fleet at TNK’s closing price on 31 May. TIL’s fleet comprises 10…

DMFR - Teekay Tankers' Acquisition of TIL: What Does This Mean for Shareholders?

Teekay Tankers (TNK US, Unattractive, USD 1.60) – trim fair value on weak earnings and asset disposals<ul><li>
Pare down fair value on reduced profitability and asset disposals:Teekay Tankers’ (TNK’s) operating revenue fell 24.2% y/y in 1Q17 to USD 125.1m (slightly north of our estimate of USD 111.6m) on account of an average 25% decline in freight rates across all vessel classes, as well as contracted fleet. The TCE revenue declined by one-third due to reduced top line and increased voyage expenses to…</li></ul>

Teekay Tankers (TNK US, Unattractive, USD 1.60) – trim fair value on weak earnings and asset disposals
Pare down fair value on reduced profitability and asset disposals:Teekay Tankers’ (TNK’s) operating revenue fell 24.2% y/y in 1Q17 to USD 125.1m (slightly north of our estimate of USD 111.6m) on account of an average 25% decline in freight rates across all vessel classes, as well as contracted fleet. The TCE revenue declined by one-third due to reduced top line and increased voyage expenses to…

Teekay Tankers (TNK US, Unattractive, USD 1.60)–Trim Fair Value on Weak Earnings and Asset Disposals

United States

Teekay Tankers Ltd. provides oil transportation services through a fleet of mid-size tankers, including Suezmax and Aframax crude oil tankers and Long Range 2 product tankers. The Company's vessels are typically employed through a mix of short- or medium-term fixed-rate time charter contracts and spot tanker market trading.

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Teekay Tankers Ltd Class A (TNK US)

Shipping Consolidation: BW LPG Bids for Dorian LPG in $1.1bn EV Valuation

Shipping, specifically LPG tanker shipping, made headlines this week with a takeover offer via an all-stock transaction from BW LPG Ltd (BWLPG NO)...

Charles De Trenck

Will Liquidity Issues Continue to Haunt Teekay Tankers?

Losses greater than our estimate, outlook remains gloomy: Teekay Tankers’ (TNK’s) operating revenue surged 29.1% year on year in the first quarter...

Drewry Maritime Financial Research

DMFR – Teekay Tankers – Stormy Seas Ahead as Earnings Expected to Remain at Very Low Levels

Results in line with our estimate; maintain unattractive on weak outlook: TNK’s operating revenue fell 25.4% y/y in 2Q17 to USD 108.8m (in line...

Drewry Maritime Financial Research

DMFR - Teekay Tankers' Acquisition of TIL: What Does This Mean for Shareholders?

On 31 May, Teekay Tankers (TNK US) announced that it had agreed to acquire all outstanding shares of Oslo-listed Tanker Investment Ltd (TIL NO) in...

Drewry Maritime Financial Research

Teekay Tankers (TNK US, Unattractive, USD 1.60)–Trim Fair Value on Weak Earnings and Asset Disposals

Teekay Tankers (TNK US, Unattractive, USD 1.60) – trim fair value on weak earnings and asset disposals Pare down fair value on reduced...

Drewry Maritime Financial Research

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