|Global Oceanic Carriers
||EPS - Basic
||Market Cap (m)
Real-Time news about Global Oceanic (London Stock Exchange): 0 recent articles
|myopia: Well at least you've got the certainty of of the bid price. Seeing as the market seems to have lost its ability to value most shares sensibly any more, who's to say in a few years time GOC's share price wouldn't still be below 150p, whether it were doing well or not. I blame the market, and whoever is responsible for setting prices.|
|courant: Well, well, well! Stitch up? Maybe, but then again they are buying at a premium to the share price and to the all time high so there's not really much to complain about. Everyone here should be showing a good profit at a time when AiM has been a bit of a war zone! As for fair value, if GOC reached 180p I'd have definitely been out, so 170p is not too shabby. GLBS awaits and HCL looks cheap too but, as I've said before, I prefer the fleet profile of GLBS, being handymax focused and thus less exposed to the volatile iron ore market.
|davebowler: Another shipping related share Ocean OCN who own ports in Brazil announced a jump of 47% in port related revenue today causing the share price to rise 4%|
|luckyjonah: I really don't think TA has any relevance to a small cap stock like GOC, the share price is generally a direct reflection of the BDI Index - which is daft because GOC's management style of securing long term charters is exactly designed to smooth out performance relative to the BDI. However IMO this reactionary performance is likely to be the way for at least another 6 months until the next dividend is paid and people look closer at the company and its cashflows.
What would be a great bonus for GOC is if the BDI remains high this year and they can secure the next 2 contract renewals at high rates - I had anticipated a drop in the BDI for those renewals, and even at just a modest increase they are generating shedloads of cash and on a very low PE.|
If you decide to go for spot rates, you dont get a whole year of guaranteed fees. You would get, I imagine, 4 or 5 charters of 10-20 days length in the year. The rest of the time would be spent paying the crew to do nothing while management would be spending all their time attempting to hawk their ship for the next short term rental, or even worse to just steam half way across the planet to pick up another one way 10 day charter.
The profit on a years worth of Patoro, even at 27k per day is outrageous. We've got some renewals coming up in the next few months too. GOC is raking it in, and the only thing stopping a share price tripling over the next few years are:
A) Global trade collapse
B) Global shipping chronic over supply
If A happens, theres more serious things to worry about than the share price of GOC. If B happens, 3-4 year contracts already in place will see us through the worst while the market bottoms out and other suppliers making hay at the moment go bust...
Relatively speaking, a safeish bet.
|luckyjonah: TadTech, I see you are still in denial over the fact these Directors have just reduced their holdings! They always held 79% before and when the share price was 33p they could have bought the other shares for just £2m.
Why keep the listing? Well I would imagine it's easier to raise (and maintain) finance with a London listing, and I'm sure an audited listed company has better credit rating than a private one, hence better rates. Also by taking the company private the Directors are basically settling for dividend income, whereas Tartsinis has publicly stated that they are looking to treble the market cap by September 2010 - so quite clearly IMO they are looking to maximise the capital value of the company as opposed to treating it as an ongoing personal cash cow. And the best way to maximise the market cap, unless an exceptional buy-out offer is received, is to build up the share price over the medium term. And the first step in doing that is stepping onto the dividend list with a juicy 13%.
I will bet you a virtual pint they haven't taken it private by Xmas 2008! :-)|
|olivercromwell: Shipper's Profits, Share Price Set to Sail Higher
By Jack Hough |Jack Hough Archive |Published: October 11, 2007
The company owns and operates fleets. The company's fleet carries various drybulk commodities, including coal, iron ore, and grains, bauxite, phosphate, fertilizers and steel products.
Share Price $121
Market Value $4.3 billion
Trailing 12-Month Sales $338 million
2007 P/E 16
Proj. Long-Term EPS Growth Rate 43%
READER DISCRETION ADVISED: The profits I'm about to recount are downright pornographic.
They're being collected by a Greek shipper whose shares debuted in February 2005. They've soared eightfold in price in a year. They still look cheap.
