Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — Q3 2007 Earnings Presentation
30 slides from Pacific Basin Shipping's earnings presentation, Nov 1, 2007
Slide 1: Q307 Trading Update
Pacific Basin Stock Code: 2343 Q307 Trading Update November 2007 1 November 2007
Slide 2: Q307 Trading Update Highlights
Q307 Trading Update Highlights Very strong dry bulk market with favourable outlook 37% of FY2008 handysize days covered at average TCE of almost US$21,000 per day 58% of FY2008 handymax days covered at average TCE of almost US$30,490 per day Revenue days continue to grow with a 16% increase
Slide 3: What is Pacific Basin?
What is Pacific Basin? World’s largest modern handysize vessel owner/operator 18 offices worldwide, 280 shore-based staff, 1000 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 supp
Slide 4: Fleet Profile
Fleet Profile Core fleet totals Handysize: 72 Handymax: 13 88 ships Newbuilding 2 Chartered 10 Chartered 10 Core & short-term fleet Owned Newbuilding 1 totals 114 ships Chartered Operating Lease 27 3 Owned 2 45 Investment Finance Lease 16 Post Panamax: 3 programme totals US$225 million Owned 27 Newb
Slide 5: Diversified Cargo
Diversified Cargo Total Handysize and Handymax Cargo Volume in Q1-Q3 07 Log & Forest Products 6% Fertilisers 11% Grains 11% Steel & Scrap 7% 20.3 Cement 10% million tonnes Alumina 3% Petcoke/Coal/Coke 13% Other Bulks* 15% Sugar 4% Ore 8% Q1-Q3 07 cargo volume grew Concentrates 7% by 42% over Q1-Q3 0
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 $US/day $US/day 31 Oct 2007 48,000 31 Oct 2007 12,000 10,656 US$ 45,000 42,000 10,000 36,000 8,000 30,000 6,000 24,000 4,000 2,000 18,000 0 12,000 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 May-06 Jul-06 Sep-0
Slide 8: Dry Bulk – 1 Year Time-Charter Rate
Dry Bulk – 1 Year Time-Charter Rate US$/day 180,000 As at 26 October 2007 160,000 Capesize 140,000 $152,950 (Jan07: $59,138) 120,000 Panamax 100,000 $77,900 (Jan07: $29,450) 80,000 Supramax $66,500 (Jan07: $27,729) 60,000 Handysize 40,000 1-Year: $39,425 (Jan07: $18,169) 3-Year: $27,313 (Jan07: $15,
Slide 9: China at Mid-Industrialization Stage
China at Mid-Industrialization Stage Steel Consumption Per Capita Same growth as China (from 1990) Japan (from 1950) historical trend in Tons per capita Korea (from 1970) 1.0 India (from 2000) Japan and Korea 0.9 0.8 0.7 Indicating long term 0.6 dry bulk strong 0.5 growth 0.4 0.3 0.2 Same trend for
Slide 10: BDI and US$ go in Opposite Direction
BDI and US$ go in Opposite Direction BDI USD / EUR Exchange rate 12000 1.50 BDI 10000 USD / EUR Exchange rate (RHS) 1.45 8000 1.40 6000 1.35 4000 1.30 2000 1.25 0 1.20 Aug-06 Nov-06 Feb-07 May-07 Aug-07 Source: Bloomberg LP As at 31 Oct 2007 10
Slide 11: Strong Growth in Dry Bulk Trade
Strong Growth in Dry Bulk Trade Global Trade in Dry Bulks Mil Tonnes Long term historical 2003-2006E CAGR: 6.4% 3,500 growth of 2,971 approx. 2%... 3,000 2,818 2,666 2,514 2,500 2,218 2,340 …but pace has quickened 2,000 in last 5 years 1,500 Dry bulk trade volume 1,000 highly correlated 2002 2003 20
Slide 12: Tonne-Mile Effect
Tonne-Mile Effect Global Trade in Dry Bulks in Tonne-miles 2003-2006E CAGR: 7.2% Voyage distances Billion tonne miles have grown… 16,000 14,600 13,745 and continue to do so 14,000 12,838 12,079 12,000 10,449 11,144 10,000 8,000 7% real growth 6,000 driver for 4,000 dry bulk ship demand 2,000 0 2002
Slide 13: Port Congestion Squeezing Supply
Port Congestion Squeezing Supply Total Vessel Congestion at Australian Ports No. of Vessels 240 All Vessels 200 Panamax Coal demand the Capesize dominant cause 160 120 80 Direct impact on handysize rates 40 0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 As at Sep 2007 Source: Monson Agencies Australia
Slide 14: Low Orderbook in Handysize
Low Orderbook in Handysize Type of Vessels Orderbook as % of Existing Fleet (dwt) Container 55% Tanker 39% All yards are almost Others 12% full until 2010 Dry Bulk 48% Capesize 100K + Ave. Age Yards starting to take 73% 11.1 more dry bulk orders Panamax 60-100K 38% 11.7 Handymax 40K-60K But still li
Slide 15: Ageing World Fleet Points to Scrapping
Ageing World Fleet Points to Scrapping No. of Vessel More than Orderbook: 25% 32% older 140 16% ≥30Years 32% ≥ 25Years 55% ≥20Years 58% >15Years than 25 years Oct 2007 - Total Fleet: 1,243 (25K-35K dwt) 120 100 Uncertainty over 80 ‘real’ deliveries from 2009 60 40 Low supply of 20 handysize despite
