Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — 24th CLSA Investors' Forum - HK 2017

39 slides from Pacific Basin Shipping's conference presentation, Sep 4, 2017

  1. Slide 1: 24th CLSA Investors' Forum - HK

    24th CLSA Investors’ Forum - HK 4 Sep 2017

  2. Slide 2: Pacific Basin Overview

    Pacific Basin Overview  A leading dry bulk owner/operator of Handysize & Supramax dry bulk ships  Cargo system business model – outperforming market rates  About 250 dry bulk ships on the water serving major industrial customers around the world  Hong Kong headquarters, 12 offices worldwide, 330

  3. Slide 3: Understanding Our Core Market

    Understanding Our Core Market Pacific Basin 2

  4. Slide 4: Diversified Cargo & Customer Exposure

    Diversified Cargo & Customer Exposure Our Dry Bulk Cargo Volumes (1Jan17 – 30Jun17)  Diverse range of commodities reduces product risk  China and North America were our largest market  60% of business in Pacific and 40% in Atlantic Pacific Basin 3

  5. Slide 5: Large Fleet of Modern Versatile Ships

    Large Fleet of Modern Versatile Ships Pacific Basin Dry Bulk Fleet: 261 www.pacificbasin.com Average age of core fleet: 7.3 years old Customers > Our Fleet Owned Chartered * Total Handysize 80 72 152 Supramax 25 82 107 Post-Panamax 1 1 2 Total 106 155 261 • Average number of vessels operated in June

  6. Slide 6: Strategic Model

    Strategic Model MARKET-LEADING COMPREHENSIVE GLOBAL CUSTOMER FOCUS & SERVICE OFFICE NETWORK Priority to build and sustain long-term Integrated international service enhanced by customer relationships experienced commercial and technical staff around the world Solution-driven approach ensures accessi

  7. Slide 7: Why Handysize? Why Minor Bulk?

    Why Handysize? Why Minor Bulk? Full Year 2017E Global Dry Bulk Trade  More diverse customer, cargo and 5.1 billion tonnes (+3.5% YOY) geographical exposure enables high utilisation Pacific Basin  A segment where scale and operational focuses on 38% expertise make a difference these growing 10% Min

  8. Slide 8: Our Ability to Outperform

    Our Ability to Outperform Our TCE Outperformance Compared to Market Our business model has been refined over many years. We are Baltic Handysize Index - net rate able to generate a TCE earnings premium over market rates PB Handysize Performance because of our high laden percentage (minimum ballast l

  9. Slide 9: 2017 Interim Results and Highlights

    2017 Interim Results and Highlights  2017 Market freight rates well above historic lows one year ago and demand outpacing supply  Much increased positive EBITDA of US$56.6m from negative $5m in 1H16  Much reduced underlying loss of US$6.7m from a loss of US$61.6m in 1H16  Took delivery of our fi

  10. Slide 10: Recent Acquisition and Placement

    Recent Acquisition and Placement  Secured 5 high quality ships for US$105m, 4 Supramax & 1 Handysize  Growth and renewal of our fleet with modern, efficient and best design ships  US$46m of share placed to sellers, US$38m placed to institutional investors and US$21m from our existing cash  Incre

  11. Slide 11: Handysize Market Rates Development YTD 2017

    Handysize Market Rates Development YTD 2017 Baltic Handysize Index (BHSI) US$/day net* $9,000 2016 1 Sep 2017 $8,000 $6,760 $7,000 $6,000 $5,000 2015 $4,000 $3,000 $2,000 $1,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * excludes 5% commission Source: Baltic Exchange, data as at 1 Sep 2017

  12. Slide 12: Supramax Rates Follow Same Pattern

    Supramax Rates Follow Same Pattern Baltic Handysize Index (BHSI) and Baltic Supramax Index (BSI) # YTD 2017 US$/day net* BSI $10,000 $9,210 $8,000 $6,000 BHSI $6,760 $4,000 $2,000 $0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 * excludes 5% commission # BSI is now based on a standard 58,000 dwt

  13. Slide 13: Key Demand Drivers for 1H17 Actual

    Key Demand Drivers for 1H17 Actual  1Q17 dry bulk effective demand 4.9% compared to +0.4% in 1Q16 and -1.7% in 1Q15  Improved North & South American grain exports  SE Asia coal imports increased  Strong increase of imports into China with minor bulk outpacing iron ore & coal  Soybean, bauxite a

  14. Slide 14: Orderbook Continues to Shrink

    Orderbook Continues to Shrink Handysize Orderbook New Vessel Ordering is Down 170 vessels (6.3 million dwt) % of Fleet (dwt) Mil Dwt 50% Historically low 5.0 5.9% levels of ordering 40% 4.0 49% 4.5% 30% Shortfall 3.0 20% 2.9% H’max: 0.7% 4.6m 2.5% 2.0 10% H’size: 0.5% 2.3m 1.0% 0% 1.0 2000 2005 2010

