Global Oceanic Carriers Share Discussion Threads

[davebowler] 29/8/2007 16:35

moneyjam;
Thursday, July 26, 2007

Following previous difficulties, Greek-based shipping company Global Oceanic Carriers (GOC:AIM) is now storming along and has expanded its fleet to seven vessels after acquiring a Handymax vessel charter-free for $37 million.

The vessel, built in Korea in 1994, was purchased from ABG Shipping and will be renamed M/V 'GO Friendship'. It is due to be delivered in August 2007 and the acquisition will lower the group's fleet average age to 16 years.

The company plans to finance the purchase with banking facilities. 'Consistent with our strategy of seeking long-term employment for our vessels, we have secured for the M/V 'GO Friendship' a three-year time charter with Samsun Global Corporation, a first-class charterer, expected to generate approximately $29.4 million in revenues for the duration of the time charter,' says chief executive, Michael Tartsinis.

Back in June the group also announced it had entered into two agreements to acquire two Handymax vessels due to be delivered in August and October. The group's fleet now includes one Capesize, two Panamax, three Handymax and one Handysize vessel.

Global Oceanic listed on Aim at the end of May 2005 and was almost immediately hit by a decline in the dry bulk market, while charter rates were adversely affected. However, the market has since been recovering and shares in Global Oceanic have had a storming run so far this year, doubling since January to 120p.

Shares says: The stock has become increasingly attractive and although still vulnerable to economic downturn, growth potential remains strong

[courant] 28/8/2007 09:39

David,

Yes, that is interesting. I had a peek at the BDI graph last week and there's no sign of a slow down there! (Of course, it's an index of actual done deals by people wanting to transport their goods, so it's not an index which could be prone to speculation). The interesting figure in the report is the current rate for a Capsize charter, $118,400. That's a significant premium to GOC's current rate for it's Capesize charter (and GOC is making good money too). If the BDI holds up at this level come the time for charter renewals (May & June 08), there should be a significant profit boost. Or indeed, this must be an attractive period in which to buy a new ship and secure a long term charter at favourable rates. GOC commented that it could buy ships on a 15-20% yield - this must be higher now.

Remember, this is on a 2008 forecast PE of 5.4 and yield potentially as high as 9.8%. It's very cheap indeed.

Courant

[david77] 25/8/2007 20:26

Good news from the Telegraph:

Do freight rates tell the true story?
Last Updated: 12:53am BST 25/08/2007

The focus has been on the credit crunch but the Baltic Index may give a better picture of the state of the world economy, writes Ambrose Evans-Pritchard

The cost of leasing cargo ships to carry coal and metal to China reached an all-time high this week, defiantly ignoring a month of panic and tumbling prices across the commodity markets.

More on

[saucepan] 07/8/2007 11:46

Slapdash: thanks for your comments. I remain sanguine and believe that patience will be rewarded. After all, GOC is still below its issue price; yet seems a much-improved company now.

I don't think it will be too long before management have more good news to announce.

[slapdash] 07/8/2007 09:52

well this hiatus is frustrating.. put simply no interest has been generated and these look set to languish... I suppose the general market is down 7% or was at one point so we shoudl be grateful..

Slapper

[wilddonkey] 06/8/2007 23:11

It doesn't matter if the big guys buy this share or not really. If the board really do have the intention of spending up to half the profit as dividends then this company will be yielding up to 12%; do that for a few years and the share price will at least double (plus dividends while they wait), regardless of whether the big boys join the party.

My main concern is that any growth (either as debt for equity, or worse and potentially disastrously, bank loans) in shipping capacity is coming at a time of record ship prices and when there seem to be ripples of panic beginning to spread on the global market.

A drop in the global economy will see ship prices drop significantly, and give other companies the chance to buy ships cheaper, and undercut GOCs margins at a time when the baltic rates would be dropping - that could hammer the price.

I think i'll buy a few, and keep a large chunk of powder dry to pick them up if they get dragged down (as long as additional bank loans are not undertaken).

[slapdash] 06/8/2007 21:23

Saucepan - trouble is althought the discount is interesting and compelling it doesn't mean it will change... smaller companies are usually at discounts to the larger companies... I mean microcap - say below £100m... the mid caps are currently rated above the small caps and above the large caps...

the guys that buy Clarkson just won't buy a small company like GOC..

slapper

[tinker] 02/8/2007 09:17

WildDonkey

Actually it's 48% which is even better.

