Ocean Wilsons (holdings)... Share Discussion Threads

[aracaju] 22/12/2019 12:50

Here is a report from JOC.com, a year old but it explains what is going on between shippers and container ports.

Five Brazil port terminals eyeing sales, more investment

Rob Ward, Special Correspondent | Sep 30, 2018 3:32PM EDT

Brazil Exports: Five Brazil terminals eyeing sales, additional investment


Five key port terminals in Brazil are up for sale or in search of new investors, and their sales could further concentrate terminal ownership in the country — something that, if certain circumstances lined up, could lead to higher rates for shippers. The terminals’ estimated combined value is 3.1 billion reais ($764.8 million) to 3.3 billion reais.
Wilson, Sons group is rumored to be trying to sell two container terminals — Tecon Rio Grande (TRG) in the country’s far south and Tecon Salvador in the northeast — with an estimated 1 billion reais to 1.2 billion reais price tag for the pair.
TRG is Brazil’s fourth-biggest container shipping port and it handled 760,900 TEU in 2017, up 5.8 percent from 718,500 TEU in 2016. It boasts a roughly 1.2 million TEU in annual capacity. Tecon Salvador is Brazil’s seventh-largest port and is the sole option in Salvador. It handled 301,129 TEU in 2017, down slightly from 302,354 TEU in 2016. Tecon’s annual capacity is about 500,000 TEU.
The other three terminals for sale or in need of investment are general cargo/container Terminal Santa Catarina (TESC) in São Francisco do Sul; Libra Rio, a small container terminal owned by Libra Terminais; and Pontal do Paraná, a new 2 million-TEU-capacity project on the outskirts of Paranaguá, which is looking for investors to commit 1.5 billion reais in a greenfield site. Shareholders are keen to sell TESC, valued at 300 million reais; TESC lost its container business when Itapoa, 70 percent owned by Hamburg Sud/Maersk Line, opened in May 2012. Meanwhile, Libra Rio is valued at 250 million reais to 300 million reais.
The status of Brazil's independent port operators
“It’s becoming more and more difficult for the independent Brazilian port operators to make a profit because of the continuing concentration of the shipping lines,” said Robert Grantham, director of Navegantes-based consultancy Solve Shipping. “Therefore, Wilson, Sons and Libra have sensed an opportunity to cash in their assets while they still have some value to prospective buyers, be they units connected to shipping lines and international terminal operating companies.”
Several consultants and banks have been brought in to evaluate the two Wilson, Sons terminals, including São Paulo-based BTG Pactual investment bank, and several JOC.com sources said that a number of international port terminal operators are showing a keen interest in the potential sale/tie up. DP World has already had discussions with Wilson, Sons directors, one source told JOC.com.
Among the other international operators showing an interest are Hutchison Port Holdings and PSA International, neither of which operates a terminal in Brazil, the economic powerhouse of South America, with more than $2 trillion GDP. DP World (at Santos) and ICTSI (with Tecon Suape in the northeast) already operate in Brazil. Meanwhile, APM Terminals has a presence in Itajai, Santos (a half share of Brasil Terminal Portuaria along with Mediterranean Shipping Co.), as well as a presence in Pecem, and is also rapidly expanding its Terminal 4 facility in Buenos Aires. (It is a favorite to win a new 35-year to 50-year tender in the Argentine capital.)
According to several JOC.com sources, APM Terminals has a keen interest in Tecon Salvador but not in TRG, where it could face market concentration concerns from the TCU, Brazil’s anti-trust body, given its presence in Itajai and Itapoa, in the state of Santa Catarina. (Santa Catarina can also serve the Porto Alegre conurbation of 4.5 million people in the state of Rio Grande.)
CMA CGM is also interested in the two Wilson, Sons assets via its two operating arms: Terminal Link (which has a 49 percent stake in China Merchants) and CMA Terminals. Last year, CMA CGM fulfilled a 20-year Brazil presence goal by buying Mercosul Line, the Brazilian coastal and cabotage carrier, from Maersk Line, and now it wants to further develop its operation via owning container terminals in Brazil.
CMA CGM already has a close relationship with Libra Terminais, the beleaguered terminal operator which is in the midst of a Chapter 11 bankruptcy process and trying to sell off assets, reorganize assets, or attract new partners so that it can survive. In early 2017, CMA CGM switched its east coast South America and SAMWAF services from Santos Brasil to Libra’s Terminal 35 and has since then been drawing up plans to get involved in the operations side with Libra there, and also in Rio de Janeiro.
“It looks very much as though Wilson, Sons is giving up the ghost in trying to compete on its own with the big boys, and the terminals which are connected to the carriers,” said one experienced consultant, who has worked closely with Wilson, Sons group over the past two decades. “It is becoming harder and harder to win liner services, if your terminal is not part of a shipping company — [such as APM Terminals, Terminal Link, and Terminal Investment Limited] — or a multinational stevedoring company like DP World, PSA, or Hutchison, which all benefit from economies of scale and cheaper financing.”
Impact on shippers
However, this constant erosion of players in Brazil and the gradual diminution and disappearance of national companies — such as Triunfo (at Portonave), Odebrecht TransPort (at Embraport in Santos), Libra Terminais, Ecoporto Santos, Rodrimar, and local shareholders at TCP in Paranaguá (before the China Merchants 2018 takeover) — from marine terminal operation may eventually lead to higher costs for shippers as the multilayered ownership of terminals decreases.

