Braemar Share Discussion Threads

[mount teide] 20/3/2019 10:39

Hmmm - Following a rapid 20%+ rise in the BDI from the recent low, Clarkson's has bounced 10%+ while BMS has dropped a further 10% albeit on very light volume.

Unless there is something we don't know the current valuation over a 2-3 year outlook looks highly compelling - not least because rising tides (shipping market cyclical recovery stages) usually lift all boats, largely regardless of the quality of the hull(assets) and management on the bridge(Board).

[shalder] 06/3/2019 17:41

Seconded. You have to wonder whether the final ividend is sustainable on any sensible basis.

[edmundshaw] 06/3/2019 16:20

Cheers MT. Good post as usual.

[mount teide] 05/3/2019 19:38

Veteren shipping financier Dagfin Lunde who boasts 40 years of experience in the banking and Maritime sector wrote the following shipping sector outlook for 2019 for a Shipping Industry Journal - I thought it a measured, well balanced assessment much of which I agree with.


'As is customary at this time of the year the editor tells me to stick my neck on the line and make my predictions for 2019.

Let’s start with the hottest game in town at the moment – liquefied natural gas (LNG) where rates have zoomed up in the final quarter with reports of spot fixtures in excess of $200,000. Looking at the global orderbook – and the longer time it takes to build LNG carriers – I’d say there’s a good 18 months of gas left in the LNG run.

This is the first time in my career where I have seen LNG exporting facilities coming onstream ahead of the new ships coming out of the yards, thanks largely to all the action out of the US. Historically, ships have entered service and confronted production line delays. Moreover, the growth on the demand side led by Asia and China in particular has been better than even the most optimistic could have predicted.

On dry bulk I reckon we’ll see a small improvement over the course of the next year, but honestly I do not want to see a big pickup in this market, which to my mind is already at sustainable levels. Any further significant improvement would inevitably lead owners, like bees to honey, to order more ships, which is not what is needed.

In the tanker segment, products, which are still suffering terribly, should finally pull through to manageable levels during next year. The pain is nearly over.

Crude tankers, meanwhile, this year have been no finer example of the volatile nature of the industry we are in. VLCCs suffered their worst ever opening four months of a year in 2018 and yet are closing out the year in sudden good health. Iranian sanctions have – and will continue to – help prop up the segment and I’m confident that despite some likely jitters early on next year with a slew of deliveries due in the first quarter overall 2019 promises to be solidly in the black for crude.

On the container side, I expect any improvement to be minimal as the ratio between trade growth and GDP growth continues to be low.

The ongoing tariff wars are unlikely to disappear next year, but history tells us such spats are often beneficial for shipping. Extra tonne-miles are already evident in many trades, especially soya beans. Any war or political disruption tends to be positive for shipping.

Enough of 2019, the truth is I am keener to discuss 2020 – it is the topic we cannot avoid, the sulphur cap and apologies for the following blast, but it is a topic that makes my blood boil.

Shipping organisations have failed to deal with politicians and let regulators do things that are not always fit for purpose. We have known this cap was coming for years. Shipping bodies should have advised IMO to get the oil refineries onboard much earlier. The leaders of the shipping industry have failed to live up to the expectations of the political environment, something that happens all too regularly in the maritime industry. Why not embrace the new sentiments and do something positive about it instead of resisting and procrastinating.

I am also disappointed that Port State Control will now control and penalise ships coming in with different fuel. Why not just control the fuel sold in the harbours so nobody gets the wrong fuel? It works on land – I do not see any cars with scrubbers.

Scrubbers are a cheat and it is a travesty – though sadly not surprising – the so called ‘green’ banks have been happy to extend credit lines to their biggest shipping clients to buy these polluter diluters. Sure, there might be a very brief financial advantage – and I mean a matter of months – for bigger ships with scrubbers come January 1, 2020, but rather quickly I feel low sulphur fuel and slow speeding will win the day. Here ends the lesson!'

[warranty] 05/3/2019 18:53

I hope so Robin, this is one of my bigger holdings so an improvement would be welcome. I'm not motivated to sell as I still see BMS as a potential recovery stock, maybe not right now but in time. I probably wouldn't be a buyer at the moment if I didn't hold but at this price I see it as a relatively safe investment with a reasonable dividend. I enjoy MTs knowledgable and intelligent posts and agree that any improvement will only come with a substantial management change. This is such a specialist industry its natural that management experience should count.

[robin_lemer] 04/3/2019 12:29

Interesting that Quentin Soanes has increased his stake from 3.92%-4.10% .He was the co-founder of Braemar and has since been a big critic of the board.Something is definitely brewing

[mount teide] 27/2/2019 17:30

Interesting article by Martin Stopford - he argues the future of shipping requires generating improved efficiencies from the use of data systems and empowering senior onboard staff to be more involved in the day to day running of the business and its decision making.

Would agree - senior shipboard personnel are highly educated technical professionals - the youngest age it's possible to gain a Masters Certificate is 27/28 - by comparison its possible by the age of 21/22 to gain a degree or pilot a Ryanair passenger Jet.



Clarkson’s Stopford sees tech-driven, high efficiency future model for shipping - Seatrade Maritime News

'The shipping business model must change if it is to survive. Noting that it was a difficult thing to do as this was the only one that many in the industry knew, Clarkson Research president Martin Stopford reiterated that this was not the model for the future

Speaking at the first Hong Kong Shipowners Association lunch in its 60th anniversary year Stopford said: “The business model we’ve known for the past 50 years is looking a bit shakey.”

Elaborating, he said that several factors are behind this imperative. With commoditisation driving rates lower and smaller onshore teams, there is a need to look for ever higher efficiency gains. The way to achieve this Stopford said, is to change the way the industry thinks about the use of data and the deployment of personnel.

