Braemar Share Discussion Threads

[mount teide] 17/7/2024 11:26

Re-routing of shipping away from the Red Sea onto much longer routes between Europe and the Middle East and SE Asia has seen demand surge, and the deployment from lay-up of ALL spare capacity across the three largest shipping sectors - Dry Bulk, Tankers and Containership . The industry is currently planning for this disruption to extend well into 2025.


Shipping’s short-term outlook looks golden, but uncertainties loom large - Lloyd's List Mid Year Outlook

'The shipping market is being driven by a fear of missing out, but will the orders being placed today be profitable in the long term — and are they the right orders for tomorrow’s markets?

The growing orderbook and rising prices are not deterring cash-rich owners or hungry yards, as all core markets continue to perform strongly at the same time, while the global disruption fuelling record tonne-miles shows no sign of abating. But is it really different this time round?

Global disruption is good for business. The maritime sector is booming.

Unusually for shipping, nearly every single market is positive right now, with very few signs of an immediate end to the party in sight.

In the box sector, successive disruptions are driving rates towards levels not seen since the Covid pandemic.

Lines are projecting triple-digit income increases, reflecting the time charter equivalent earnings that are now in the triple-digit thousands of dollars range.

A bifurcated market and record tonne-miles has seen tanker earnings exceed already high expectations, with analysts openly announcing a “golden era” for tanker takings.

Asset values for chemical tankers are approaching all-time highs, thanks to the same story playing out across most asset classes right now: years of underinvestment, held back by uncertainty.

The numbers are massive. The sentiment is reaching fever pitch. The market is — to quote one shell-shocked shipowner still recovering from the industry’s recent Posidonia gathering — “absolutely bloody nuts”.

In this febrile atmosphere, cash-rich owners preaching optimistic forecasts of sustained market fortunes have been beating a path to the shipyards’ doors amid record high newbuilding prices.

The big names are all back in: Marinakis, Idan Ofer, Procopiou, Döhle, MSC, CMA CGM, Maersk... the list goes on.

The yards, meanwhile, desperate to cash in, are seeking to expand capacity.

Yangzijiang Shipbuilding is rumoured to be planning a new dock. New Times Shipbuilding, one of China’s largest privately owned yards, is awaiting government approval for similar plans.

Even South Korea’s Hanwha is said to be considering a new floating dock order, while yards previously consigned to repairs are being looked at as possible expansion opportunities.

How much of this will materialise is not yet clear, but the market been struck by an acute case of FOMO (fear of missing out).

In the short term, all this makes sense.

Even an easing of tensions in the Middle East is not likely to bring about a quick cessation of the assaults that have, for some lines, absorbed 20% of capacity in the resulting disruption and rerouting.

Tanker analysts have been rapidly re-readjusting their market forecasts this week, based on modelling that assumes Red Sea disruption will continue into 2025 in the wake of the latest deadly attacks.

But the rush to order now amid constrained yard capacity comes at a cost, with more than just financial implications to worry about.

The current sky-high newbuilding prices beg the obvious question of whether owners can win in the long term.

Buying an 8,000 teu dual-fuelled boxship at $140m assumes earnings of more than $50,000 a day for 15 years. If you are buying very large crude carriers at $140m, you are making bets in excess of $60,000 a day.

Amid the excitement, there are those questioning how many people ever make money at these rates in the long term.

Newbuild prices are up 40% compared to pre-pandemic levels. This is not yet anywhere near the shirt-losing heights of the 2006-2008 ordering supercycle that preceded the financial crash, but high enough to make more conservative owners with a long enough memory, nervous.

There are enough people around this market who remember capesize bulkers being bought for $120m that even amid today’s elevated prices can be bought for $70m.

The ill-fated phrase “this time it’s different” has already been deployed and the numbers back that up.

The orderbook today is less than 50% of what it was in 2008: 290m dwt versus 660m dwt.

At least one-quarter of that orderbook was never completed, as shipowners cancelled orders following a consequent slump in shipping markets. The other factor the last time was that shipyards were being driven to bankruptcy.

FOMO is fleeting, but the ships being ordered at pace today are going to be with the market for the next 20 years, which raises the other consequence of this race to order.

The current ordering boom has hit before there is any certainty over green fuel supply or regulation.

Despite an initial appetite from owners to ready themselves for the incoming supply of green methanol and ultimately ammonia choices, the current safer bet for many has been liquefied natural gas.

Even Maersk, the vanguard pioneer of green methanol, is now rumoured to be looking at LNG dual-fuelled newbuilds, having failed to secure the support it was anticipating from some stakeholders.

While there are perfectly good reasons behind a swing back towards the proven efficiency of LNG — not least the options for fuel blending and biofuel pathways — even the most eco-friendly owners concede such decisions are driven more by cost and pragmatism than any ideological environmental factors.

