Global Oceanic Carriers Share Discussion Threads

[saucepan] 26/9/2007 08:32

A breakout on the cards? The bid has just moved up to create the smallest spread I have seen since I started following this stock.

[ziga2] 21/9/2007 07:23

thank you courant. I think of it as a bond with a certain risk profile where there is all about cash.worth investing into it, but investor has to be able to holding it to maturity.

[tuckswood8] 20/9/2007 21:27

From website today


"Global Oceanic Carriers Ltd. to Present at the Jefferies Shipping Conference in New York
20 September 2007

Global Oceanic Carriers Limited (AIM:GOC), a global provider of marine transportation services for dry bulk cargoes, announces today that, the company's Chief Executive Officer, Mr. Michael P. Tartsinis, will be presenting at the Jefferies Fourth Annual Shipping Conference, which will take place in New York City on Wednesday, September 26, 2007.

A live audio webcast of Global Oceanic Carriers' presentation will be available on the Jefferies website at A PDF version will also be available on the Global Oceanic Carriers corporate website at www.gocarriers-ir.com in the Investor Relations section."

[courant] 20/9/2007 15:38

Yes and no. I do take your point, but I think both GOC and GLBS are attractively valued (sufficiently so for me to hold both in roughly equal measure). It's always tricky trying to apply static valuation metrics to historic data that is changing so fast. GOC is doing very well now with EV/EBITDA around 6.5, GLBS less so at 12-ish currently, extrapolating Q2 earnings. However, GLBS is all about going forward and what they can secure in the coming months, and this should be very interesting indeed. GOC is hard pressed to expand without a placing, which will dilute figures. Which means they're cheap now, cheap next year but then a little reliant on a continuing strong charter market to grow earnings 2009 and beyond. Fine, it's just a different risk profile. If GLBS can secure 3 year charters for their 4 ships at decent rates, it'll be a super-attractive proposition.

Forward vs actual - it's the eternal investment debate! Remember though, that GLBS should be paying a dividend easter 2008 around 10p a share. It's not all jam tomorrow.

So, slightly different, but both v.cheap in their own way, IMO.

Courant

[cb7] 20/9/2007 14:37

courant, thanks for that read and your hard work. Your comparison seems to centre on 08 earnings estimates, ie 54 for GLBS and 22 for GOC, but these are not alike as GLBS' year end is 12/08 and GOC's is 05/08... 7 months earlier, which means (hopefully) payback sooner for us shareholders. In fact only 4 months after GLBS's 08 figures are released, (I'm guessing at late March), GOC will release their 09 figures (late July), which should be well ahead of 22. Hence GOC seems the much better bet to move higher in a quicker time frame.

[courant] 20/9/2007 13:45

I just posted a review of the UK dry-bulk shipping sector (including GOC) on The Motley Fool:



Regards,

Courant

[scburbs] 12/9/2007 09:32

GOC has 3 redeliveries due next year in May 08, June 08 and November 08.

Can anyone tell me when they usually start negotiating new contracts when old ones are close to expiry. Are they able to negotiate these now to take advantage of current rates?

[davebowler] 11/9/2007 12:36

More good news from the sector today;

Shipping company Goldenport Holdings Inc reported a 48.8 pct jump in net profit for the first half helped by a recovery in the dry-bulk market and significantly higher rates for bulk carrier charters.
Goldenport's net profit increased to 32.3 mln usd from 21.7 mln usd as
revenues went up 44.5 pct to 57.5 mln usd.
"We remain confident on the outlook of the dry-bulk and container markets
for 2007," chief executive Paris Dragnis said in a statement.
The company's fleet is favourably positioned to take advantage of the
booming dry bulk and container markets and to strongly support its financial
performance in 2007 and beyond, he added.

[davebowler] 11/9/2007 12:34

I wonder if the increase in second hand ship values was factored into the recent NAV calculation carried out by Jefferies on July 13th?
Their assessment was that it traded at a discount to its asset value then.

[david77] 10/9/2007 19:12

Copied from the Caledon Mining CDN thread:

bodg - 10 Sep'07 - 05:24 - 14576 of 14578

Bulk carriers ride rising freight wave

The skyrocketing of dry bulk rates, largely fuelled by strong Asian demand and Australian port congestion, is the strong driver for the record new highs in bulker prices.

Santanu Sanyal


An Indian shipowner engaged in dry bulk transportation would like to acquire a Supramax bulk carrier but finds the price prohibitive.

The going rate for a five-year-old Supramax is around $65 million. The same owner had bought a three-year old Supramax two years ago at around $30 million. The resale price of a Panamax newbuilding is currently more than $80 million while the contract value of the same ship is $41 million. A 10-year old Panamax has a premium of $10 million compared to a new building. “The market now is virtually on fire,” say shipping industry sources, pointing out that “in the past one year, second-hand prices shot up by 80 to 90 per cent and the new building by 30 to 40 per cent.”

The virtual skyrocketing of dry bulk freight rates is the strong driver for the record new highs in the bulker prices, according to sources. The spot rates are up by more than 100 per cent from a year ago.

