Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping — India Investment Show 2007
42 slides from Great Eastern Shipping's conference presentation, Jun 3, 2007
Slide 1: The Great Eastern Shipping Co. Ltd. - India Investment Show
The Great Eastern Shipping Co. Ltd. India Investment Show June 3 rd, 2007 1
Slide 2: Forward Looking Statements
Forward Looking Statements Except for historical information, the statements made in this presentation constitute forward looking statements. These include statements regarding the intent, belief or current expectations of GE Shipping and its management regarding the Company’s operations, strategic
Slide 3: Corporate Profile
Corporate Profile The Great Eastern Shipping Co. Ltd Incorporated in 1948 Shipping Business Offshore Business Crude Tankers Through wholly owned subsidiary Wet bulk Greatship (India) Ltd Product Tankers (includes LPG) Dry bulk Offshore oil field Support & Logistics Services Asia’s 3rd most profitabl
Slide 4: Committed Capex
Committed Capex Committed Equity G E Shipping Participation Greatship (I) Ltd of US$ 110 Mn Committed CAPEX Committed CAPEX US$ 239 Mn US$ 331 Mn Already infused Balance US$ 55 Mn infusion (@ a premium of Rs.90/ spread over share) next two years Total committed CAPEX of US$ 570 Mn Spread over next t
Slide 5: Asset Profile: Shipping business
Asset Profile Shipping business q 46 ships aggregating 3.22 Mn dwt q 34 Tankers (53% double hull) q 13 Crude oil carriers (1 VLCC, 4 Suezmax, 8 Aframax) q 19 Product tankers (2 Panamax ,10 MR, 7 GP) q 2 LPG carriers q 12 Dry bulk carriers q 1 Capesize q 2 Panamax q 6 Handymax q 3 Handysize Committed
Slide 6: Asset Profile: Offshore business - Greatship (I) Ltd.
Asset Profile Offshore business - Greatship (I) Ltd. (wholly owned subsidiary) q 2 Platform Supply Vessels (PSV) q Committed Capex of around USD 331 Mn q 1 Secondhand PSVs to be delivered in Q2 FY 2007-08 q 2 NB 80T AHTSV (CDL) one each in Q3 and Q4 FY 2007-08 q 2 NB PSVs (Aker) delivery during Q2 a
Slide 7: Historical performance
Historical performance 70.00 3.5 3.02 2.92 3.26 60.00 58.01 3 2.47 55.07 50.00 2.5 42.34 Rs/ Share 40.00 2 mn dwt 1.32 30.00 1.37 1.28 1.5 24.30 20.00 1 11.22 11.50 11.40 9.00 10.00 8.00 8.80 6.50 0.5 2.75 4.00 4.00 0.00 0 FY01 FY 02 FY03 FY04 FY 05 FY06 * FY07 Earnings Per Share (Rs) Dividend Per S
Slide 8: Delivering through the years
Delivering through the years … 450 50 405 43.80 45 400 40.60 350 34.80 40 335 282 35 300 32.40 Rs. Per share 30 250 25 % 19.50 201 200 17.48 15.96 157 20 139 150 115 15 100 84 67 67 79 10 53 62 50 50 5 0 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06* 2006-07 BV NAV ROE% *relates to shipping busi
Slide 9: Historical NAV per share
Historical NAV per share (only shipping business) As on Rs/Share 31-March-2005 300 31-December-2005 320 31-March-2006 335 30-June-2006 350 30-September-2006 400 31-December-2006 388 31-March-2007 405 9
Slide 10: Quarterwise Financial comparison FY 2006-07
Quarterwise Financial comparison – FY 2006-07 (in Rs Mn) Q1 Q2 Q3 Q4 Income from 4406.3 5223.2 4907.5 5438.1 Operations Operating Profit** 2419.3 2657.6 2238.5 2992.0 Interest 273.9 267.0 242.7 288.3 Depreciation 709.0 643.2 594.2 706.1 PAT* 2410.6 2354.8 1658.5 2409.2 * Includes prior period adjust
Slide 11: Financial Comparison Q4FY2006-07 & Q4FY2005-06
Financial Comparison Q4FY2006-07 & Q4FY2005-06 (in Rs Mn) Q4FY2006 – 2007 Q4FY 2005 - 2006 % Change Income from Operations 5438.1 5283.7 3% Operating Profit** 2992.0 2705.2 10.6% Interest 288.3 232.7 23.9% Depreciation 706.1 769.9 - 8.3% PAT* 2409.2 1835.2 31.3% RONW 32% 31.2% ROCE 21.6% 19.8% * Inc
Slide 12: Quarter FY 2006-07 under review
Quarter 4 FY 2006-07 under review Macro Factors ü Reduced OPEC production – compliance with quotas ü Warm winter & drawdown on product inventories ü Higher volumes of Chinese crude imports from long haul West Africa Company Specific ü Revenue days higher by 8%; inchartering days higher by 78% ü High
Slide 13: Financial Overview FY 2005-06 & 2006-07
Financial Overview FY 2005-06 & 2006-07 Balance Sheet 31-03-2006 31-03-2007 FY FY % as on (Rs.Mn) 2005/06 2006/07 change Share Capital (Rs Mn) 1522.7 1522.7 Op.Revenues 19347.7 19975.1 3% Reserves (Rs Mn) 22339 29155 EBIDTA 9357.6 10287.3 10% Debt (Rs Mn) 18691 21897 % of Op. Rev 48% 51% Total (Rs M
Slide 14: Financial Comparison FY2006-07 & FY2005-06