Wilson, Sons executives are keeping a low profile, but the company has issued a statement, "Strategic alternatives are being evaluated by the company's board of directors, which may include divestment of such assets and/or attraction of strategic partners."
Wilson, Sons port division has invested a substantial amount in its two container facilities over the past five years and lauded this investment in its internal magazine (NE/WS) earlier this year.
During its 180th anniversary, celebrated in 2017, Wilson, Sons CEO Cezar Baiao emphasized that Tecon Salvador received three rubber-tire gantry (RTG) cranes last year and had spent 397 million reais since it had been inaugurated in 2000. He added that TRG had invested even more, about 130 million reais last year, for three ship-to-shore gantry cranes and eight RTGs, giving Brazil’s southernmost container terminals the possibility of acting as a hub for Mercosur trade cargo (including from Argentina, Uruguay, and Paraguay).
Still, some might argue that the emphasis on terminal operations by a company that operates 100 ships — mostly offshore support vessels and tugs — suggests Wilson is already looking to put its container terminals in the shop window, for a sale or new capital injection.

“With these acquisitions, Tecon Rio Grande can be considered one of the best container terminals in Brazil in terms of equipment, with a total of 22 RTGs and nine STSs [ship-to-shore cranes] capable of serving ships with 24 rows of containers,” said Baiao.
TRG covers 735,000 square meters (879,053 square yards) and hosts 2,000 reefer plugs, one of the highest concentrations in Brazil.
Wilson, Sons also inaugurated a new inland terminal at the port of Suape, in northeast Brazil, which many believed was a first step toward bidding for a new container terminal in Suape, but that goal will become history, if it sells its two box terminals. Or, if the company becomes a partner with a major terminal operator company or ocean carrier, it may lead to a successful bid for Tecon 2 Suape, with the addition of new capital. The Philippines operator International Container Terminal Services Inc. currently operates Tecon 1 Suape.
Contact Rob Ward at [e-mail].

[aracaju] 22/12/2019 12:33

I have not seen anything special relating to Wilson Sons. The IBOVESPA is strong mostly I think following the strength in the US, and the hope that if the China trade deal falters it will improve the prospects for Brazilian agriculture. Cyclically the economy has probably seen the bottom and there is a positive mood. Unfortunately no details were given on the results of discussions to sell the container terminals, but I think in the recent tie-ups between shippers and ports Wilsons has lost out. The volume of shares traded is lower that would be expected if many knew of an impending deal, and the rise may be due to a combination of optimism and a lack of liquidity. A good site to keep up to date is JOC.com.

[pockstones] 22/12/2019 11:50

Aracaju, there have been two meaningful director purchases and some comment Brazil turning up do you see any sign of this since your August post

[galeforce1] 21/8/2019 13:47

Aracaju & varies - many thanks for your replies. Very helpful.

[varies] 19/8/2019 17:40

galeforce
Somewhere in the annual report we are told how the directors decide on the dividend.

If Wilson Sons reduces its dividend, then presumably OCN will too.

[aracaju] 19/8/2019 16:11

There are no indications of anything particularly wrong with Ocean Wilsons in Brazil. It's just a cyclical downturn. The Chinese bought one maritime operator TCP Participações a few years ago, but for the declared aim of their "Belt and Road" initiative Wilson Sons is a better prospect.

[aracaju] 19/8/2019 16:11

There are no indications of anything particularly wrong with Ocean Wilsons in Brazil. It's just a cyclical downturn. The Chinese bought one maritime operator TCP Participações a few years ago, but for the declared aim of their "Belt and Road" initiative Wilson Sons is a better prospect.

[galeforce1] 19/8/2019 15:14

Varies - thanks for your quick response. I think I'm up to speed on the ownership/control of OCN by the Salomon family via Hansa and their personal holdings. I thought they also managed the cash (for a fee) via a business in the CI, but perhaps I'm out of date there.

What I'm less clear about is the operational performance of the business. Is there a problem here or are we just looking at a cyclical down-dip?

Also, do you think the current generous divi is sustainable?

