Hellenic Carr. Share Discussion Threads

[rlindsey2] 26/1/2012 17:26

As your see from all the index's the rates have dramatically dropped the last few months, lower than they have been for a long time. What's people's views on this, do you recon HCL can still be profitable at such low rates?

[yupawiese2010] 06/11/2011 17:26

Not specifically linked to Hcl, but a usefull article on the state of the bulk carrier market.

Shipping sector all at sea
By Lee Wild, 10 October 2011

This year's fourth Capital Link International Shipping & Marine Services Forum was a glum affair. Panelists discussed key issues like overcapacity, rates, asset prices and funding, but few gathered at the Grange St. Paul's Hotel in London could crack a smile. A profit warning from Aim-listed ACM Shipping before breakfast was not a good start.

"Hopefully, the economy is not as bad as everyone thinks," said one big shot in container shipping, summing up the mood among the owners, analysts and journalists at the well-attended event. And one can sympathise. Over 85 per cent of world trade is seaborne, making the sector an accurate barometer of the globe's economic health. It does look grim though, given the recent dearth of good news on world trade.

Icy waters ahead for shipping



Source: Bloomberg

As well as the worsening demand outlook, freight rates have slumped and the price of a container ship, new or old, has plunged as much as 30 per cent since the height of the market in 2008. "What we are seeing at the moment is fear," Robert Perri, finance boss of Box Ships Inc, said. "Whether next year will be good or bad depends on your view of the economy."

What's clear is that, for ship owners, current charter rates are unsustainable. The BDI, an index of shipping rates, has bounced back to 2,000 in recent weeks (it was 11,000 in 2008), but still averages about 50 per cent less this year than it did in 2010. It comes as something of a relief, then, that experts predict a recovery for the medium and large ships by the second quarter of 2012. If they're wrong, expect a repeat of the distressed-asset sales we saw two years ago. Some, like Peter Evensen, CEO of Teekay Corp, go further. "Several ship owners will go bust," he warns.

Overcrowded seas

But what about overcapacity? The world's shipping fleet swelled during the boom years (it's now manned by 350,000 Filipino sailors, about 30 per cent of the world's 1.2 million seamen) and orders placed in better times are still being built. "This shipping crisis is one we have brought on ourselves, unlike the demand-driven crisis of the 1980s," Nikolas Tsakos of Tsakos Energy, said. According to figures from Hellenic Carriers, the global dry bulk fleet will grow by 12-13 per cent in 2011. "The main problem is oversupply and the significant order book out to 2013," it says.

So, shipyards have plenty of work on and the overhang of new vessels won't begin to correct for at least a couple of years, even with an anticipated slippage (delays and finance issues) of up to 40 per cent. "I see 2012 much the same as 2011," Goldenport's John Dragnis, said. "I don't see any major upside in the next year."

That ties in with comments from Clarksons MD Dr Martin Stopford. "As far as owners are concerned the cycle goes – peak, plateau, collapse, recovery. We're in the collapse phase at the moment and moving towards the trough."

Maritime mergers

In times of stress, the talk often moves to M&A. And, with owners trading way below net asset value (NAV), so it has here. But, in the macho world of shipping, personalities may get in the way. "There are too many egos involved, so I don't think there's a lot of room to get alpha males into a merger situation," reckoned one pessimistic panelist. "M&A didn't happen before and is unlikely to feature this time," added another.

Indeed, there was plenty of talk in 2009, but little action. Now, a lack of finance makes deal making even harder. The alternative for some could be failure. "The depressed market may lead to the need for rationalisation, but this could be achieved through voluntary exit or bankruptcy, and egos in this industry, of course, are rife," warns another industry figure.

Better times ahoy?

More than a few of the sector specialists in London last week are pinning their hopes on China. Much was made of the urbanisation story, both there and in India. And it's true, the figures are staggering. China imported 63 per cent of all the seaborne iron ore trade in 2011. The rest of Asia mopped up 21 per cent. There may be good new on ship prices, too. Rising labour costs in China may be taking the steam out of aggressive cuts by the big yards.

While China and India's long-term growth credentials are sound, neither economy is immune from global economic strife. It's also doubtful whether China possesses the financial clout to lead a recovery with the same vigour it did in 2008-09. To pull out of its recession, the shipping industry needs either a leaner shipping fleet or rapid expansion in world trade. Both will come, eventually. It's just a matter of which one first, and when.

[eelanguilla] 08/9/2011 19:53

the drop is results nervousness ? dont get it with 2 new ships coming in 2013 when things should have recovered. short term vs long term imo

[yupawiese2010] 27/4/2011 18:08

whilst im aware that there is a lot of capacity coming to the dry bulk carrier market in the next couple of years, can anybody recommend a website that list the quantity of new vessels under construction & when they are anticipated on the high seas

[eelanguilla] 24/3/2011 20:17

maybe some shorter term contracts with the charters up for renewal would make sense until the bdi takes a step up. This is back to a level close to where i brought in but as debt gets reduced it becomes more attractive. 2 new ships and fleet renewal is a good sign as it points to investment for the future.

this is quite an interesting co. in an unfashionable sector.

[deadly] 16/3/2011 09:52

There's your answer: P/E now less than 2!!!!