Financial Comparison FY2006-07 & FY2005-06 (in Rs Mn) FY 2006 – 2007 FY 2005 - 2006 % Change Income from Operations 19975.1 19347.7 3.2% Operating Profit** 10287.3 9350.1 10% Interest 1071.9 969.4 10.6% Depreciation 2652.5 2828.1 - 6.2% PAT* 8833.1 8386.0 5.3% RONW 32.4% 40.6% ROCE 20.8% 23.8% * Inc
Slide 15: The Year FY 2006-07 under review
The Year FY 2006-07 under review Macro Factors ü Increasing ton-mile demand due to sourcing diversity ü Growth in tonnage in dry and wet segment ü Port congestion & increasing share of minor bulks –impetus to drybulk Company Specific ü Inchartering days higher by 71% ü High treasury income and incre
Slide 16: Financial Overview FY 2005-06 & 2006-07 (consolidated)
Financial Overview FY 2005-06 & 2006-07 (consolidated) FY FY % Balance Sheet 31-03-2006 31-03-2007 (Rs.Mn) 2005/06 2006/07 change as on Op.Revenues 20360.6 21659.5 6.37% Share Capital (Rs Mn) 1522.7 1522.7 EBIDTA 9356 10674.8 14% Reserves (Rs Mn) 22681 29737 % of Op. Rev 46% 49% Debt (Rs Mn) 18766 2
Slide 17: Global Shipbuilding Status
Global Shipbuilding Status þ Highest contracting since 1973; 40% of tanker & 33% of dry bulk fleet on order þ Order book for associated marine equipment (engines, crankshaft and on-board navigation system) have also reached record high P Led to increases in equipment cost and longer lead times þ Reg
Slide 18: Ship prices continue to be firm
Ship prices continue to be firm Asset Price Movement (5 yr old) 140 120 120 100 100 80 $ USD mn. $ USD mn. 80 60 60 40 40 20 20 0 0 3.1.06 Dry bulk Tankers Time line- Jan 2006 till May 24, 2007 Source: Baltic Sale & Purchase Assessment VLCC AFRAMAX CAPESIZE PANAMAX(DRY) 18
Slide 19: Regulatory environment supporting Ship building
Regulatory environment supporting Ship building þ Regulations getting stringer As per MARPOL single hull tankers to move out of trade by 2010 þ Caveat : Flag States and Port States can accept single hull tankers to 25 years or up to 2015 whichever is earlier Conversions into double hulls,FSOs,FPSOs
Slide 20: OIL has many expressions
OIL has many expressions 20
Slide 21: US once ruled the ENERGY space
US once ruled the ENERGY space – celebrates 148 years of oil era ü US strikes oil in 1859 in Pennsylvania ü US supplies grew too old : OIL peaked in 1970 Natural gas peaked in 1973 ü US has been world’s largest consumer of oil for a century World’s largest energy importer Imports more energy than ne
Slide 22: The Transition happened
The Transition happened ….. Energy vulnerability is on the rise ü Demand for oil galloping ü Middle East supply buffer depleting; oil price escalating ü Producers & Users not in an “ideal” harmony situation ü Sector serviced by vintage infrastructure Demand growth in New Emerging GIANT economies Sou
Slide 23: Oilonomics
Oilonomics ü Global economy well set for continued robust growth in 2007 & 2008 ü Growth moderated at 4.9% ü Oil production increasingly concentrated in small number of countries ü Over 130 projects in execution/planning stage in OPEC ü Oil as a “financial asset” ü China plans SPRs – Phase I 100 mn
Slide 24: Changing trade patterns
Changing trade patterns Oil demand sourcing matrix changing China & India in forefront Oil supply dynamics changing North Sea – Decreasing Supply Venezuela – Diversifying Customer base West Africa – More takers Other Market Developments Angola , Algeria – inching production Increasing demand from In
Slide 25: Oil Markets gloomed by uncertainty
Oil Markets gloomed by uncertainty þ In the past oil demand growth forecasts have been significantly way off CY 2004 2004 2005 2005 2006 2006 2007 2007 Forecast Actuals Forecast Actuals Forecast Actuals Forecast Actuals Oil demand 1.5% 3.7% 2.2% 0.94% 1.8% 0.9% 1.8% growth ? þ OPECs capacity additio
Slide 26: An emerging Product trade
An emerging Product trade þ Refinery maintenance season over in H1 of CY. OPEC production from AG expected to rise in H2 of CY þ New refining capacity coming up in ME & Asia Pacific away Projected Distillation capacity additions from consuming EU & US 10% 28% 21% Larger parcel size over 9% longer di
Slide 27: Tanker Market – Supply side of the equation
Tanker Market – Supply side of the equation þ Fleet growth in 2007-2009 estimated to be at very high levels (2007 tanker supply growth to be around 6%) , 2010 phase-out is a wildcard þ Scrapping at around 3.42 mn. dwt in 2006 much below the 5 year average of around 13 Mn dwt þ Potential conversions