  15. Slide 15: Vessel Values Increased

    Vessel Values Increased Handysize Vessel Values US$ Million 60 50 40 30 Newbuilding (35,000 dwt): US$21m 20 10 5 years (32,000 dwt): US$14m 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17  Improved freight market conditions supported increased vessel values  Newbuilding and secondhand prices have incr

  16. Slide 16: Dry Bulk Supply & Demand

    Dry Bulk Supply & Demand % YOY 10  Demand is recovering and 8 outpacing supply so far in 2017  For full year 2017: 6 4.9%  Clarksons estimate effective 4 demand growth of 3.9% 2.2% 3.4%  PB estimate net supply growth 2 around 3% (5% deliveries – 2% scrapping) 1.9% 0  Progressively fewer new shi

  17. Slide 17: 2H 2017 Results?

    2H 2017 Results?  Our Handysize rate guidance: US$/day Owned vessels 1H2017 costs/day 7,480 Overhead spread over all vessel days 590 Owned vessels break-even rate 1H2017 8,070 1H2017 Actual earnings 7,920 2H2017 Cover Rate (57%) * 8,360 Average market index rate so far during 3Q # 6,670 Current mar

  18. Slide 18: Our Ability to Outperform

    Our Ability to Outperform Our TCE Outperformance Compared to Market Our business model has been refined over many years. We are Baltic Handysize Index - net rate able to generate a TCE earnings premium over market rates PB Handysize Performance because of our high laden percentage (minimum ballast l

  19. Slide 19: Our Outlook and Strategy

    Our Outlook and Strategy Dry Bulk Outlook Pacific Basin Benefits:  Market conditions have improved since last year and we believe the worst of Fully Handysize & Supramax the current Dry Bulk market cycle is behind us focused  Demand has recovered and benefit from growing grain consumption for anim

  20. Slide 20: 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,

  21. Slide 21: 1H17 Performance and 2H17 Cover

    Appendix: 1H17 Performance and 2H17 Cover As at 26 July 2017 US$/day Handysize Supramax PB daily TCE rate 1H17 1 $7,920 $8,920 Market Index Rate $6,590 $8,010 PB Outperformance $1,330 $910 20% 11% PB daily TCE cover 2H17 $8,360 $9,830 % of Contracted Days Covered 57% 80% 1 Excluding short-term vesse

  22. Slide 22: 2017 First Half Financial Highlights

    Appendix: 2017 First Half Financial Highlights US$m 1H17 1H16 Dry Bulk (6.3) (60.4) Towage & Others (0.4) (1.2) Underlying loss (6.7) (61.6)  Unrealised derivative (expenses)/income (2.6) 13.7  Office relocation costs (1.4) -  Impairment of towage vessels (0.9) -  Sales of vessels (0.4) (1.9) Lo

  23. Slide 23: 1H17 By Vessel Segment

    Appendix: 1H17 By Vessel Segment Handysize 1H17 1H16 Change Revenue days (days) 25,660 23,070 +11% TCE earnings (US$/day) 7,920 6,080 +30% Owned + chartered costs (US$/day) 7,550 7,300 -3% Handysize contribution (US$m) 7.8 (30.2) >+100% Supramax Revenue days (days) 17,330 14,180 +22% TCE earnings (U

  24. Slide 24: Balance Sheet

    Appendix: Balance Sheet US$m 30 Jun 17 30 Dec 16 Vessels & other fixed assets 1,763 1,653 Total assets 2,204 2,107 Total borrowings 952 839 Total liabilities 1,174 1,066 Net assets 1,030 1,041 Net borrowings (total cash US$248m) 705 570 Net borrowings to net book value of property, plant and equipme

  25. Slide 25: 1H17 Daily Vessel Costs – Handysize

    Appendix: 1H17 Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) As at 30 June 2017 Depreciation Charter-hire : Index-linked Opex Owned Chartered Inward Charter Commitments US$/day Days & rates Blended US$7,550 (FY2016: US$7,320) 2017-2018 10,000 Vessel Days

  26. Slide 26: 1H17 Daily Vessel Costs – Supramax

    Appendix: 1H17 Daily Vessel Costs – Supramax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 30 June 2017 Opex Owned Chartered Inward Charter Commitments US$/day Days & Rates Blended US$8,360 (FY2016: US$6,830) 2017-2018 Vessel Days 10,000

  27. Slide 27: Five Vessel Acquisitions announced on 2 Aug 17

    Appendix: Five Vessel Acquisitions announced on 2 Aug 17 Supramax Supramax Handysize Supramax Supramax Total 2014-built 2014-built 2014-built 2016-built Resale newbuild Shipbuilder Tsuneishi Tsuneishi Imabari Imabari Tsuneishi Dwt 57,964 57,964 37,503 61,244 63,700 Total consideration 17.0 17.0 21.1