“It has nothing to do with the environment,” commented one owner with several dual-fuelled orders in train.

“It’s purely cost. It’s going to be cheaper. And, as long as the EU continues to pump carbon costs up on conventional fuel while ignoring the methane slip from LNG, you’re going to make things worse for the environment again, and put more money into the shipowners’ pockets.” '

[rivaldo] 17/7/2024 11:20

Useful comment on a BMS thread elsewhere from vsihv:

"Hapag Lloyd upgraded their guidance recently - positive readacross - I assume if Hapag Lloyd are upgrading, so will the Maersks & MSCs of this world"

[masurenguy] 17/7/2024 09:51

Agree - meanwhile it's also just hit a 15 month high !

[spooky] 17/7/2024 09:06

The share exchange starting to warm up. Things might start to get interesting if/when the 90000 on offer at 315 get taken out.

[masurenguy] 11/7/2024 08:33

Gradually ascending here with the shareprice up by 20% since March and 8% over the past month.

[spooky] 09/7/2024 12:49

Currently an active buyer and seller in reasonable size. Interesting to see which is more motivated
.

[sphere25] 09/7/2024 12:13

Someone is keen for sure Spooky.

A 460,000 exchange followed by a 458,462 yesterday. The latter trade then got edited, with what appears to be a correction to show it being replaced by a trade of 454,446. Essentially, someone is coming in for an unusually large block of shares here.

Wondering if it is Minna or Lightship upping their stakes and whether the market gets more interested in moving the price then.

At the moment there is no real interest. There is a nice trend with the psychological 300p mark being tested. It looks like someone is sat on the bid at 300p willing to buy in bigger size than normal, but hard to read these illiquid ones - they can move on nothing volume and make you look like a daft sod.

There was a 100k sell order on the offer at 307p. Noted this sell order before, but it seems to come and go. Can't see it right now, so unsure if someone is farting about (or strategic farting about) on the book, or whether that has been cleared with the exchanges yesterday.

If it has, then this might break out higher.

Worth a little watch.

All imo
DYOR

[spooky] 08/7/2024 12:11

Interesting burst of volume today.

[pireric] 05/7/2024 09:49

Fair dos! I recall they were asked about this at an IMC previously (or a results presentation).

BMS should probably institute a buyback policy that goes beyond the ESOP option neutralisation plan

Eric

[rivaldo] 05/7/2024 09:19

Hmmm. I've read that dry cargo can refer to either dry bulk or container shipping, and BMS have divisions for dry cargo as well as containers.

I will take your opinion on board though and will wait to see what the next statement brings :o))

[pireric] 05/7/2024 09:08

Dry cargo is not containers

The Baltic Dry Index (which is relevant for dry cargo) is doing fine, but still the case that there's not really much relevance for container shipping for Braemar at all

Eric

[rivaldo] 05/7/2024 08:09

Dry cargo contributed 14% of revenues last year, and was essentially equal second in terms of being BMS's biggest division (behind Tankers). And that was in a year when dry cargo freight rates were lower - the prior year it contributed 23% of revenues and was not far behind Tankers in being the largest division.

Talking about VLCC rates, this from late June is worth noting:



"Buy Frontline ahead of VLCC rate rebound to $80,000 per day, says Clarksons

Opportunity knocks for investors despite weak summer rates for big tankers

Clarksons Securities believes now is the time to capitalise on cheaper Frontline shares ahead of a tanker rate rebound later this year."

[pireric] 05/7/2024 07:52

Unfortunately, like last time, Braemar has basically no exposure to container shipping. Clarkson is the play on this

Conversely VLCC rates have been slipping

Eric

[rivaldo] 05/7/2024 07:17

Take a look at the exponential rise in the World Container Index of rates over the last couple of months:

