Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — FY2007 Earnings Presentation
39 slides from Pacific Basin Shipping's earnings presentation, Mar 3, 2008
Slide 1: Pacific Basin 2007 Annual Results
Stock Code: 2343 2007 Pacific Basin As at 3 Mar 08
Slide 2: What is Pacific Basin?
What is Pacific Basin? World’s largest modern handysize vessel owner/operator 19 offices worldwide, 297 shore-based staff, 1,345 seafarers We carry the dry bulk commodities required for China’s and Asia’s growth Enjoying record high rate environment brought about by tight balance of ship sup
Slide 3: 2007 Results Highlights
2007 Results Highlights Profits: US$472m (US$110m) y Basic EPS: HK$2.34 (HK65¢) Includes US$137m (US$77m) disposal gains Handysize average daily charter rate: US$23,200/day (US$15,420/day) ROE: 78% (36%) y Net Profit Margin: 67% (32%) Final proposed dividend 2007: HK 75¢ y Total 2007 divid
Slide 4: Fleet Profile
Fleet Profile Fleet numbers as at 28 February 2008 Dry Bulk Fleet - 95 Other Ships - 19 Handysize: 75 Handymax: 17 RoRo: 4 Tugs: 14 Newbuilding 1 Chartered Chartered 13 Newbuilding 4 13 Newbuilding 6 Chartered Newbuilding 1 Owned Barge: 1 48 Operating Lease 4 Owned 8 31 Owned 3 Owned 1 Finance Lease
Slide 5: Diversified Cargo
Diversified Cargo Total Handysize and Handymax Cargo Volume in 2007 Log & Forest Products 5% Fertilisers 11% Grains 10% Steel & Scrap 8% Cement 9% 29.1 Alumina 4% million tonnes Petcoke/Coal/Coke 16% Other Bulks* 12% Sugar 4% Ore 9% 2007 cargo volume grew Concentrates 6% by 38% over 2006 Salt 6% Div
Slide 6: Market Review
Market Market Review Review
Slide 7: Baltic Exchange Indices
Baltic Exchange Indices The Baltic Dry Index (BDI) The Baltic Handysize Index (BHSI) 29 Feb 2008 $US/day 29 Feb 2008 7613 48,000 US$ 32,865 12000 10000 42,000 8000 36,000 6000 30,000 4000 24,000 2000 18,000 0 12,000 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 May-06 Aug-06 Nov-06
Slide 8: Dry Bulk – 1 Year Time-Charter Rate
Dry Bulk – 1 Year Time-Charter Rate US$/day 180,000 As at 29 February 2008 160,000 140,000 Capesize 120,000 $141,075 (Jan07: $59,138) 100,000 Panamax 80,000 $67,213 (Jan07: $29,450) Supramax 60,000 $56,325(Jan07: $27,729) 40,000 Handysize 1-Year: $31,825 (Jan07: $18,169) 20,000 3-Year: $22,800 (Jan0
Slide 9: Sustainable Growth of Bulk Cargo Volume
Sustainable Growth of Bulk Cargo Volume Seaborne Bulk Trade and Tonnage Demand Million Tonnes 7.2% Total cargo volumes 3000 2,517 2,699 grew by a healthy 2500 2,258 2,381 7% year on year 2,096 1,918 1,956 2000 1,881 1,739 1,757 Variety and volume 1500 of commodities 1000 needed by China have forced
Slide 10: High Tonnage Demand
High Tonnage Demand Changes in Tonnage Demand % change from Estimated year before 13.0% tonnage 14 11.4% demand 10.7% 12 growth of 13% 10 from 2006 to 2007 6.1% 8 6 4 Volume Demand growth: 2 3.6% 7.2% for ships 0 enhanced by -2 tonne miles, 2003 2004 2005 2006 2007 congestion International cargo vol
Slide 11: Lower Orderbook in Handysize
Lower Orderbook in Handysize Type of Vessels Orderbook as % of Existing Fleet (dwt) Record year for dry bulk Dry Bulk 57% ordering in 2007 Ave. Age Capesize 100K + 87% 11.3 Panamax 60-100K But still limited supply 44% 11.8 in 2008, particularly handysize Handymax 40K-60K 11.8 56% New capacity is Han
Slide 12: Ageing Handysize Fleet
Ageing Handysize Fleet Total handysize 25-35k dwt fleet in Jan 2008: Orderbook 25-35K dwt (35%) 1,250 Vessels (36.8mil dwt) 14% More than 12.0% 12.1% 35% older 10% than 25 years 5.7% 5.5% 6% 30 yrs or above 0-4 yrs 20% 13% 2% 5-9 yrs Uncertainty over 14% 2008 2009 2010 2011+ ‘real’ deliveries 25 -30
Slide 13: Dry Bulk Carrier Sale & Purchase Market
Dry Bulk Carrier Sale & Purchase Market 2nd-hand 5-year old handysize vessel price (25K-35K dwt) US$ million 46 February 08: US$ 46 mil Second hand vessel 42 price continues to stay high 38 34 30 26 Our asset value moves 22 in line with 18 market values 14 10 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-0
Slide 14: Financial Review
Financial Financial Review Review
Slide 15: 2007 Financial Highlights