Þ US$57.5 million Revenue (2009: US$58.0 million)

Þ Book gain of US$8.5 million and debt repayment of US$21.0 million following the sale of M/V Hellenic Breeze

Þ US$32.9 million Operating Profit (2009: US$23.9 million)

Þ Earnings per share of US$0.60 (2009: US$0.40)

Þ Dividend payments: Interim dividend for 2010 2.15 pence per share and final dividend for 2010 5.45 pence per share subject to AGM's approval (2009: total dividend 2.47 pence per share)

Þ Gearing ratio2 at 26.5% as of 31 December 2010 (39.4% as of 31 December 2009)

Þ Payment of first two instalments in the amount of US$27.2 million for the construction of two new building Kamsarmax vessels

Þ Total unencumbered cash liquidity of US$59.0 million as of 31 December 2010 (US$71.2 million as of 31 December 2009)

[rupe1958] 16/2/2011 16:21

Thanks for you view CB7. I have read about a global glut of ships, so maybe this is a sector to avoid for the moment. The BDI seem to be ticking up a bit though.

[cb7] 16/2/2011 15:53

your p/e is historic, this years doesnt look that promising, with some ships up for renewal-no doubt at lower rates--thats assuming they get the work. The BDI is decidedly grim, so the outlook aint good. The only positive is that they have assets, although with a worldwide surplus of ships they too could be subject to devaluation.

[rupe1958] 16/2/2011 14:54

This looks interesting. PE of 3. Lots of cash on the balance sheet. Anyone got a view on this?

[eelanguilla] 02/1/2011 20:43

happy new year hcl'ers - value will out in 2011 (thats if china doesnt impolde lol) :)

[sivadnoj] 18/10/2010 09:30

Broker questions valuations
Geoff Garfield London
430 words
15 October 2010
Tradewinds
TRADEW
31
English
(c) 2010 TradeWinds

UK broker and corporate-finance specialist Charles Stanley Securities says quoted shipowners continue at a substantial discount to the net book value of their fleets.

This is despite operators using the market downturn to renew or expand their fleets and improving optimism because of the recovery in rates.

The securities house focusses on the handful of listed UK owners - Globus Maritime, Goldenport Holdings and Hellenic Carriers - involved in dry bulk and containers.

Charles Stanley questions the "anomaly" in company valuations given the apparently greater stability in asset values, which it describes as the "cornerstone" of shipowning companies because of ship life expectancy.

The earlier decline in vessel prices has clearly encouraged investors to exploit opportunities, it says.

But the "current rating differential between the UK quoted companies and their US counterparts is notable," added Charles Stanley Securities in its annual Shipping & Marine Services review.

"The UK companies currently trade on 6.1 times EV/EBITDA [enterprise value/earnings before interest, tax, depreciation and amortization] compared to the US companies on 7.4 times," it added.

"There remains significant scope for further recovery in share prices, especially if concerns over the level of future [newbuilding] deliveries proves misplaced. It is notable that there has been no impairment losses to date among the quoted companies."

The broker and advisor recommends Goldenport Holdings as a "buy" with a target price of £1.55 and Hellenic Carriers as "Buy" with a target of £1.29. It also makes recommendations for UK-listed marine-services companies Hamworthy ("reduce") and James Fisher ("add").

Charles Stanley says the long-term drivers for shipping remain but the near-term picture is less clear.

"The fundamental major uncertainty is the amount of new capacity coming on stream," it said.

In its comments on the UK's quoted shipbroking companies, it notes the subsector has rallied over the past year.

"The current earnings ratings range from 8.2 times to 10.4 times compared to the industrial transportation sector on 12.6 times, upon which we base our price targets," said Charles Stanley.

It recommends ACM Shipping as a "buy" with a price target of £ 2.53, Braemar Shipping Services as an "add" with a target £ 5.82 and Clarksons as an "add" with a target £ 11.86.

The report notes that shipbroking businesses benefit from a more flexible cost base and scope to generate income from a range of different services.

Charles Stanley concludes that the global economic outlook continues to dominate sentiment in shipping and that volatility is set to continue.

[sivadnoj] 07/10/2010 09:41

HCL presenting in London next Tuesday.

[sivadnoj] 23/9/2010 11:43

$18k per day to $22k per day seems like a healthy increase. Is this an indicator of a firmer market or simply a premium for a relatively short term charter - 7 months?

[cb7] 15/9/2010 14:45

Yep, just checked, as you say its ex-divi today, so good news....

[stemis] 15/9/2010 08:16

The share price seems to be drifting upwards. I thought it went ex div today? If the current price is ex the 2.15p div then the rise is even better.

[stemis] 06/9/2010 10:51

Yes, and a dividend of 2.15p which when added to the 2009 final dividend of 2.47p puts HCL on a yield of 6.2%.

[deadly] 06/9/2010 10:00

Healthy results. Good cash flow, debt reduced, interim dividend of 2.15p, P/E below 3.
Good management I'd say.

[kimboy2] 31/8/2010 12:38

Has anyone run their eye over Frontline Ltd (FRO) which is in the same market but essentially oil tankers. This may, or may not, be a more stable market.

FRO also pays a dividend.

[sivadnoj] 05/8/2010 13:33

Interims due on 2 September according to Dow Jones.

[sivadnoj] 23/7/2010 14:54

Indeed. At the risk of stating the obvious, we're now trading above the level we were at when the accident occurred.

[stemis] 22/7/2010 13:08

Nice recovery

[koolio] 20/7/2010 18:00

What about insurance for loss of earnings I wonder...

[g2am] 20/7/2010 15:21

Delightful. Another thing to help drive the share price down argggggh