I've also seen the 35% figure quoted but can't find it this morning. It needs to happen though as currently 79.3% of the shares are held by two shareholders, Solstice and Tildough. Since the market cap is only 49m, this means that less than 10m worth of shares are available on the open market which is nowhere near enough to interest the institutions.

Possibility of a placing in the not too distant future IMO.

[wilddonkey] 01/8/2007 21:17

henryatkin,
thanks for your response. Where did you hear that the directors are intending to reduce their holding to around 35% by debt for equity issues ?

Btw GiddyGoat, it said in the slides that there was already 43% of fleet days prebooked for 2009, which is not bad imo.

[saucepan] 01/8/2007 17:51

Very good results announced yesterday, IMHO.

The only disappointment for me was the company's stated dividend policy is only coming into effect with the commencement of the new financial year - but perhaps that was always the intention and my misunderstanding to expect anything other than that.

I found the webcast very informative and impressive.

The following slide was the highlight for me, illustrating how GOC is arguably undervalued compared to its peers. Even if the share price only goes part way to making up the disparity in the near term, which is not unreasonable, it should do well.

[ziga2] 01/8/2007 13:19

todays FT: consolidation looms in bulk shipping

[h d shoring] 01/8/2007 12:19

Will not be small for too long the way these guys are moving .

[slapdash] 01/8/2007 10:18

shipmates - I had a look at their presentation and it does appear to confirm the large discount this company has... It is on one of their presentation slides......

I think it is on about 6.5X vesus about 10X for the bigger companies in the same space...

However, small companies do have a discount..

Slapper

[henryatkin] 01/8/2007 07:42

WD, I suppose it depends on your timeframe outlook for global economy expansion. They state that they have seen a major shift from the old shipping industry to a new age industry with new countries joining in the import/export market for dry bulk. How long does this go on for 2yrs, 5yrs, 10yrs? The longer it goes on the better the decission to buy now. China is buying a lot of african resouces that will need regular shipping. The company is still going to buy 10-15 year old vessels which they claim is the economically most efficient age to buy so they are at a competitive price advantage to all the operators of those new vessels that are on there way. The eventual debt for equity they are aiming at is to reduce the Director holding to about 35% so that equates to about a 55% reduction in their stake and yours and mine. But that has to looked at against the profit upside that the new equity will provide. To date that has proved to be very good and transparrent. If they can keep that record going I will be more than happy. The company also state that they are to make presentations to institutional investors in the comming weeks. My concern is at what price the new issue will be, but I guess the directors have a lot more to loose than I do.

[wilddonkey] 01/8/2007 00:07

You can access the webcast and conference call via:


The very last question in the conference call asked when the next debt for equity swap was going to happen, and the answer was September, I guess this means they are going to be buying more ships at a time when prices (according to their own presentation) are at record highs and there's a large number of new ships on the way. Is that a sensible approach ?

I can see them starting on this high dividend this year, continuing for maybe a year, then rates begin to drop and the company is left holding a lot of debt plus then announcing it's going to have to cut the dividend to cover the debt. Could get messy.

Incredibly low forward PE though.

[slapdash] 31/7/2007 20:03

well frieght rates according to FT today at a new high.... shiver me timbers...

Slapper

[h d shoring] 31/7/2007 20:01

This usually takes a couple of days from announcement to share price action so think we might look better by weekend .

[lonrho] 31/7/2007 15:56

brokers forecasts put it on just over 3 for 2008,see papal power thread link above.

[slapdash] 31/7/2007 15:49

Is ths definetely on 5X next year??? Maybe that was before the placing/rights issue...

Slapper

[slapdash] 31/7/2007 14:24

full steam ahead me heartys.....

[papalpower] 31/7/2007 14:17

Added to the "Stocks with Low P/E" thread today :



.

[slapdash] 31/7/2007 11:23

Aye Aye Captin... keep those ships moving.. slap

[rafieh] 31/7/2007 11:04

Judging by the share price behaviour over the last few turbulant days, I get the feeling that those who are currntly holding have no intention of selling at these levels. Bearing in mind the lack of liquidity in this stock, any half decent buying activity will therefore result in significant rise in the share price

[lonrho] 31/7/2007 10:42

just topped up with 8,000 at 1.25.These are way too cheap but at least they are going in the right direction.