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Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

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

<ul>
<li>The company reported net income of USD 23.6m in 4Q18 and USD 84.5m for full year 2018. However, the profit in 4Q18 missed the mark when compared with USD 27m earned in 4Q17, owing to a downtrend in spot rates for Capesize vessels post October 2018.</li>
<li>Excluding installations, the remaining capex for scrubbers is USD 28.8m. In order to partially finance scrubber installations on up to 11 vessels, the company has upsized the USD 420m term loan facility and extended maturity from June 2020 to June 2023 at LIBOR + 250 basis points.</li>
<li>Even after pricing in the fixtures reported by the company, exposure to spot market still remains high.</li>
<li>Despite the repayment obligations, capex and dividend payments, the current net debt to market adjusted fleet value ratio—maintained at 43%—provides ample headroom to secure any additional funding if required.</li>
<li>We retain Attractive rating on the stock with a fair value of USD 8.3 per share. Risk rating is ‘Medium’ as debt levels are comfortable.</li>
</ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/979/original/GOGL_valuation%20overview.PNG?1551771332" class="editor-image img-responsive" data-smartkarma-image-id="80979"></figure><div class="content-caption">Valuation overview</div><p><em>Source: S&amp;P Capital IQ, Drewry</em></p>


The company reported net income of USD 23.6m in 4Q18 and USD 84.5m for full year 2018. However, the profit in 4Q18 missed the mark when compared with USD 27m earned in 4Q17, owing to a downtrend in spot rates for Capesize vessels post October 2018.
Excluding installations, the remaining capex for scrubbers is USD 28.8m. In order to partially finance scrubber installations on up to 11 vessels, the company has upsized the USD 420m term loan facility and extended maturity from June 2020 to June 2023 at LIBOR + 250 basis points.
Even after pricing in the fixtures reported by the company, exposure to spot market still remains high.
Despite the repayment obligations, capex and dividend payments, the current net debt to market adjusted fleet value ratio—maintained at 43%—provides ample headroom to secure any additional funding if required.
We retain Attractive rating on the stock with a fair value of USD 8.3 per share. Risk rating is ‘Medium’ as debt levels are comfortable.
Valuation overviewSource: S&amp;P Capital IQ, Drewry

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