Slide 16: 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 October 07: Now worth approx. 46 US$ 45 mil US$45m (Clarkson), 42 but US$47 million 38 by our estimates 34 30 26 22 Our asset value moves 18 in line with rising 14 market values 10 Jan-00 Jan
Slide 17: Financial Review
Financial Financial Review Review
Slide 18: 1H07 Financial Highlights
1H07 Financial Highlights 1H07 1H06 TCE Earnings (US$m) 269.2 140.4 Vessel disposal gains 50.2 - Reported net profit 162.9 36.4 Return on average shareholders’ equity 63% 25% Basic EPS (HK¢) 81 22 Dividends (HK¢ per share) 45.0 20.0 Payout ratio 55% 92% 18
Slide 19: Results – Handysize Freight & Charter-hire
Results – Handysize Freight & Charter-hire Drivers of the results 1H07 1H06 % Change Revenue days (days) 9,590 7,570 +27% TCE earnings (US$/day) 19,750 14,400 +37% Owned + chartered cost (US$/day) 9,370 8,540 +10% Contribution (US$m) 99.5 44.4 +124% Deliveries of 2006 1H07 TCE rates Blended cost ref
Slide 20: Results – Handymax Freight & Charter-hire
Results – Handymax Freight & Charter-hire Drivers of the results 1H07 1H06 % Change Revenue days (days) 2,260 1,320 +71% TCE earnings (US$/day) 25,180 15,690 +60% Owned + chartered cost (US$/day) 20,580 17,710 +16% Contribution (US$m) 10.0 (3.0) Division fully operational Exceptional 2Q07 TCE rates
Slide 21: Daily Vessel Costs - Handysize
Daily Vessel Costs - Handysize As at 2007 Interim Result Opex Owned Chartered Depreciation US$/day Finance cost Blended US$9,370 (FY2006: US$8,880) $11,580 12,000 Direct Overhead 400 $10,040 Charter-hire 10,000 570 $8,480 $8,330 Contracted 8,000 960 830 Charter-hire 2,000 1,710 FY 08: US$15,360 6,00
Slide 22: Balance Sheet
Balance Sheet 30 Jun 07 31 Dec 06 US$mil Net book value of fixed assets 1 763.5 741.0 Gross borrowings 319.5 350.5 Cash 83.3 63.2 Net borrowings 236.2 287.3 Shareholder's equity 599.5 485.0 Net borrowings / Fixed assets 30.4% 38.1% Net borrowings / Shareholder's equity 39.4% 59.2% Note 1 Insured val
Slide 23: Cashflow
Cashflow US$m 1H07 1H06 Operating cash inflows 131.3 57.3 Investing cash outflows (24.1) (91.4) - Payments for property, plant and equipment (167.6) (97.5) - Sales of vessels 176.0 - - Purchase of shares of other listed shipping companies (37.8) - - Others 5.3 6.1 Financing cash outflows (87.2) (5.5
Slide 24: Dividend
Dividend Continue to payout at least 50% of annual attributable profits Actual payout ratio has consistently exceeded the stated policy Year Dividend US$mil HK ¢ per share Payout Ratio 2006 Interim (paid 7Sep06) 33.4 22.0 Final (paid 17Apr07) 45.1 22.5 Total for year 78.5 42.5 71% 1H07 Interim (ex d
Slide 25: New Developments & Outlook
New New Developments Developments & & Outlook Outlook Jiangmen Nanyang Shipyard – Hull 101
Slide 26: Other Operations in China
Other Operations in China First co-investment in a Chinese bulk cargo terminal - with Nanjing Port Group Pacific Basin holds 45% interest with equity commitment of US$16 million in 2007 China Coal Trade Joint ship owning venture Mil Tons agreed with the shipping arm of Export 80 Import China’s
Slide 27: Listed Shipping Investments
Listed Shipping Investments Q107 – Pacific Basin began investing a portion of cash reserves in a selection of other shipping equities Taking advantage of in house knowledge of the shipping market and excellent access to industry information flows Investments as of 30 June amounted to US$34.9 m
Slide 28: Earnings Coverage
Earnings Coverage Handysize Handymax Revenue Days 25,000 16% 23,450 days 20,140 days Unfixed 20,000 7% Fixed 63% 15,000 10,000 5,610 days 4,600 days 5,000 US$21,920* US$21,000* US$27,120 42% 93% 37% 103% 58% US$30,490 0 2007 2008 2007 2008 * includes an approximate US$1,000/day anticipated uplift fr
Slide 29: Outlook
Outlook Handysize revenue days set to increase by 16% from 2007 to 2008 37% of 2008 handysize days uncovered; current spot market at almost US$45,000 per day net Record high vessel prices Active development of business model into complementary areas Industrial revolution in the world’s mos
Slide 30: 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,
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