2007 Financial Highlights 2007 2006 TCE Earnings (US$m) 700.5 344.8 Reported net profit 472.1 110.3 Less: Vessel disposal gains (137.4) (23.8) Net profit before disposal gains 334.7 86.5 Basic EPS (HK¢) 234 65 Return on average shareholders’ equity 78% 36% Proposed final + interim dividends (HK¢ per
Slide 16: Results – Handysize Freight & Charter-hire
Results – Handysize Freight & Charter-hire Drivers of the results 1H07 2H07 2007 2006 % Change Revenue days (days) 9,590 10,510 20,100 16,420 +22% TCE earnings (US$/day) 19,750 26,350 23,200 15,420 +50% Owned + chartered cost (US$/day) 9,370 11,040 10,240 8,880 +15% Contribution (US$m) 99.5 161.0 26
Slide 17: Results – Handymax Freight & Charter-hire
Results – Handymax Freight & Charter-hire Drivers of the results 1H07 2H07 2007 2006 % Change Revenue days (days) 2,260 2,610 4,870 4,320 +13% TCE earnings (US$/day) 25,180 34,250 30,040 17,660 +70% Owned + chartered cost (US$/day) 20,580 25,200 23,050 18,600 +24% Contribution (US$m) 10.0 24.0 34.0
Slide 18: Daily Vessel Costs - Handysize
Daily Vessel Costs - Handysize Opex Owned Chartered US$/day Depreciation $12,850 Blended US$10,240 (2006: US$8,880) Finance cost 12,000 620 Direct Overhead $10,040 Charter-hire 10,000 570 $8,480 $8,640 8,000 960 1,080 Contracted Charter-hire 2,000 1,720 6,000 2008: US$14,800 12,230 9,470 2009: US$14
Slide 19: Balance Sheet
Balance Sheet 31 Dec 07 31 Dec 06 US$mil Net book value of fixed assets 1 755.9 741.0 Gross borrowings 660.2 350.5 Cash 649.5 63.2 Net borrowings 10.7 287.3 Shareholder's equity 867.6 485.0 Net borrowings / Fixed assets 1.4% 38.1% Net borrowings / Shareholder's equity 1.2% 59.2% Note 1 Insured value
Slide 20: Vessel Capital Commitments
Vessel Capital commitments At 31 December 2007 2008 2009 2010 2011 Total US$mil 11 Handysize 137.6 49.3 - - 186.9 1 Handymax 32.1 - - - 32.1 1 Post Panamax - - 21.7 22.1 43.8 2 Tugs 11.4 - - - 11.4 181.1 49.3 21.7 22.1 274.2 Recent Vessel Commitments 4 Roll on roll off 92.2 119.0 137.7 25.9 374.8 4
Slide 21: Cashflow
Cashflow US$m 2007 2006 Operating cash inflows 314.0 148.2 Investing cash in/(out)flows 102.0 (241.1) - Payments for vessels and other fixed assets (259.4) (286.6) - Sales of vessels 365.9 39.9 - Others (4.5) 5.6 Financing cash inflows 170.3 74.0 - Proceeds from convertible bonds, net of expenses 38
Slide 22: Dividend
Dividend Year Dividend US$mil HK ¢ per share Payout Ratio 2007 Proposed final (payable 16Apr08) 152.3 75.0 Interim (paid 31Aug07) 91.3 45.0 Total for 2007 243.6 120.0 52% 2006 Total for year 78.5 42.5 71% 2007 payout of 52% of annual Minimum 50% payout attributable profits for at least 1H08 22
Slide 23: New Developments & Outlook
JNS Hull 101 – Silver Lake New Developments New Developments && Outlook Outlook JNS Hull 102 – Port Phillip JNS Hull 103 – Diamond Harbour Jiangmen Nanyang Shipyard
Slide 24: Business Development
Business Development July 2007, US$17m capital investment in Nanjing Longtan Tianyu APMIG - Ports Terminal JV Company 3 post panamax newbuildings will deliver in 2011 China - other Pacific Time Shipping, the JV with China Huaneng Group November 2007, acquisition of Australian Maritime Servic
Slide 25: Roll On Roll Off (RoRo)
Roll On Roll Off (RoRo) Pacific Basin entered RoRo sector with four newbuildings acquired for approx. US$375m in Feb 08, scheduled to be delivered 2009-2011 Used for transportation of wheeled cargoes (mostly trucks) which are loaded over a ramp Proven design, suitable for the common short sea
Slide 26: Ports and Towage
Ports and Towage APMIG - Ports Pacific Basin holds a 45% interest in a Chinese bulk cargo terminal - Nanjing Port Longtan Terminal 2007 trial operations handled 160,000 tonnes of general cargo Steady growth in terminal’s throughput is expected once formal operations begin, later in 2008 PB Tow
Slide 27: Earnings Coverage
Earnings Coverage Earnings Coverage As at 22 February 2008 Handysize Handymax Revenue Day 25,000 Unfixed 16% 23,310 days Fixed More revenue days, 20,100 days higher rates… 20,000 compared with 43% this time last year : 15,000 58% at US$17,000 10,000 25% of 2009 4,870 days2 4,630 days2 5,000 US$23,20