[varies] 19/8/2019 14:40

galeforce1
I have held shares for over 30 years and I suppose my average cost is about 40p.
OCN is controlled by the descendants of Walter Salomon, a banker from Hamburg who came over to London, I believe, in the 1930's. He also controlled Rea Bros (merchant bankers)amongst other companies.
He died many years ago and I believe that his son and son-in-law must now be their seventies. I believe that their children are now in control but you could check on the Hansa Trust web-site.
I I rember rightly, the family hold about 25% of OCN directly and about 25% more through Hansa Trust where they have a majority of the voting shares.

In the past the investment management business of OCN was very successful indeed but this was then delegated to others whose collective performance has been very moderate.
I believe that the family will sell out at some point but this may not happen in my lifetime. I did think that this was about to happen when discussions about the future of the Brazilian business were announced 9 months ago and much regret not selling some of my shares then.
In short I regard this as a long-term holding with a decent yield.

[galeforce1] 19/8/2019 14:09

Big drop in the share price here last week on slightly disappointing interim results.

Revenues and profits are lower in the marine services part of the business. The container terminals seem to be doing OK.

There's so much to like about OCN - no debt, lots of cash, modest valuation, great dividend. But it hasn't been a particularly successful investment for me so far.

Would be interesting to hear anyone else's view on OCN's prospects. Is OCN's problem basically short term or something more serious and long term?

[sleepy] 24/7/2019 18:31

Thanks Piecro

[piedro] 24/7/2019 06:07

MATERIAL FACT
Rio de Janeiro, 23 July 2019 – Wilson Sons Limited (B3: WSON33) (“Wilson Sons” or “Company”;), in furtherance to the Material Fact disclosed on 16 July 2018, informs that it has concluded the formal process to evaluate strategic alternatives involving its container terminal and logistics assets. The Board of Directors has decided not to engage in any transaction at this time.

[pugugly] 16/5/2019 06:30

LOTM- Analysis much appreciated.

[last of the mohicans] 16/5/2019 06:04

Pugugly

The investment portfolio is just back up to the value it had 1 year ago.

You can't monetise it, the directors control the company through there own holdings & those of Hansa which they and there family run. They get a nice wad of management fees paid to keep all there family members etc happy & employed.

If you looked at the annual report you'd see that if the money had simply been invested in either the MSCI ACWI FM NR USD or MSCI Emerging Markets NR USD index the performance over the past 10 years would have been substantially better for shareholders.

The fund has gained about 70% those other ones 150% & 115% respectively.

LOTM

[pugugly] 15/5/2019 06:33

Trading poor but investments up
"At 30 April 2019, the investment portfolio including cash under management amounted to US$276.3 million (31 December 2018: US$258.9 million). The investment portfolio represents US$7.81 (£6.01) per Ocean Wilsons share."

So what are Wilson Sons Limited worth? And how (if at all) can it be monetised for shareholders?

[shiv1986] 07/5/2019 07:57

ADVFN is hosting an investor event for a firm within Industrial Transportation; Avation plc, on the 21st May to find out about their future prospects.

Sign up to attend this event:

[piedro] 30/3/2019 11:51

varies,

re:"the mooted disposal of the container ports"

The company, Wilson Sons, have never said that they were going to sell their container ports; only that they were doing a strategic review {which involves 'sounding' the market.

[piedro] 30/3/2019 11:44

Danilo Oliveira
INDÚSTRIA NAVAL
28/03/2019 - 15:46
Consórcio Águas Azuis construirá corvetas para a Marinha

[varies] 15/3/2019 11:20

I am disappointed to learn that the mooted disposal of the container ports has come to nothing yet but at least we are still getting our dividend.

[piedro] 15/3/2019 08:00

An idea of the towage competition ...

From Camorim:
Between the years 2019 and 2020, another 8 new 80-ton ships are planned, which will be built by Starnav, bringing the fleet to a total joint fleet to 43 azimuthal tugboats

[piedro] 16/11/2018 10:16

LOL

I think the case of Tecon Sepetiba is interesting in this context.
The then owner, Companhia Siderúrgica Nacional, offered them for sale a couple of years back.
Wilson Sons was one of the bidders.

See what happened !!

[last of the mohicans] 12/11/2018 15:57

Not a good set of results.

Quite frankly, they can't afford to sell the container terminals other wise they'll be no growth, given how big towage is compared to what would be left.

Yes the oil & gas stuff should pick-up but its not happening yet & they don't seem to have many other ideas on how to grow the business.

Oh wait ……. maybe we're going to have another investment fund managed by Hansa

LOTM

[angusf77] 12/11/2018 12:33

Not that familiar with OCN but I see Wilson Sons (which I understand makes up about 2/3 of Ocean Wilsons, investment portfolio c.1/3) reported to the Brazilian and lux stock exchanges on Friday and it looks like the shares moved up quite sharply in Brazil. I don't know finer details eg whether it's the same reporting currency, reporting time, current price etc, but may be a sign some of the news had been priced in since the last announcement.