Slide 28: Tanker Market Outlook
Tanker Market Outlook þ Tanker supply / demand growth appear to be evenly balanced P Lengthening of voyage distances , discrimination of single hulls stand to be influencers þ Geo-politics to stay in forefront – expect the unexpected – supply threats P Nigeria prone to sporadic outrages P Leadership
Slide 29: Demand dynamics of dry bulk trade
Demand dynamics of dry bulk trade þ Economic performance & industrial production driving dry bulk trade þ After steel, coal constitutes larger portion of the seaborne trade pie þ Minor bulks (1/3rd) gradually inching its share þ GRAIN TRADE: (seasonally shifting patterns) P Growing sophistication of
Slide 30: CHINA Steel full steam ahead
CHINA Steel full steam ahead !!! þ Rise in China’s investment & production of steel þ Chinese steel production expected > 500 million tons in 2007 þ Chinese’s iron ore imports expected to exceed 400 million tons in 2007 þ China has become a net importer of coal Source: Lorentzen & Stemoco AS 30
Slide 31: COAL – a widely sought after commodity
COAL – a widely sought after commodity þ Met coal demand arising from steel sector requirements þ Coal as cheapest source of power generation fuelled by industrialisation P Chinese coal exports decreasing; Indonesia & Australia exports on the rise þ India's thermal coal imports imminent to bridge ga
Slide 32: Dry bulk Market – Supply side of the equation
Dry bulk Market – Supply side of the equation þ Fleet growth in 2007 estimated to be at 6.7% þ Scrapping at around 1.9 mn. dwt in 2006 ; average scrapping 1990 to 2005 around 4.96 mn dwt,1998 to2005 around 6.18 mn dwt þ Potential conversions to VLOCs to change trade dynamics Global Drybulk Fleet age
Slide 33: Dry bulk Market Outlook
Dry bulk Market Outlook þ Market “heated up” could witness volatility ; port congestion to give sudden spikes “bi-directional ” þ CHINA “boom” key factor in dry bulk freight surge þ Overcapacity in steel and environmental issues in use of coal may impact the chunk of commodity trade þ Change in trad
Slide 34: Offshore oil field services industry
Offshore oil field services industry þ Continuing growth in energy demand þ Energy Security concerns high on sovereign agenda þ Globally E & P expenditure on the rise þ Offshore will continue to account for increasing proportion of oil supply þ Increase in demand from higher oil prices – Demand > Su
Slide 35: Globally shift towards Deep water drilling activity
Globally shift towards Deep water drilling activity 35
Slide 36: Offshore Oil services Industry: Global Rig forecasts
Offshore Oil services Industry : Global Rig forecasts Source: ODS Petrodata 36
Slide 37: Distinct market for Jackup's
Distinct market for Jackup’s 37
Slide 38: Ageing Offshore fleet
Ageing Offshore fleet (No.of units) Total Fleet AHTS PSV Existing fleet 1879 1018 861 Average Age (yrs) 17.1 18.4 15.2 NB Orderbook 545 333 212 Position (29%) (33%) (25%) Source: ODS Petrodata/ Clarksons þ AHTS - 56.9% over 20 years of age; 16.9% over 30 years of age þ PSV – 42.5% over 20 years of a
Slide 39: India's Offshore oil field services industry
India's Offshore oil field services industry Onshore Offshore TOTAL Deep water Shallow water NELP I 1 7 16 24 NELP II 7 8 8 23 NELP III 8 8 7 23 NELP IV 10 11 - 21 NELP V 12 6 2 20 NELP VI 25 24 6 55 TOTAL 63 64 39 166 In NELP VII around 70 to 80 blocks ,acreage 4,00,000 SKM Source:DGH Pre NELP i.e
Slide 40: FACT FILE: India's Offshore oil field services industry
FACT FILE : India's Offshore oil field services industry þ Only 18% of India’s total offshore area has been explored þ 58 offshore wells were drilled between 2000 –2004 ; NELP envisages 498 wells to be drilled between 2006 –1012 þ Indian operators chartered 25 rigs in 2004.By 2010 an estimate of 44
Slide 41: Offshore oil field services outlook
Offshore oil field services outlook þ 193 countries in the world are energy dependent , vast majority of the countries rely on few energy producing nations þ New Building capacity fully exploited þ In 1980s there were around 80 yards manufacturing rigs in 2006 there are 10 yards þ During 1982-83 60
Slide 42: Thank You
Thank You Visit us at www.greatship.com 42
The Great Eastern Shipping — India Investment Show 2007 on 6ix