Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping — Investor Presentation (October 2007)
37 slides from Great Eastern Shipping's investor presentation, October 2007
Slide 1: Business & Financial Review
The Great Eastern Shipping Co. Ltd. Business & Financial Review Oct 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 Wet bulk Through wholly owned subsidiary Greatship (India) Ltd Product Tankers Offshore oil field Support & Crude Tankers (includes LPG) Logistics Services Dry bulk 3
Slide 4: Company at a glance
Company at a glance A India’s largest private sector Shipping Company A In its 60th year of operations A Diverse asset base with global operations A 25 years of uninterrupted dividend track record A Rated ‘AAA’ (Domestic Currency Debt) since 1996 A High liquidity; adequate floating stock Shareholdin
Slide 5: Market Information
Market Information In Rs. In US$ NAV (as on 30 Sep-07) 492 12.3 Share Price* 453 11.32 Total Market Cap.* 6,902 crs 1.7 bn Shares outstanding 152.2 mn P/E (based on FY06-07 EPS of Rs. 58)* 7.8 Daily Average Volume (last 12 mths) 0.26 mn *As on 22 Oct’07 At exchange rate 1 USD= Rs 40. 5
Slide 6: Asset Profile Shipping business
Asset Profile Shipping business q 49 ships aggregating 3.34 Mn dwt, avg.age 11.2 years q 36 Tankers avg.age 10.6 years (79% in tonnage terms) q 14 Crude oil carriers (6 Suezmax, 8 Aframax) avg.age 8.9 years q 20 Product tankers (2 Panamax ,11 MR, 7 GP) avg.age 13.3 years q 2 LPG carriers – avg.age 2
Slide 7: Committed CAPEX – Shipping Business
Committed CAPEX – Shipping Business Committed Capex of around USD 319 Mn - 6 new building contracts aggregating 0.46 mn. dwt üFY 2009 - 2 NB, LR 1 Product Tankers (Q2) üFY 2010 - 2 NB, LR 1 Product Tankers (Q3) üFY 2011 - 1 NB Kamsarmax Dry Bulk Carrier (Q4) üFY 2012 - 1 NB Kamsarmax Dry Bulk Carrie
Slide 8: Asset Profile Offshore business - Greatship (I) Ltd.
Asset Profile Offshore business - Greatship (I) Ltd. (wholly owned subsidiary) & its subsidiary companies Ø 3 Platform Supply Vessels (PSV) Ø Committed Capex of around USD 521 Mn* ü FY 2008 - 2 NB 80T AHTSV (CDL) (one each in Q3 and Q4) 5 vessels at end of FY08 ü FY 2009 - 2 NB PSVs (Aker) delivery
Slide 9: Committed Capex
Committed Capex Committed Equity Participation of USD 135 mn G E Shipping Greatship (I) Ltd (Committed CAPEX (Committed CAPEX USD 521 mn) USD 319 mn) Already Balance infused infusion USD 120 mn within FY09 Total committed CAPEX of USD 840 mn Spread over next two & half years To be financed with a mi
Slide 10: Business Philosophy
Business Philosophy Strive to deliver through the cycle Risk Management Mechanism Revenues Cost - Mix of Spot v/s Time - Bunker Hedging - FX Hedging - Interest Rates “Planning for future” rather than “forecasting for future” 10
Slide 11: Financial Review
Financial Review 11
Slide 12: Performing through the years
Performing through the years. . . 70.0 3.5 3.26 3.02 2.92 60.0 58.0 3 55.0 50.0 2.47 2.5 42.3 Rs/ Share mn dwt 40.0 2 1.37 1.32 30.0 1.28 1.5 24.3 0.87 0.88 20.0 0.71 1 8.8 11.2 11.5 11.4 9.0 10.0 8.0 6.5 0.5 5.7 4.0 4.0 4.0 4.4 2.0 4.3 1.5 2.7 0.0 0 FY98 FY99 FY00 FY01 FY 02 FY03 FY04 FY 05 FY06* F
Slide 13: Performing through the years
Performing through the years. . . 450 50 405 43.80 45 400 40.60 350 34.80 40 335 282 35 300 Rs. Per share 32.40 30 250 % 19.50 201 25 200 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
Slide 14: Timing acquisitions and sales – Monetising values
