Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — 3Q 2018 Earnings Presentation

26 slides from Pacific Basin Shipping's earnings presentation, Oct 11, 2018

  1. Slide 1: 3Q18 Trading Update

    B YF Pacific Basin h, 3018 Trading Update /, B } wc Sac : AN “44 Oct 2018

  2. Slide 2: Highlights

    Highlights 3Q18 Trading Update 1

  3. Slide 3: PB Daily TCE Earnings in 3Q Improved by 24% and 30%

    PB Daily TCE Earnings in 3Q Improved by 24% and 30%  Handysize and Supramax freight market indices reached their highest 3Q levels since 2011, and our average Handysize and Supramax daily TCE earnings in 3Q improved by 24% and 30% YOY respectively  During 3Q, we purchased and took delivery of one

  4. Slide 4: Our Quarterly TCE has Improved Significantly Since Early 2016

    Our Quarterly TCE has Improved Significantly Since Early 2016 PB Handysize TCE Performance PB Supramax TCE Performance US$/day US$/day PB TCE: PB TCE: $12,180 11,000 $10,080 13,000 12,000 10,000 11,000 9,000 10,000 8,000 9,000 7,000 8,000 6,000 7,000 5,000 6,000 5,000 4,000 4,000 3,000 3,000 2,000 2

  5. Slide 5: 3Q18 Performance and 2018 / 2019 Cover

    3Q18 Performance and 2018 / 2019 Cover Cover as at 10 Oct 2018 US$/day Handysize Supramax PB daily TCE net rate 3Q18 10,080 12,180 Improvement over 3Q17: Handysize: 3Q18 Market (BHSI/BSI) index net rate 3Q18 7,840 11,260 +24% / $1,950 Supramax: PB outperformance 28% / 2,240 8% / 920 +30% / $2,830 PB

  6. Slide 6: Market Review

    Market Review 3Q18 Trading Update 5

  7. Slide 7: Freight Market Continues to Improve

    Freight Market Continues to Improve Handysize Market Spot Rates in 2016-2018 Supramax Market Spot Rates in 2016-2018 # US$/day net* US$/day net* 10 Oct 2018 14,000 $12,740 12,000 10 Oct 2018 $8,930 12,000 10,000 2017 2017 10,000 8,000 2016 8,000 6,000 2016 6,000 4,000 4,000 2,000 2,000 0 0 Jan Feb M

  8. Slide 8: 2018 Demand is Forecast to Grow 3.1% with Minor Bulks at +4.0%

    2018 Demand is Forecast to Grow 3.1% with Minor Bulks at +4.0% Annual change dry bulk demand Bn tonne-miles Demand Growth Since 2010 % YOY 1,500 16% Less than 2017 but 14% 13.4% +5.0% 12% above supply 10% 8% 1,200 6.3% 5.9% 6.4% 6% 5.3% 5.0% 4% 3.1% 3.0% 2.4% +3.1% 2% 0.8% 0% 900 2010 2011 2012 2013

  9. Slide 9: Better Fundamentals for Handysize

    Better Fundamentals for Handysize Orderbook Average Over Over YTD Scrapping as as % of Age 20 Years 15 Years % of Existing Fleet Existing as at 1 Oct 2018 Fleet (annualised) Lower Handysize – 82m dwt orderbook (25,000-41,999 dwt) 4.6% 9 10% 17% 0.4% More Supramax – 197m dwt older 5.8% 9 7% 15% 0.3%

  10. Slide 10: Newbuilding Deliveries Continue to Reduce

    Newbuilding Deliveries Continue to Reduce Dry Bulk Supply Development Total Ordering vs Existing Fleet Mil Dwt 60 6.0 % of Fleet (Dwt) 50% 40 4.0 2.3% 40% Historically low 20 2.0 30% new ship ordering 22.4m 0 0.0 20% -3.1m -20 -2.0 10% 4.0% -40 -4.0 1.5% 2014 2015 2016 2017 1Q-3Q18 0% 07 08 09 10 11

  11. Slide 11: Favourable Dry Bulk Supply and Demand Outlook

    Favourable Dry Bulk Supply and Demand Outlook Dry Bulk Supply and Demand % YOY Change Clarksons Research estimates FY18: 8  3.1% tonne-mile demand growth  2.7% net fleet growth (3.3% deliveries – 0.6% scrapping) 6 5.0%  Actual deliveries expected to be around 4 3.1% 27m dwt compared to 38m dwt in

  12. Slide 12: Significant gap between Newbuilding and Secondhand prices

    Significant gap between Newbuilding and Secondhand prices Handysize Vessel Values Supramax Vessel Values US$ Million US$ Million 60 80 70 50 60 40 Newbuilding (38,000 dwt): 50 US$24m Newbuilding (62,000 dwt): 30 40 US$26m 30 20 20 10 10 5 years (32,000 dwt): US$15m 5 years (56,000 dwt): US$18m 0 0 0