Stopford suggested that to do this, a fleet of ships should be run like a transport factory. This inherently involves the use of technology but not necessarily in the move towards more autonomous vessels as has been suggested recently. Eschewing the image of “Ronnie the robot” type ships’ bridges, Stopford said a better use for technology would be to empower the human element on ships by giving the masters more autonomy and motivating them to be more involved in management level decision making.

He highlighted the example of team and technical managers of the top F1 racing teams and how they made critical trackside decisions that were pivotal to race performance and suggested that with the onboard information that crews now have available, they might be challenged to reach a similar level of efficiency.

Stopford added that with ships now built mostly digital-ready and with all the requisite technology to process key information, the next step is to ensure that this is standardised and enable systems that are not too people-dependent and where personnel can be moved around the business easily.

This would ultimately facilitate a move towards a more horizontal personnel system for shipping, which he believed is what the industry needs.

“Digitalisation is not the goal, nor is autonomous shipping; these are tools and ways you might develop it. The goal is maritime transport systems that meet the needs of the next generation,” Stopford concluded.'

[dtaliadoros] 27/2/2019 15:11

Think this could be a take over target given the poor share price performance?

[edmundshaw] 27/2/2019 08:17

NED appointment of Steve Kunzer who has "extensive experience of shipbroking and global shipping markets". Hope the new chair will have that too...

[8w] 27/2/2019 07:41

Thanks for your overview of the industry MT.

[mount teide] 26/2/2019 21:14

8W - I thought the board was well led by Alan Marsh during the recovery/boom stage (2001-2008) of the last shipping market cycle and weathered the global financial crisis as a result of their diversification. However, after Alan stepped down the new team failed to manage the albeit far more challenging decline/recession stage of the market cycle well, and made a major error in electing to take an overweight exposure to the oil sector(ship-broking and services) just prior to it going into free-fall when the oil price collapsed to circa $30.

Clarkson's took a different approach, largely i believe as a result of the input they received from a number of very high quality executives with long and distinguished shipping industry backgrounds like Dr Martin Stopford.

Clarkson's elected to diversify away from the boom and bust shipping market cycle by expanding into new sectors like port services, agency, freight forwarding, supplies and equipment for the marine and offshore industries. This had the effect of helping to insulate the company from the worst effects of the last shipping market cycle - which broke some all-time records for the size of the market falls across many shipping sectors ( the BDI for example fell an astonishing circa 98% between 2008 and 2016 ).

[8w] 26/2/2019 19:30

MT. Yes couldn't agree more, thinking back to when the company first came to my attention they were feted as having good management noticeably by Lord Lee I think. Share price was rising, Takeover of AMCG (?) BMS shares were valued at 500p. I must have taken my eye off the ball. Has the board undergone significant change?

[mount teide] 26/2/2019 13:48

8w - they are not shipping people which counts for a lot in a niche industry where specialist knowledge and huge experience of the long-term shipping/commodity cycle is extremely important.

[alfred] 25/2/2019 19:41

Time for a change in management. It's overdue.

[8w] 25/2/2019 13:09

Sold 80% of my holding here, a few days ago. Realising a loss, Maersk not happy with 2019 outlook. Been a big disappointment. It looks like faith in management to effect a turnaround on the upward cycle was misplaced.

[mount teide] 05/2/2019 09:47

A historic three year comparison of the BDI, Clarksons and Braemar's valuations tells its own story - one largely of management incompetence.

+113% - BDI
+31% - Clarksons
-57% - Braemar

Since the BDI finally made a bottom in Q1/2016 after an 8 year period of falling ship charter rates, contrary to the overwhelming majority of the shipping industry Breamar's shareholders have continued to see a steep deterioration in its valuation.

[rivaldo] 28/1/2019 13:50

I've mot been a holder for some time, and am unlikely to be for a while yet....but FYI Stockdale have reduced the current year forecast to only 16.3p EPS, and will review forecasts going forward after the results in May.

[pireric] 26/1/2019 11:22

"While costs have been reduced, the results are now expected to be £1m below expectations. We have reduced our group FY2019E PBT forecast 29% to £6.7m" - Stockdale securities

I don't have the updated forecasts as yet

[gargoyle2] 26/1/2019 02:15

boonkoh, pireric, do you have any detail on these apparent broker downgrades? Thanks in advance.

[pireric] 25/1/2019 20:23

Technical division with the issues, which is very levered, so definitely negative. As boonkoh says, broker downgrades to forecasts today are big

[speedsgh] 25/1/2019 09:09

I would tend to agree with boonkoh. If overall performance had been positive, you can be pretty sure they would have been shouting from the rooftops about it. Seeing as they're not, I would take that to mean that they haven;t got much to shout about or, worst case, they're afraid to be open about the full picture.

Looks like we'll have to wait for the Pre Close Trading Update in March and Preliminary Results in May for more meaningful information.

[spooky] 25/1/2019 09:01

Management performance at BMS is shocking in my opinion and has been for several years. Todays announcement sums it up in many ways, totally lacking in an any clarity whatsoever.

[boonkoh] 25/1/2019 08:52

Trading uodates should have statement about performance overall and market expectations. This has neither. Looking like management is trying to hide something. One broker has downgraded FY2019 PBY by 26% I believe this morning.

[cwa1] 25/1/2019 08:14

Well, I'd go for it being a slight positive overall......however the market seems to think differently! Hey ho.

[edmundshaw] 25/1/2019 07:57

Well is that a good update, a so-so update or a weak update? Kind of hard to tell with no overall picture of performance, just some qualitative blurb about the separate divisions...