The Supramax freight rates now top $45,000 per day and Panamax rates about $60,000 per day. Between April and August this year, the dry bulk freight index jumped more than 1,200 points and between August 24 and September 6 by nearly 1,000 points.

Factors fuelling jump

The jump, according to analysts, has been fuelled by strong Asian demand and Australian port congestion. The strong Asian demand again is largely due to the growth of the steel sector pushing up the demand for iron ore and coal. Global steel production in the first half of 2007 increased by 8 per cent, global iron ore trade by 10 per cent and Chinese steel exports by 70 per cent from a year ago. The global coal demand is up six per cent since 2002 and the steam coal trade by 6 per cent.

The forecast is that there will be 6-7 per cent annual growth in coal demand through 2011 as China, India and the US will see rapid growth and the Japanese imports too will rise due to nuclear problems.

Port congestion, particularly in Australia, currently blocks an estimated 6 per cent of the fleet, and experts say the problem will not fully disappear in the foreseeable future. From 2008, the extent of congestion will come down a little but remain fairly high till 2011.

Go for buys

In such a situation, according to experts, ship-owners should go for an acquisition, even if it is a high-cost one. In the present market, the five-year-old $65 million Supramax can be fixed at $50,000 per day, yielding $16 million annually. Even if the market dips after a few years, the ship, with a normal useful life of 20-25 years, will still have many years left to earn enough not only to cover the cost but also to generate surplus.

A 17-year-old Panamax was recently fixed at $53,000 per day. If the net earning is $48,000 per day, the ship will earn $17.2 million in one year. It is possible to get a three-year deployment for a five-year old Panamax at $30,000 per day, yielding a total of about $33 million over three years.

[lonrho] 10/9/2007 17:03

its difficult to raise the funds for mbo's at the moment even for low p/e companies.

[courant] 10/9/2007 17:01

Robsy,

Simply put, GOC need access to capital markets to raise money for further vessel acquisitions. The easiest and most efficient way to do this (bearing in mind they're aiming to keep the debt/equity ratio at a sensible level) is to remain a publicly listed company. Also, who's to say they have a spare 20% cash lying around with which to buy the other shareholders out??!! Listen to the recent results webcast (on their website) for a better feeling of where the company is going. I think if they bought out the remaining shareholders, they'd have to offer a price at least as good as their last purchase price, which is around 118p AFAIK. Please correct me if this is wrong, but I think that puts an effective floor under the share price (from a buyout point of view).

Courant

[robsy2] 10/9/2007 16:50

Nice thread , this looks interesting but there are a few questions.There is talk of buying new ships,How are they going to finance the purchase of new ships?
If the share is as cheap as it looks then why don't the majority shareholders just mop up the other 20% of the shareholders at the current low sp? Almost suspicious not to..... If they did decide to buy the minority shareholders out how would it work? What are the restrictions?
I'm trying to understand why this share is half as cheap as its peer group, which is cheap anyway vis a vis the market.

[courant] 05/9/2007 16:49

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!

Courant

[ziga2] 05/9/2007 14:54

Or they need to serve their personal loans :)

[ziga2] 05/9/2007 14:53

I would be careful to grow at the peak of the cycle. But peak might be few years away.

There are also dividends. They need cash and they will start with dividends. In my simple way it does not make sense (it makes me feel like manipulation (of SP) going on).

hvala

[courant] 05/9/2007 14:39

Dober dan!

In which case, (with my simplistic hat on!) why didn't they take it private after the management reshuffle and pay half price? And why bother putting on very decent financial PR and revamping the website, just to take it private? This all says way more about intentions than anything else!

Also, where would they get the money from (assuming the majority of their wealth was tied up in GOC)? Taking on more debt would really not be a sensible move, as it lays them open to the risk of bankrupcy.

A high share price is something they can wait for, they don't need the funding urgently at all, unless there are more attractive purchases lined up.

Courant

[ziga2] 05/9/2007 14:29

I am from balkans and we from south see it simplistic which it is.

[ziga2] 05/9/2007 14:28

Then they need high share price. Low float, low valuation, easy to pump. Good for longs.

[courant] 05/9/2007 14:25

ziga2,

List to the recent results webcast - there are plans to raise more capital in the autumn, in order to reduce debt. I sincerely don't think that GOC will be taken private.

Courant

[ziga2] 05/9/2007 13:54

In the situation - 80 % of the company being private it does not have sense to be public at this share price It makes sense to take it private on the cheap. The only utility of beeing public is rising capital on capital markets. And this is on the cards - taken private or growth by issuing bonds and shares (less chance).

[davebowler] 05/9/2007 12:42

Big volume.

[cb7] 05/9/2007 11:21

a buy signal was given about 5 days ago and i doubled my holding then. I topped up yesterday too as momentum gathered. As you say it seems a bargain, but maybe its about to be tipped in Shares or IC

[saucepan] 05/9/2007 10:50

The expressions "wind in its sails" and "getting up a head of steam" come to mind in the context of observations of the share price behaviour this past few days.

I do not know what is driving momentum, other than the fact that GOC is significantly undervalued IMHO. Others waking up to this, or something else afoot?

