Globus Maritime Share Discussion Threads

[xdavid] 16/10/2007 01:18

"10 x 2008 forecast eps"...

That would put GLBS at around £10 :-)

[darlocst] 15/10/2007 15:50

CEO of DryShips (DRYS) Nasdaq listed greek based dry bulk shipping company, was inverviewed on CNBC around an hour ago.

Very bullish on current market, believes it has further to go. Looking to expand by buying second hand ships, 1-10 years old. Sees no slowdown in the market for the foreseeable future. Still sees a decent return from accquiring those 2nd hand ships/

DRYS share price is up 600% this year & is trading around 10x 2008 forecast EPS.

[sandlab] 12/10/2007 16:09

Is it possible to correct the heading from "Globas" to "Globus", just in the interests of universal harmony ;-)

Pedantic Pete.

[alter ego] 12/10/2007 15:55

generalcuster, thanks for reply. I asked because the ratio of NAV to price amongst the peer group GLBS compared itself with (in the Jefferies presentation) ranged from 0.7 to 1.3 with GLBS at 0.9 and this did not seem to make GLBS especially out of line to my mind. Courant, when he first drew my attention to this stock also likened shipping companies to property companies so it set me wondering if the normal earnings/price relationship would hold true here. I tend to agree with your view that asset backing is important (and it helps that second hand ship values are rising). At the same time I find it difficult to see how a high yield/low p/e can be subordinated to the NAV. Anyway, I'm new to this category of investment so it will be a learning curve as time passes. So far so good.....(I wonder if your namesake ever said that) alter ego

[generalcuster] 12/10/2007 14:07

alter ego

i think NAV is important to this stock given it is new without much operating history so investors like to know there are some solid assets backing up its share price. however, given that most of its vessels will roll-off below-market charters in during 2007 and 2008, and with 2 new vessels to be delivered, the chances of locking in new charters at very high levels is good.

So as long as the BDI remains strong I believe that we will see this stock continuing its upwards momentum. I think forecast eps will play a more important role than NAV valuations for this stock. I also suspect that there will be a follow-on offering in due course to take advantage of the strong market and increasing investor awareness.

[saucepan] 12/10/2007 12:07

Long GLBS - to add to my GOC interest in shipping. Some great research, Courant. Thanks for sharing.

[m.t.glass] 11/10/2007 14:53

Ianwc - could you add the company website to your header? Always useful - especially when the advfn data page omits to give it. Ta.

[alter ego] 11/10/2007 14:41

Charter rates continue to rise according to Fernleys latest report


Handimax's
"We see takers willing above usd 60,000 for 12 months and usd 54,000
for 2 years."

Panamax's
"Several 1 yr fixtures reported at very high usd 70,000
level, and rumours that 1 yr is fixed at usd 80,000, 2 yrs fixture reported at
usd 65,000, and 3 yrs reported at usd 57,000."

New charters for GLBS at anything like those rates would surely make todays share price look v cheap unless NAV is more important than earnings. Anyone have a view on this?

[m.t.glass] 11/10/2007 09:43

In today's Telegraph:


"..One London broker said the price of the biggest ships had risen to $227,000 (£112,000) a day compared with $137,000 as recently as August. He said a similar charter a year ago would have cost as little as $60,000 a day.

Fast-rising shipping costs are the result of soaring demand for the building blocks of industrialisation and supply bottlenecks due to port congestion and a shortage of suitable ships. Soaring day rates have been translated into sharply higher values for ships and the companies that own them. One Capesize ship was reportedly ordered from a shipyard at $82m in February, re-sold before it was built for $90m in April and then again three months later for $120m.

Dryships, a Greek-based and Nasdaq-quoted dry bulk shipping group with a fleet of 34 vessels, has seen its shares rise six-fold since the start of the year from less than $20 a share to $117.8 yesterday..."

[alter ego] 03/10/2007 12:17

Thanks for the explanation Courant. I'm not as bold but have a small bet riding on glbs so I'm keen to see if I can justify increasing my stake. Another look at the latest presentation shows that management intend to achieve an average day rate of $33k (note 2 on page 8). Assuming 345 charter days per year, this gives earnings per share of approx £1. Assuming a 50% dividend this produces a 2008-9 p/e of 4.5 and a yield of 11.1% at the current buy price (£4.50). This may be a little optimistic but it confirms Jefferies forecasts and I think there's a good margin of safety even if earnings come in a bit lower.

That's good enough for me and I've doubled my holding. good luck to us all. alter ego

[pip_uk] 01/10/2007 16:18

Have joined the party today, and look forward to seeing our investment prosper.
I must admit I know nothing about shipping, so it`s a learning curve for me.
Thanks Courant, it was your post on Fool that got me doing some research,and I like what I see.
As long as China and world trade keeps expanding, the future for Global looks excellent.
Regards.
Pip.

