Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — Morgan Stanley Asia Pacific Summit 2017

34 slides from Pacific Basin Shipping's conference presentation, Oct 27, 2017

  1. Slide 1: Morgan Stanley Asia Pacific Summit 2017

    Morgan Stanley Asia Pacific Summit 2017 Singapore, Nov 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 260 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 3Q17 Trading Update 2

  4. Slide 4: Diversified Cargo & Customer Exposure

    Diversified Cargo & Customer Exposure Our Dry Bulk Cargo Volumes 1Q-3Q 2017  Diverse range of commodities reduces product risk  China and North America were our largest market  60% of business in Pacific and 40% in Atlantic 3Q17 Trading Update 3

  5. Slide 5: Large Fleet of Modern Versatile Ships

    Large Fleet of Modern Versatile Ships Pacific Basin Dry Bulk Fleet: 264 www.pacificbasin.com Average age of core fleet: 7.3 years old Customers > Our Fleet Owned 1 Chartered 2 Total Handysize 80 85 165 Supramax 25 72 97 Post-Panamax 1 1 2 Total 106 158 264 1 Two recent acquisitions (one secondhand H

  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: Market Rates Development YTD 2017

    Market Rates Development YTD 2017 Handysize Market Spot Rates in 2016-2017 Supramax Market Spot Rates in 2016-2017 US$/day net* US$/day net* $14,000 26 Oct 2017 $12,000 26 Oct 2017 $11,800 $9,580 $12,000 $10,000 2016 $10,000 $8,000 $8,000 $6,000 2016 $6,000 $4,000 $4,000 $2,000 $2,000 $0 $0 Jan FebM

  10. Slide 10: Key Demand Drivers for 2017

    Key Demand Drivers for 2017  1H17 actual dry bulk effective demand growth about 4.5%  Clarksons estimate full year 2017 dry bulk effective demand growth will exceed 5% (compared to +1.9% in 2016 and -0.9% in 2015)  Strong American grain exports, including record high 3Q volumes from Brazil  SE A

  11. Slide 11: Our Performance in 3Q17

    Our Performance in 3Q17 As at 10 Oct 2017 US$/day Handysize Supramax PB daily TCE 3Q17 $8,130 (+15% YOY) $9,350 (+27% YOY) 3Q Market Index Rate $7,000 $9,070 PB daily TCE YTD 1 $8,010 (+25%YOY) $9,060 (+41% YOY) 1Q- 3Q17 Market Index Rate YTD $6,730 $8,370 PB Outperformance YTD 19% 8% 1 Excluding sh

  12. Slide 12: Forward cover for 4Q17 and 2018

    Forward cover for 4Q17 and 2018 As at 10 Oct 2017 US$/day Handysize Supramax PB TCE Cover Rate for 4Q17 $8,890 $10,600 4Q % of Contracted Days Covered 70% 79% PB TCE Cover Rate for 2018 $7,690 $9,640 2018 % of Contracted Days Covered 14% 32% 3Q17 Trading Update 11

  13. Slide 13: 2017 Third Quarter Trading Update

    2017 Third Quarter Trading Update  Market improvement since last year benefits our owned and long term chartered ships which have mainly fixed costs  Market rates increased at end of 3Q but, due to lag between fixing and earning and 4Q is already mostly covered, these stronger rates will have marg

  14. Slide 14: Vessel Values Increased YOY

    Vessel Values Increased YOY Handysize Vessel Values US$ Million 60 50 40 30 Newbuilding (35,000 dwt): US$21.5m 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 hav

  15. Slide 15: Orderbook Continues to Shrink

    Orderbook Continues to Shrink Handysize Orderbook New Vessel Ordering is Down 149 vessels (5.5 million dwt) 50% Mil Dwt Historically low 7.0 40% levels of ordering 7.6% 6.0 30% 51% 5.0 Shortfall 20% 4.0 3.7% H’max: 0.8% 3.5% 3.0 6.0m 10% H’size: 0.9% 2.0 1.9% 1.6% 0% 2.9m 2000 2005 2010 2015 2017 1.

  16. Slide 16: Dry Bulk Supply & Demand

    Dry Bulk Supply & Demand % YOY Change 10  Demand is recovering and outpacing supply so far in 2017 8 5.9%  For full year 2017: 6  Clarksons estimate effective demand growth to exceed 5% 4 2.2%  PB estimate net supply growth around 3.5% 2 3.5% (5.0% deliveries – about 1.5% scrapping) 1.7% 0  Pro

  17. Slide 17: 1H17 Daily Vessel Costs – Handysize

    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 7,840 7,6

  18. Slide 18: 1H17 Daily Vessel Costs – Supramax

    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 8,590 8,40

  19. Slide 19: 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

  20. Slide 20: 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

  21. Slide 21: 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,

  22. Slide 22: Earnings Cover in 2017

    Appendix: Earnings Cover in 2017 Handysize Supramax Contracted Revenue Days 51,350 Days 45,630 Days 32,360 Days 4Q 70% 11,170 26,980 Days 4Q 4Q $8,890 79% 74% Days 36,600 Days 5,750 $10,600 10,910 $7,960 4Q 75% days days 4,950 days $7,460 FY17 FY17 34,720 FY16 40,180 94% 94% days FY16 96% days $8,15

  23. Slide 23: 2017 Interim Results and Highlights

    Appendix: 2017 Interim Results and Highlights  2017 Market freight rates well above historic lows one year ago and demand outpacing supply  Much increased positive 1H17 EBITDA of US$56.6m from negative $5m in 1H16  Much reduced 1H17 underlying loss of US$6.7m from a loss of US$61.6m in 1H16  Too

  24. Slide 24: 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

  25. Slide 25: 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

  26. Slide 26: 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

  27. Slide 27: 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 3Q17 Trading Update 26

  28. Slide 28: Cash Flow in 1H17

    Appendix: Cash Flow in 1H17 As at 30 June 2017 1H17 Operating cash flow US$47.6m 1H17 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 vesse

  29. Slide 29: 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

  30. Slide 30: 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

  31. Slide 31: PB Focus: Seaborne Dry Bulk Volume Growth

    Appendix: Estimated 4% Growth in Seaborne Dry Bulk Volume in Full Year 2017 (Volume) Million Tonnes YOY Change Iron Ore 1,478 5% Coal 1,193 5% Major bulk total 2,671 5% Manganese Ore 30 20% Bauxite / Alumina 127 11% Scrap Steel 110 9% Clarksons estimate FY2017: Soybean 145 8% Fertiliser 162 8%  >5%

  32. Slide 32: Supramax Vessel Values

    Appendix: Supramax Vessel Values US$ Million 80 70 60 50 40 Newbuilding (61,000 dwt): US$23.5m 30 20 10 5 years (56,000 dwt): US$17m 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Source: Clarksons Platou, as at 20 Oct 2017 3Q17 Trading Update 31

  33. Slide 33: Dry Bulk Supply

    Appendix: Dry Bulk Supply Orderbook Average Over Over YTD Scrapping as as % of Age 20 Years 15 Years % of Existing Fleet Existing as at 1 Oct 2017 Fleet (annualised) Handysize (25,000-39,999 dwt) 7% 9 9% 16% 1.6% Handymax (incl. Supramax) (40,000-64,999 dwt) 5% 8 7% 14% 2.0% Panamax (65,000-119,999

  34. Slide 34: 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 35 350 30 Increased 18% YOY 300 258 247 250 25 200 20 150 15 100 10 50 5 0 0 -5 -9 -9 -50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 06 07 08 09 10 11 12 13 14 15 16 17E Annualised

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