Slide 28: Outlook
Outlook Final proposed dividend 2007: HK 75¢ Handysize revenue days set to increase by 16% in 2008 on 2007 57% of 2008 handysize days covered at US$27,360 per day; current spot market at almost US$33,000 per day net Solid balance sheet – US$650m cash and minimal net debt Significant opport
Slide 29: Disclaimer
Disclaimer This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of Pacific Basin and certain plans and objectives of the management of Pacific Basin. Such forward looking statements involve known and unknown risks,
Slide 30: Appendix: Port Congestion Squeezing Supply
Appendix: Port Congestion Squeezing Supply Total Vessel Congestion at Australian Ports No. of Vessels Coal demand the 240 dominant cause All Vessels Panamax 200 Capesize Dec07: 176 160 120 Direct impact on handysize rates 80 40 0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Source: Monson Agencies Aust
Slide 31: Appendix: Impact of US slowdown on China
Appendix: Impact of US slowdown on China Direct trade effects from 1% a US slowdown are 0% expected to be small -1% China’s domestic -2% Results Is offset in a 0.3% demand has been by a fall in fall in -3% Leads to a imports Chinese insulated from external -4% 1.5% fall in GDP shocks A 3% fall in Ch
Slide 32: Appendix: China at Mid-Industrialization Stage
Appendix: China at Mid-Industrialization Stage Steel Consumption Per Capita Same growth as Tons per Capita China (from 1990) historical trend in 1.0 Japan (from 1950) Korea (from 1970) Japan and Korea 0.9 India (from 2000) 0.8 0.7 Indicating long term 0.6 dry bulk strong 0.5 growth 0.4 0.3 Same tren
Slide 33: Appendix: Daily Vessel Costs - Handymax
Appendix: Daily Vessel Costs - Handymax Owned Chartered Opex US$/day $25,460 Depreciation Blended US$23,050 (2006: US$18,600) 710 Finance cost 24,000 Direct Overhead $18,870 Charter-hire 20,000 700 16,000 $11,500 12,000 9,370 24,750 950 18,170 2,800 1,300 8,000 310 4,080 4,300 4,000 3,670 3,460 0 20
Slide 34: Appendix: Dry Bulk Orderbook
Appendix: Dry Bulk Orderbook Total Dry Bulk Fleet Orderbook Total Orderbook Orderbook in dwt 20% 100.0 Capesize 100K + YoY Fleet Growth No. Dwt 18% 90.0 16% 80.0 634 116.5 Panamax 60-100K 14% 70.0 608 49.6 12% 60.0 Handymax 40K-60K 10% 50.0 921 48.3 8% 40.0 Handysize 25-35K 6% 30.0 411 12.9 4% 20.0
Slide 35: Appendix: Convertible Bonds Due 2013
Appendix: Convertible Bonds Due 2013 Issue size US$390 million (includes US$40 million upsize) Maturity Date 1 Feb 2013 Investor Put Date and Price 1 Feb 2011 at par Coupon 3.3% p.a. semi-annual in arrears on 1 February and 1 August Redemption Price 100% Initial Conversion Price HK$19.28 (27% premiu
Slide 36: Appendix: What is a RoRo?
Appendix: What is a RoRo? “Roll on, roll off” (RoRo) vessels mainly carry cargoes on trailers which can be loaded and discharged over a ramp, enabling rapid port turnaround times Ro-Ro vessels are a very economical way of transporting just in time cargoes on short-sea trades where speed of door
Slide 37: Appendix: RoRo Market Drivers
Appendix: RoRo Market Drivers Shift from road to short sea transport driven by Pollution / Environmental restrictions Road congestion Government/public resistance to new roads Road deaths Regions of growing RoRo demand include Europe and Mediterranean Rim Asia – especially along China’s ex
Slide 38: Appendix: RoRo Fleet Supply
Appendix: RoRo Fleet Supply Total 17% of current fleet on order in terms of capacity Total 9% of current fleet on order in terms of number of ships Ageing world fleet profile – average age 20 years Limited European newbuilding capacity – only a handful of yards are experienced Ro-Ro builders “
Slide 39: Appendix: Age Profile Total RoRo Fleet
Appendix: Age Profile Total RoRo Fleet Few young ships due to 44% over 25 lack of investment in years old 30+ Years 0 - 4 Years retonnaging by 16% 13% operators 5 - 9 Years 17% 25-29 Years 10 - 14 Years 28% 5% 20 - 24 Years 15 - 19 Years 13% 8% RoRo - Average Total Fleet Age: 20 years VS Handysize D
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