  28. Slide 28: Earnings Cover in 2017

    Appendix: Earnings Cover in 2017 Handysize Supramax Contracted Revenue Days 47,080 27,120 42,490 Days Days Days 23,250 36,480 Days Days 2H 80% 2H 2H 57% $9,830 58% $8,360 2H 65% $7,670 FY17 $8,020 FY17 81% 93% 10,480 $8,060 17,330 $9,200 Days 23,070 25,660 14,180 days days days days 100% 100% 10% 10

  29. Slide 29: Borrowings and Capex

    Appendix: Borrowings and Capex As at 30 June 2017 Secured borrowings (US$835.9m) Convertible bonds (face value US$125.0m, book value US$116.5m, maturity July 2021)  Our final 7 newbuildings delivered in 1H17, all remaining facilities were drawn down Pacific Basin 28

  30. Slide 30: Cash Flow in 1H17

    Appendix: Cash Flow in 1H17 As at 30 June 2017 Operating cash flow US$47.6m EBITDA US$56.6m Borrowings increased by US$106m due to:  Net repayment of US$52m of secured borrowings  Drew down US$158m:  US$140m Japanese export credit facilities  US$18m other borrowings on 2 existing vessels Capex U

  31. Slide 31: Sustainability

    Appendix: Sustainability  Applying sustainable thinking in our decisions and the way we run our business 2016 CSR Report  Creating long-term value through good corporate www.pacificbasin.com/ar2016 governance and CSR Corporate Social Responsibility (CSR)  Guided by strategic objectives on (i) wor

  32. Slide 32: Convertible Bonds Due 2021

    Appendix: Convertible Bonds Due 2021 Issue size US$125 million Maturity Date 3 July 2021 (approx. 6 years) Investor Put Date and Price 3 July 2019 (approx. 4 years) at par Coupon 3.25% p.a. payable semi-annually in arrears on 3 January and 3 July Redemption Price 100% Initial Conversion Price HK$4.0

  33. Slide 33: Atlantic Rates Stronger than Pacific

    Appendix: Atlantic Rates Stronger than Pacific Handysize (BHSI) Supramax (BSI) # US$/day net* US$/day net* 14,000 12,000 12,000 Atlantic 10,000 Atlantic $9,170 $6,820 10,000 8,000 8,000 6,000 Pacific 6,000 Pacific 4,000 $6,700 4,000 $8,500 2,000 2,000 0 0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Ju

  34. Slide 34: Supramax Rates Follow Same Pattern

    Appendix: Supramax Rates Follow Same Pattern Baltic Supramax Index (BSI) # US$/day net* 1 Sep 2017 $10,000 $9,280 2016 $8,000 $6,000 $4,000 2015 $2,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * excludes 5% commission # BSI is based on a standard 52,000 dwt bulk carrier in this slide only

  35. Slide 35: PB Focus: Estimated 3.9% Growth in Seaborne Dry Bulk Demand

    Appendix: Estimated 3.9% Growth in Seaborne Dry Bulk Demand in Full Year 2017 (Volume) Million Tonnes YOY Change 5% Iron Ore 1,488 Coal 3% 1,173 4.3% Major bulk total 2,661 20% Manganese Ore 30 7% Soybean 144 Fertiliser 161 7% Clarksons estimate FY2017: 6% Scrap Steel 107 Bauxite / Alumina 120 5% 

  36. Slide 36: Vessel Values Increased

    Appendix: Vessel Values Increased Supramax Vessel Values US$ Million 80 70 60 50 40 Newbuilding (61,000 dwt): US$23m 30 20 10 5 years (56,000 dwt): US$16.25m 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Source: Clarksons Platou, as at 3 Sep 2017 Pacific Basin 35

  37. Slide 37: 1H17 Dry Bulk Supply Development

    Appendix: 1H17 Dry Bulk Supply Development Mil Dwt % 80 8 Jan-Jun:2.3% 6 60 47 40 4 18 1.7% 2 20 2.2% 8 0.6% 0 0 4.5 3.5 -20 -2 -40 29 -4 2013 2014 2015 2016 1Q17 2Q17 New Deliveries Scrapping Net Fleet Growth Source: Clarksons Platou Pacific Basin 36

  38. Slide 38: Dry Bulk Supply

    Appendix: Dry Bulk Supply Orderbook Average Over Over 1H17 Scrapping as as % of Age 20 Years 15 Years % of Existing Fleet Existing as at 1 Jul 2017 Fleet (annualised) Handysize (25,000-39,999 dwt) 8% 8.6 10% 16% 1.9% Handymax (incl. Supramax) (40,000-64,999 dwt) 6% 8.3 7% 2.0% Panamax (65,000-119,99

  39. Slide 39: China Major and Minor Bulk Trade

    Appendix: China Major and Minor Bulk Trade China Coal Trade 2017 Chinese Minor Bulk Imports Mil Tonnes Mil Tonnes 350 35 Increased 15% YOY 300 30 247 257 250 25 200 20 15 150 10 100 5 50 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -9 -11 -50 06 07 08 09 10 11 12 13 14 15 16 17E 2015 2016 201

Pacific Basin Shipping — 24th CLSA Investors' Forum - HK 2017 on 6ix