Timing acquisitions and sales –Monetising values 1000 6 Buy Sell (6) 5 (3) (1) Tanket Secondhand Price Index (2) 750 (4) (5) 4 (6) 500 (4) 3 (2) (5) (1) (3) 2 250 1 0 0 02 03 04 05 06 07 00 01 20 20 20 20 20 20 20 20 1. Jag Prachi (Jan’03 , May’06) 2. Jag Prakash (Feb’03, Nov’05) 3. Jag Leena (Jul’0
Slide 15: Historical NAV per share (only shipping business)
Historical NAV per share (only shipping business) As on Rs/Share 31-March-2005 282 31-March-2006 335 31-March-2007 405 30-June-2007 452 30-September-2007 492 15
Slide 16: Financial Highlights of Q2 FY08 performance
Financial Highlights of Q2 FY08 performance (Rs.crs) Q2 FY08 Q2 FY07 % change H1 FY08 H1 FY07 % change Income from Operations 601.3 522.1 15% 1238.4 955.9 30% Operating Profit 277.8 265.5 5% 590.5 498.6 18% Operating Margin 46% 50% 48% PAT (excl. AS 11 impact) 295.2 235.4 26% 613.1 476.5 29% Cash Pr
Slide 17: Earnings Mix
Earnings Mix Mix of Spot & Time Days Q2 FY08 Q2 FY07 H1 FY08 Average TCY Details – Q2 FY08 Dry Bulk Spot % 57% 52% 55% Average TCY ($ per day) Q2 FY08 Q2 FY07 % change Time % 43% 48% 45% Crude Carriers 31,836 32,015 -1% Tankers Product Carriers 19,337 20,834 -7% Spot % 37% 38% 34% Time % 63% 62% 66%
Slide 18: Shipping Markets in Q2 FY08
Shipping Markets in Q2 FY08 n Sharp correction in Crude Tanker Rates - General summer depression in rates got aggravated by warm winter - Liquidation of Inventories n Product Tanker Rates too witnessed softness - Large refineries went through their maintenance period - Draw down in inventories by th
Slide 19: Ship prices continue to be firm
Ship prices continue to be firm Asset Price Movement (5 yr old) 160 160 140 140 120 120 $ USD mn. $ USD mn. 100 100 80 80 60 60 40 40 20 20 0 0 16/09/2003 Dry bulk Tankers Time line- Sep 2003 till Oct 22, 2007 VLCC AFRAMAX CAPESIZE PANAMAX(DRY) Source: Baltic Sale & Purchase Assessment 19
Slide 20: Global Shipbuilding Status
Global Shipbuilding Status E Highest order book since 1973; 40.4% of tanker & 48% of dry bulk fleet on order E Order book for associated marine equipment (engines, crankshaft and on- board navigation system) have also reached record high E Regulatory environment contributing to increased costs ÷ IMO
Slide 21: Shipping Industry Outlook
Shipping Industry Outlook 21
Slide 22: Oil Markets clouded by uncertainty
Oil Markets clouded by uncertainty IEA – Aug’07 =In the past oil demand growth forecasts have been significantly way off CY 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 Forecast Actuals Forecast Actuals Forecast Actuals Forecast Actuals Forecast Actuals Oil demand 1.5% 3.7% 2.2% 0.94% 1.8% 0.9%
Slide 23: Strong Oil Consumption Growth
Strong Oil Consumption Growth 7.0 Emerging Economies Mature Markets 6.0 5.0 4.0 (%) 3.0 2.0 1.0 0.0 China India Other Asia Africa South Middle N.America West Mature Eastern America East Europe Asia Surope Projected Annual GDP (2005-2015) Projected Annual Oil Consumption( 2003-2015) Source: Energy In
Slide 24: Tankers
Tankers n Crude: o Changing trade patterns o Low inventory levels to increase the vulnerability to any supply shock effect – • Weather • Geopolitical • Floating storage demand o Likely increase in OPEC & non-OPEC production 2007 2008 2009 2010 World Fleet addition 6.7% 7.7% 13.8% 10.7% 24
Slide 25: Tankers