[rafieh] 31/8/2007 23:07

The shipping companies are doing well across the board. I saw this article today about Excell Maritime Carriers, which is incidentally a Greek company too. The shares ,which are listed on NYSE, jumped more than 10% today.
Parts of the articl is not directly relevant to GOC, but generally gives good insight to the current state of the industry:


Investor's Business Daily
Greek Shipping Company Helps Satisfy Chinese Appetite For Coal
Wednesday August 29, 7:00 pm ET
Brad Kelly


China dethroned the U.S. last year as the world's largest emitter of carbon dioxide, a Dutch policy group reports.
Some blame the greenhouse gas for what they call global warming.

This is due in large part to China's heavy reliance on coal-fired power plants. The nation opens about one plant a week, according to China's State Environmental Protection Administration.

Coal makes up almost 70% of primary energy use in China vs. a world average of less than 30%, the agency says. The country consumes more coal than Europe, Japan and the U.S. combined.

China, once one of world's biggest coal exporters, is now a net importer.

Excel Maritime Carriers will be one of the many dry-bulk shippers transporting coal to quench the energy thirst of the world's most populist nation.

The key driver behind dry-bulk shipping growth over the past 10 years has been rapidly growing global iron ore and coal trades, says analyst Douglas Mavrinac of Jefferies & Co.

Coal Growth

In 2006, coal and iron ore, a key component of steel, accounted for 48% of the total dry-bulk trade of 2.83 billion metric tons, according to Clarksons Research Services. The firm tracks figures of the seaborne trade industry.

Also, India and the Philippines have put export taxes on their coal reserves in order to save enough for their own energy demands.

This forces China to import coal from places farther away, such as South and North America.

It is more expensive for the customer, but more lucrative for dry-bulk carriers like Excel (NYSE:EXM - News).

"Given Chinese electricity consumption outpacing domestic coal production gains," Mavrinac said, "East Asian coal-consuming nations will increasingly rely on coal from more distant suppliers, resulting in ton-mile demand expansion."

Excel's fleet of 16 dry-bulk vessels, 10 panamax and six handymax, benefits from longer shipping routes. The Greek shipper is also operating in a market hitting record-high day rates for use of its vessels.

The two most common forms of shipping in the dry freight trade are time charters and spot charters.

Under time charters, the customer rents a vessel at a fixed daily rate for months or years and pays all voyage-related costs. Spot rates charge for a one-way delivery to a certain destination.

Ship owners play the spot market when they expect rates to remain stable or improve. And analysts say rates are hitting all-time highs.

Excel prefers stability, Mavrinac says. Its strategy has been to sign long-term contracts. Some of its charters have expired and are up for renewal.

Timing, as they say, is everything. Whether Excel signs a ship to a long-term contract or a spot charter, it will take advantage of today's higher day rates.

Mavrinac says a panamax, the second-largest dry-bulk ship, can fetch up to $58,000 a day for its services. The smallest dry-bulk vessel, the handymax, charges $46,000 to $48,000 a day, he says.

Excel typically signs 75% of its fleet to long-term charters. The other 25% take advantage of the spot market.

"We increased our charter coverage to 53% of our fleet operating days for the second half of 2007 and 40% for the full year 2008," Chief Executive Christopher Georgakis said in the second-quarter press release.

"(We're) locking in strong rates and predictable cash flows for the longer term," he said, "while with the rest of our fleet will continue to take advantage of spot market opportunities as they arise."

Excel says second-quarter earnings tripled to 69 cents a share ex items. Analysts polled by Thomson Financial expected 57 cents.

Revenue rose 40% to $37.3 million. Excel says its vessels earned an average time charter rate of $25,142 a day, up 43% from last year. That average reflects rates that Excel signed onto two years ago.

"It was a stellar quarter, despite the company having to dry dock four or five vessels," said analyst Grant Hopkins of Ferris Baker Watts. "It's impressive to achieve those rates with part of your fleet out of service during the quarter."

Dry docking is an industry requirement. Ships must undergo dry-dock repairs twice every five years.

Hopkins says another major factor helping Excel is that dry-bulk trade volume will outstrip the incremental tonnage, or ships, hitting the market by the end of this year.

"The supply of new ships is constrained by worldwide shipyard capacity, which is so heavily booked today that some new orders won't be delivered for a few years," Hopkins said. "Excel will be able to capture higher rates, which are likely to increase through 2007 and 2008."

Clarksons Research forecasts total dry-bulk fleet capacity to grow 6% to 395.3 million deadweight tons in 2007, before slowing to 5.6% in 2008. The firm sees the total bulk trade rising 4.8% to 2.97 billion metric tons by the end of this year.

In 2007 alone, demand will outstrip supply by the equivalent of 55 panamax vessels.

Also fueling demand is port congestion; 9% to 10% of the ships waiting to be loaded or unloaded at international ports are tied up, Hopkins says.

"A lot of this is in Australia and Brazil, where ports have trouble handling the larger vessels," he said. "But delays don't affect bulk shippers, because customers are on the clock under time charters while ships sit idle in port."