[tole] 04/7/2024 19:45

https://masterinvestor.co.uk/equities/small-cap-catch-up-braemar-hunting-and-loungers/Braemar (LON:BMS) – Totally Lacklustre AGM StatementThis group, which is one of favourites, is a leading provider of expert investment, chartering, and risk management advice to the shipping and energy markets. It offers services that enable its clients to secure sustainable returns and mitigate risk in the volatile world of shipping and energy.The group's experienced brokers work in tandem with specialist professionals to form teams tailored to its customers' needs, and provide an integrated service supported by a collaborative culture.In late May when announcing its Final Results for the year to end February, it reported another strong performance for the group, demonstrating its strategy to grow the business, to build its resilience, and to generate sustainable shareholder returns across the shipping cycle.The company stated that FY25 had started well, entering the year with a total forward order book as at 29th February 2024 of $82.6m (FY23: $56.2m).It also noted that it looked forward to continuing the successful execution of its growth strategy, through hiring talented individuals, geographic expansion and making selective acquisitions, while at all times maintaining a strong focus on cost efficiencies and improving operating margins, as the business continues to scale.CEO James Gundy stated that:"The overall market outlook remains positive. Geo-political and natural events, as well as environmental considerations are leading to longer voyage times, and global seaborne trade continues to grow, while the total fleet size remains at similar levels."After the recent results, analyst Ian McInally, at Cavendish Capital Markets, increased his Buy note Price Objective to 392p, concluding that:"We believe our forecasts are conservative and the shares look good value at current levels, trading on just 6.7x FY25E underlying EPS."He commented that the worldwide fleet remains low by historic levels and seaborne trade continues to grow, providing a positive outlook for the business, notwithstanding normal cyclical movements in individual shipping sectors.For the year to end February 2025 he is going for £154.7m (£152.8m) revenues, with adjusted pre-tax profits of an unchanged £16.1m, but with earnings increasing to 38.1p (34.1p), enabling a dividend of 14.0p (13.0p) per share.Yesterday the group held its AGM after having issued a totally feeble Trading Update which said almost nothing, it read:"Further to the update provided in the FY24 results announcement issued on 23 May 2024, the board is pleased to report that the Group has continued to trade well and that performance in FY25 to date is in line with expectation.The Group remains focused on its stated growth strategy and the board looks to the year ahead and beyond with confidence."Despite that 'nothing' of an Update I still like this £90m capitalised group and consider that its shares at 297p each are undervalued.

[deanowls] 04/7/2024 11:21

On the flip side, less movements decreases transactions, so sometimes it is an equal balance.

[rivaldo] 04/7/2024 10:42

Comment from Stockopedia today from a reliable poster sounds good for BMS:

"planetx 9:14am

Freight rates

Spoke to my forwarder

Sounds bad .In Chennai India. only 1 ship left last month and huge huge backlogs .(one of the major ports out of India )

Rinse and repeat looks like the situation is here to stay and as people panic more prices will get raised by the naughty ship owners who will fill their boots again just like the covid free for all ."

[deanowls] 03/7/2024 16:03

Not happy with the money they are taking out as salaries.

[spooky] 03/7/2024 14:51

Some fairly chunky votes against a number of the AGM resolutions.

[rivaldo] 03/7/2024 07:34

An encouraging AGM statement, leaving room for upgrades as the year progresses.

Consensus of Cavendish's and Edison's forecasts for this year is 40.5p EPS, which puts BMS on a current year P/E of only 7.4.

[masurenguy] 03/7/2024 07:17

AGM Statement

Braemar Plc, a leading provider of expert investment, chartering and risk management advice, provides the following trading update ahead of its Annual General Meeting to be held later today.

Further to the update provided in the FY24 results announcement issued on 23 May 2024, the board is pleased to report that the Group has continued to trade well and that performance in FY25 to date is in line with expectation1. The Group remains focused on its stated growth strategy and the board looks to the year ahead and beyond with confidence. Company compiled consensus as at the date of this announcement: FY25 revenue of £152.7m and FY25 underlying operating profit (before acquisition-related expenditure) of £18.2m.

[masurenguy] 02/7/2024 08:25

Current global container freight rates !

[masurenguy] 02/7/2024 07:51

Both ship rerouting and capacity issues continue to impact sea freight costs !

"Shoe Zone announces that, further to its AGM Statement released on 12 March 2024 it has continued to experience cost pressures associated with container prices due to a reduction in the supply of shipping vessels and the continuation of a reroute away from the Suez Canal. As a result, container prices have risen significantly over the last six months." Shoe Zone, Trading Update, 2 July 2024

[masurenguy] 26/6/2024 11:53

Sea freight rates spike with peak season on the horizon
transinfo: 7.06.2024

Eye-opening increases in sea freight rates have been ongoing for over two weeks, coming as something of a bolt from the blue. Rising demand, an insufficient supply of ships, and a shortage of containers at major export ports in Asia have contributed to rising prices in recent weeks. In the first week of June, prices went crazy again and returned to double-digit increases. In the latest reading of Drewry’s WCI index from June 6, from Shanghai to Rotterdam, the price was already $6,032 – 14% more week-to-week. From China to Genoa, the increase was even greater at 17%, up to $6,664 per container.

On routes from Asia to North America, increases were more moderate – 6% to New York and 11% to Los Angeles. In total, the global WCI index increased by 14% to $4,716. Nevertheless, the increase recorded over the last two months brings to mind the gigantic jumps in rates during the pandemic. Looking at the route from Asia to Northern Europe (currently over $6,000), on April 1, the Drewry index for this direction was $3,349! Year on year, the current rate to Rotterdam is 315% higher and to Genoa by 214%. The summer peak season is just getting started, which will maintain high demand for transport capacity. However, these capacities are almost exhausted.