Dryships (DRYS: 126.16, +4.38, +3.59%) operates 33 vessels, 21 of which it bought using its initial stock offering proceeds plus some debt. It's scheduled to receive seven new vessels by 2010. The company specializes in carrying "drybulk" commodities. These include iron ore, used to make steel; coal, used to heat steel furnaces and generate electricity; grains, used to feed people and cattle and, increasingly, for fuel distillation; bauxite, used to make aluminum; and phosphate, used in detergents and fertilizer. Most of Dryships' fleet consists of "Panamax" ships, so named because they're the largest vessels permitted to pass the Panama Canal, and considered the workhorse of drybulk shipping.
A decade ago you could have transported a Panamax full of coal from the U.S. to China for around $10,000 a day. China's economic boom brought soaring demand for steel and electricity, resulting in a world-wide shipping capacity shortage. By late 2004 that same ship of coal would have cost you about $50,000 a day. Builders began turning out more ships in response, and by the time Dryships issued shares, prices were in decline. They bottomed at about $15,000 a day in August 2005 and stayed there until summer 2006. Dryships shares lost half their value. The company quietly expanded its fleet.
To understand what happened next, you have to know how ship operators price their capacity. The aforementioned prices are "spot" rates, which are agreed upon for a single job only according to market prices. There are also time charters, whereby shippers commit vessels for a year or more at a time. Companies that rely on time charters produce fairly predictable profits, but are slow to cash in if prices rise. Companies that use spot pricing can produce enormous profits when prices rise. That's particularly true because costs in the shipping business are mostly - what's a better way here to say sunk? - paid upfront when ships are purchased. So higher rates create pure, levered profit.
Raging demand for steel, grains and electricity since the 2005 pricing trough has sent drybulk rates to uncharted highs: about $85,000 a day for Panamax capacity. Earlier this year Dryships was expected to boost its profits from $2.38 a share last year to about $4.00 a share this year. But the company earned well more than expected in the first half, and is now expected to clear $7.64 a share for the year. The stock has soared from $10 to $121 since summer 2006. But today's price puts it at just 16 times forecast 2007 earnings, on par with the S&P 500 index. And while underlying earnings for the index are projected to increase at only about 10% a year over the next couple of years, earnings for Dryships are expected to jump 43% to $10.93 next year.
Thursday morning I spoke with Doug Mavrinac, who covers the stock for Jefferies & Co., an investment bank, and has recommended it since the 2005 offering. I asked about the outlook for drybulk pricing, and whether a stock that has risen so quickly might plunge just as fast if more ships become available. Mavrinac has looked at forecasts for new steel and coal capacity, and those for new ship deliveries, and he figures that next year the world will need the equivalent of 350 additional Panamax ships to meet demand, but will only get 200. "If you put in an order for a new ship today, you'd be lucky to see one in late 2009 from a Chinese yard or in 2010 to 2011 from a Japanese or Korean yard," he says. Dryships, because of its heavy use of spot pricing, has significant exposure to further price changes. According to Mavrinac's math, each $1,000 increase in spot prices puts an extra 35 cents per share of earnings on the company's income statements.
An economic slowdown, of course, could affect demand. But supply is fairly visible for the next couple of years, it seems. And Mavrinac notes that the company always has the option of locking in current pricing with some time charters. Drybulk spot rates are around $85,000 a day, recall. A one-year time charter locks in a price of about $75,000 a day. A three-year one might fetch $55,000 a day. Presumably, management, which has a better handle on supply and demand than I could hope to have, will know if and when they should make the switch. In the meantime the stock trades at a seeming bargain, most likely because investors are cautious about paying the all-time-high price. Those who have the stomach for it might profit nicely.
Perhaps not surprisingly, Dryships turned up recently on a search for companies with strong earnings momentum. Run the search yourself anytime you like using SmartMoney's stock screener and my recipe of criteria. Also, have a look if you like at seven other survivors the screen recently produced.
i suspect the rise in confidence as something to do with the above article,
|olivercromwell: nice article from yahoo.com search: not sure, maybe dated around june 2007
it indicates one fundamental fact - charter rates are driven and are closely aligned to the prosperity of the global steel industry. on this front china and the new kid on the block,INdia, are consuming ever increasing amounts of coal and iron ore which need to be imported from all corners of the globe - buut you have economic develpment taking place in s america, middle east and eastern europe incl russia which is unique. the urbanisation of rural populations in all these countries can only have a positive effect on the demand for infrsstructure products which canonly enhance the demand on global shippers. there are reports of america having to confront the dilemma of its aging infrastructure and we should see increased private/public sector spending on upgrades over the next 10 years.
