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Analyst Meet / AGM - Analyst Meet

Total committed capital expenditure in shipping is USD 150 mn

Great Eastern Shipping

13-Aug-2013, 03:43
Great Eastern Shipping (GE Shipping) held a conference call for discussing the performance for quarter ended June 2013 Key takeaways of conference call

Income from operations for Q1 FY14 was down by 9% to Rs 736.42 crore. Total Owned tonnage revenue days declined by 14% to 2718 days. The company had 27 days from in-chartered tonnage in Q1 FY14 compared to 232 days in Q1 FY13 and 195 in Q4 FY13. The average TCY (time charter yields) for crude carriers was at USD 16132 per day, down by 16% along with Dry bulk carrier which declined by 7% to USD 10289 per day while Product carriers (including Gas) incline by 37% to USD 18825 per day. The OPM increased by 1034 bps to 46.4% due to fall in hire of chartered ships and fuel, oil & water cost. As a result the operating profit has increased by 17% to Rs 341.8 crore. There was forex gain on currency translation of Rs 118.43 crore. The PAT inclined by 35% to Rs 244.98 crore due to fall in interest cost, marginal incline of deprecation and forex gain.

The crude tanker market continued to remain weak with subdued demand from the western economics and seasonal refinery maintenance. However, product market showed strength on back of robust demand of distillate cargos from US to South American countries.

The Company placed an order for 2 new building Kamsarmax dry bulk carriers (~81,600 dwt). Both the vessels are expected to join the fleet during H1 FY16. It has contracted to buy a 2005 built Medium Range (MR) (about 51,300 dwt) product tanker with delivery in Q2 FY14. Total committed capital expenditure in shipping is USD 150 mn while in Offshore there is no committed capital expenditure.

Asset prices have shown signs of recovery with shipping assets up 10-15% over past six months. The recent spate of ordering done by the company seems on the assumption that asset prices have bottomed out, though recovery conviction remains relatively low.

NAV of the company was Rs 277 per share at standalone level and Rs 494 per share at consolidated level as on quarter ended June 2013.

All the three rigs have long term charters till atleast end-CY14 which provides reasonable visibility in the offshore segment. Rigs Chayya and Chitra have contracts till Feb 2018 and end-CY14 respectively and rig Chetna has received another contract till end-CY16. Rig Chetna has received a contract @~10% lower than its previous charter rate.

The smaller sized assets in the offshore segment like AHTV's have witnessed a correction in charter rates though the larger vessel size PSV's still attract reasonably better rates.

The company has announced a buy back not exceeding Rs 279/share with total buyback limited to Rs 279 crore. If successful, this would extinguish ~10 mn shares, i.e. 6.6% of equity.