Tankers n Product: o Strong product trade movement likely due to - • Ensuing winter demand • New refineries away from large consumers leading to ton-mile demand increase o Supply overhang to be fully absorbed by 2008 as refining capacity in Mid.East & Asia picks up 2007 2008 2009 2010 World Fleet ad
Slide 26: Dry Bulk
Dry Bulk n Rates to remain firm on strong Asian demand for Iron-Ore & Coal n Change in trade patterns as importers turn to far away sources n Reduced shipyard deliveries & an aging world fleet 2007 2008 2009 2010 World fleet addition 6.8% 7.4% 10.3% 12.9% 30% of world fleet fleet over 20 20 is over
Slide 27: Dry Bulk – Growth Driven by Asia
Dry Bulk – Growth Driven by Asia Breakup of commodities transported Imports - Regional Distribution Others 4% Iron Ore N.America 4% M.East 27% 4% Africa S.America 4% Minor 3% Bulk Others 2% 33% Europe 24% Asia Coal 59% Grains 26% 10% Asia contributes to 59% of dry bulk imports, whereas North America
Slide 28: Iron ore trade – stronger growth in the offing
Iron ore trade – stronger growth in the offing Global Seaborne demand million metric tons China RoW 1,010 725 790 670 465 603 452 484 537 410 405 400 395 389 360 372 545 320 380 208 270 92 112 148 2001 2002 2003 2004 2005 2006 2007E 2011E World China RoW 9.9% 28.3% 2.4% CAGR 2001 - 06 6.9% 11.2% 2.8
Slide 29: Offshore Industry Outlook
Offshore Industry Outlook 29
Slide 30: India's Oil Reserves- How the competition Stacks up
India’s Oil Reserves- How the competition Stacks up 60 Oil Reserves in bn. Barrels No.of yrs in which reserves will be used up 40 ? 25 18.3 20 15 11.2 5.8 Russia China Brazil India STATUS: 5.8 billon barrels IMPACT: Not only are India’s oil reserves totally inadequate, they are also expected to last
Slide 31: Offshore oil field services industry
Offshore oil field services industry FEnergy Security concerns high on consumer countries agenda. F Between 1985 to 2002, investment in global E & P almost stagnant. Since 2002, it is growing in between 9% to 13%. F Offshore will continue to account for increasing proportion of oil supply. FASIA cur
Slide 32: Increase in E&P Budget
Increase in E&P Budget ü Lehman Brothers analysis of E&P expenditure budgets suggested expenditure was to increase by 9% at the beginning of 2007 from 2006. In June ’07 this estimate was increased to 13%. 32
Slide 33: Offshore Industry – gearing up
Offshore Industry – gearing up Source: Lehman Brothers Source: Douglas-Westwood - Worldwide expenditure increasing year on year - $267 billion expenditure in 2006 - Near 100% industry utilization drives prices & rates 33
Slide 34: Offshore Supply Market
Offshore Supply Market OSV Fleet Summary (Nos) AHTSVs PSVs Others Current Fleet* 2,068 1,476 1,274 Aging Fleet Orderbook 447 220 160 ü 52% of the total fleet % of O/B to current fleet 21.6% 14.9% 12.5% over 25 years * Data as on Sep’07 Source: Clarkson Offshore Installations Delivery Schedule Type C
Slide 35: 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 NELP VII 29 19 9 57* TOTAL 92 83 48 223 Source:DGH, * Blocks allotted till date Pre NELP i.e (1993 –
Slide 36: Good times, but how long will it last?
Good times, but how long will it last? Positives: ü High vessel utilisations and strong charter dayrates ü Tenders continuing to be issued for long term work ü High E&P budgets leading to non-traditional market development ü New players driving technology and efficiency Potential Negatives: • Level
Slide 37: THANK YOU
THANK YOU visit us at www.greatship.com 37
The Great Eastern Shipping — Investor Presentation (October 2007) on 6ix