It has been a shaky few years for Global Oceanic Carrier ('GOC'). After listing in December 2004 to take advantage of an upturn in the dry bulk shipping sector, the company was caught on the hop in 2005 when charter rates considerably weakened. Generally speaking, dry bulk ships tend to contracted for 1-2 years. GOC was in the process of purchasing four second hand vessels, but the company quickly found itself in a precarious position as it was supposed to taking the delivery of vessels at a time when prices were less than ideal. As GOC was a small operation, it wouldn't take much too seriously undermine the business which is exactly what happened. The company was forced to cancel the fourth vessel, at a cost of US$3.2 million, and had to put two other vessels into the 'spot' market on short term contracts to ensure they weren't sitting in the docks empty.
The share price was duly hammered, and the management found one of its large shareholders calling an EGM to replace the entire board of directors. The plot thickened however, after the resolution at the EGM was rejected, thanks in part to two new funds The Trafalgar Catalyst Fund and Trafalgar Recovery Fund which had built up considerable stakes. The management may have survived the EGM, but their stay of execution was short lived. Within weeks of the EGM, Trafalgar appointed its own members to the board, and in the process some of the old board members were ousted.
The new management implemented a range of initiatives to cut costs, leverage the businesses asset to expand and most importantly, secure long term contracts for its vessels to improve earnings visibility. Thus far, the new team has delivered. Last week the group announced that the GO Pride has singed a new charter to run from June 2007 for 12 months at rate of US$18,500 per day almost double the previous rate. The GO Faith has also been charted for 12-14 months starting in May for a rate of US$28,000 per day. GOC has had a stroke of luck. Despite the wobble in dry bulk rates in 2005, the price has recovered somewhat since then, which is attributed to two key factors. First dry bulk rates are dictated predominantly by demand for iron ore and coking coal. 98% of global iron ore demand is for the steel industry. A large proportion of coking coal is also used in the steel industry. At the same time, over 50% of global dry bulk shipping is coking coal and iron ore.
Dry bulk shipping rates are closely linked to the health of the global steel industry, and the largest producer of steel in the world is China. In fact, China produces so much steel, that despite it veracious appetite for all things related to its impressive growth, it actually is a net exporter of steel. China is also influencing the dry bulk shipping industry in another way. While China is an emerging economic superpower, it is also a very long way from the sources of many of the raw materials it requires. Headlines are often littered with news of Chinese trade officials cutting deals in South America, Canada, Africa and Australia to secure sources of raw materials. This equates to longer shipping routes to deliver materials, which in turn means ships are tied up for longer periods delivering their goods which in turn applies upward pressure on shipping rates. This combination of increased demand and longer shipping routes has buoyed charter rates good news for GOC.
This is a cyclical industry heavily influenced by the global steel industry, something to keep in mind, but projections for the next 3-4 years for the steel industry suggest charter rates will remain favourable. There is one other factor that comes in to dry shipping rates each year wheat. 11% of dry bulk shipping is dedicated to wheat, so each year in the autumn the prevailing success or failure of the wheat crop can affect rates.
House Broker Jefferies International initiated coverage with a buy rating and 120 pence price target for 2007. The price target in particular applied considerable discounts for the company's short trading life, wobbly track record, and illiquidity and small market capitalisation. Which begs the question when will GOC warrant a valuation comparable to its peers? Food for thought.
|saucepan: Perhaps today's announcement will be sufficient to get the GOC share price moving to 52-week highs. The chart is certainly looking strong.|
|courant: Dividends make absolute sense, especially if they're looking to make a placing at some point in the future. What better way to support the share price than declare a fat dividend, which will be well covered by the cash thrown off from their operations? What's the forecast dividend for this year, something like 11p. That's over 9% yield. Can you see it staying like that? No! Far more reasonable would be a yield around 5-6%, like Goldenport for example, which would put GOC on about 200p. As I said, they don't need the cash - it would be useful if they want to expand further or reduce their levels of debt - they are forecast to generate something like £10m cash this year, compared to overall debt of ~£40m. That's fine by me. So, I don't see this as share price "manipulation" - rather it's giving investors what they want, thus supporting the share price.
Anyway, going back to the original point, I don't see GOC being taken private - your argument here points to quite the opposite!
Global Oceanic Carriers share price data is direct from the London Stock Exchange