[courant] 01/10/2007 10:12

I'm not necessarily more optimistic, I just worked back from the Jeffries forecast to work out what that might imply about the charter rates.

All I did in the Fool post was work on conservative assumptions and came to the conclusion that something like 600p might be fair value. Clearly, if those assumptions are exceeded, then the shares are even cheaper.

The reason I can believe those rates (37,000 and 42,000) is that they are consistent with actual contracts being agreed in the marketplace, such as those reported here:



The time charter rates in the graph on page one and the report on page two suggest daily rates of 78,000 for a panamax and 52,000 for a handy. OK, chop off a bit because this assumes new ships (say 15%), and chop off a bit more because GLBS would be looking at charter periods longer than 5 months (say another 15%). You're then left with 52,000 * 0.7 = 36,400 and 78,000 * 0.7 = 54,600. So, not too extreme, although clearly I would base any investment decision on rates far below that to allow a margin of safety.

Further vessel acquisitions also can't be ruled out - certainly GLBS is less geared than some of its peers and this gives it flexibility.

Either way, I've piled in and GLBS is now geting on for close to 30% of my small-cap portfolio. For me, this is a rare move, I'm normally much more diversified!

Courant

[alter ego] 01/10/2007 09:50

Hi Courant, like you, I find it hard to believe they would effectively endorse Jefferies numbers without also believing they were correct. Management have also talked about acquiring more ships so is that part of the justification? Incidentally, the charter rates you've just suggested would get pretty close to the earnings implied by the forecast yield. They are a lot higher than the rates in your Fool post though so what's made you more optimistic? regards, alter ego

[courant] 30/9/2007 19:38

There was a mention in the recent presentation that they planned on renegotiating the contract on a handy Coral Globe, which was due to run until Jan 2009 at a rate of only USD17,000. Whether this is realistic or not, I don't know. But surely they wouldn't present this to a collection of shipping owners and analysts without it being believable? It chimes with a comment, i think out of the CapitalLink Dry Bulk webcast, that some charterers were very keen to sign long term contracts even at today's rates. I guess the trade-off is:

a) pay a discount for a year and then (potentially) lots later.

b) pay a higher price now but lock it in for longer.

It's quite foreseeable that a charterer might favour option b, if their own forecasts are for continued strength in the charter market. Personally, I'd also take option b as a shareholder, more return now at lower risk and greater visibility. A win-win situation?

In which case, implied charter rates would be around 37,000 for a handy and 42,000 for the panamax.

Courant

[alter ego] 30/9/2007 17:39

I'm having trouble believing the forecast eps based on the fleet as it stands (inc ships on order). Even very optimistic contract rates don't provide the earnings implied as some existing contracts run on into next financial year at much lower rates than might be achieved on new contracts. Does anyone have access to Jefferies assumptions?

[slapdash] 28/9/2007 11:00

oh right... jsut gives P/E rati and I guess you have worked back from that..

Slapper

[courant] 28/9/2007 10:49

Slap,

Page 16.

Regards,

Courant

[slapdash] 28/9/2007 10:43

xdavid - I can't find the forecasts for 2008 in the presentation. Which page is it on????? I can find the dividend yield forecast but not the earnings forecast...

Slap

[xdavid] 28/9/2007 08:59

From the updated figures from above pdf doc...

taking £:$= 2:1

2008 e = 97p
2008 divi = 48p

So for reference, at a share price of £5 (10% above where it is at writing), you have the following...

PE (2008) @ £5 = 5.15
divi @ £5 = 9.6%

[alter ego] 27/9/2007 07:43

Thanks Courant. Investor presentation dated a couple of days ago now available at
which makes interesting reading and gives expiry dates of 2/08 for both the Ocean and Lake ships with Tiara and River (which is a slightly bigger Supramax) available 12/07. Dates given on company website which I referred to must be out of date.

[courant] 26/9/2007 20:19

I think it was the interims that gave the earliest and the latest redelivery dates. Given current spot and time charter rates, GLBS's customers be mad to give their ships back early, so I'll take the latest date!!!

Courant

[alter ego] 26/9/2007 12:02

Courant, great post on the Fool - thanks for the effort, much appreciated. Just one query. Looking at the company website
it says the expiry dates for existing contracts are
Ocean Globe 12/07
Lake Globe 11/07
and the earliest expiry of the others being the Coral Globe due to end in 10/08
with the new ships Tiara Globe and River Globe due for delivery in 12/07.

I know the dates are the earliest possible but where do you get your dates from as they don't tie up at all with the dates the company gives?