  13. Slide 13: New Regulations

    New Regulations New Content Impact on the Industry PB actions Regulations IMO Ballast  International Maritime  Increased capex for existing  We have arranged BTWS for Water Organization (IMO) requires shipowners all our owned vessels Treatment: ballast water treatment  Potentially increased scra

  14. Slide 14: Outlook and Strategy

    Outlook and Strategy 3Q18 Trading Update 13

  15. Slide 15: PB's Fleet Mix is Changing

    PB’s Fleet Mix is Changing Fleet Development for Handysize and Supramax vessels Average no. of  Our number of owned ships is increasing vessels operated providing us with greater operational 250 242 222 control and earnings leverage 207 213 200  Owned vessels are replacing LT charters 110 94 89 as

  16. Slide 16: Competitive Owned Vessel Break-Even Levels

    Competitive Owned Vessel Break-Even Levels Handysize Supramax FY18 PB TCE cover rate1 US$11,810/day FY18 PB TCE cover rate1 US$9,980/day 2017 PB TCE actual US$9,610/day 2017 PB TCE actual US$8,320/day 900 P&L Break-even G&A Overheads P&L Break-even 900 ≈ US$9,000/day Finance Cost 1,090 ≈ US$8,300/da

  17. Slide 17: Our Business Model Continues to Outperform

    Our Business Model Continues to Outperform Our business model has been refined over many Our TCE Outperformance Compared to Market years. We are able to generate a TCE earnings in Last 5 Years premium over market rates because of our high laden percentage (minimum ballast legs), which US$1,870 US$1,

  18. Slide 18: Well Positioned for a Recovering Market

    Well Positioned for a Recovering Market Our TCE More Owned Efficient Cost Sensitivity toward Outperform Vessels with Structure Market Rates* Market Fixed Costs Annual Group 106 112 Market Rate 92 G&A Overheads 86 Average PB premium 75 80 US$75.7m +/- over market indices in Annualised US$1,000 US$57m

  19. Slide 19: Our Outlook and Strategy

    Our Outlook and Strategy Outlook  The minor bulk freight market has improved again since late September. Despite increasing trade tensions, the outlook for widely-spread global GDP growth remains favourable and bodes well for dry bulk demand. In addition, supply fundamentals are now more positive F

  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: Pacific Basin Dry Bulk – Diversified Cargo

    Pacific Basin Dry Bulk – Diversified Cargo Our Dry Bulk Cargo Volumes in 1Q-3Q 2018  Diverse range of commodities reduces product risk  China and North America were our largest markets  About 60% of business in Pacific and 40% in Atlantic 3Q18 Trading Update 20

  22. Slide 22: Appendix: Fleet List – as at 30 Sep 2018

    Appendix: Fleet List – as at 30 Sep 2018 www.pacificbasin.com Our Fleet 109 Vessels 30 LT 82ST 221 Total owned 1 Chartered Chartered 2 Total Handysize 81 21 36 138 Supramax 27 8 46 81 Post- Panamax 1 1 0 2 1 An additional 3 vessels we purchased during the period are scheduled to deliver into our fle

  23. Slide 23: Appendix: 3Q18 Performance and Future Cover

    Appendix: 3Q18 Performance and Future Cover Contracted Handysize Supramax Revenue Days 32,360 days 51,350 days 48,330 days 4Q 28,230 days 4Q 79% 70% 4Q 5,750 $10,600 4Q 11,170 days 10,790 68% days 5,290 78% $8,890 37,680 days days $10,560 days $11,970 26,610 FY17 FY17 94% days 96% 22,940 FY18 13,410

  24. Slide 24: Appendix: Dry Bulk Demand in 2018

    Appendix: Dry Bulk Demand in 2018 Key Drivers in 3Q18 2018E Dry Bulk Trade Volumes  Broad based economic recovery seen through increased Million Tonnes YOY steel output, also outside China  US coal exports grew strongly Iron Ore 1,503 2% Coal 1,249 4%  Stronger minor bulk demand in the Atlantic d

  25. Slide 25: Appendix: Handysize and Supramax Scheduled Orderbook at Historically Low Level

    Appendix: Handysize and Supramax Scheduled Orderbook at Historically Low Level Total Dry Bulk Orderbook Combined Orderbook: Handysize and Supramax Mil Dwt 4.5% Mil Dwt 40 4.2% 37.4m 35.0m 10 3.1% 29% 35 8.7m Shortfall 3.4% 20% 2.6% 30 28.1m Shortfall 8 7.2m 2.7% 2.2% 25 22.4m 6.2m 1.8% 6 5.1m 20 1.1

  26. Slide 26: Appendix: China Major and Minor Bulk Trade

    Appendix: China Major and Minor Bulk Trade China Coal Trade 2018 Chinese Minor Bulk Imports Mil Tonnes Mil Tonnes 350 Increased 5% YOY 300 25 300 247 263 20 250 200 15 305 150 271 10 100 256 5 50 0 0 -9 -8 -5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -50 06 07 08 09 10 11 12 13 14 15 16 17 18E

Pacific Basin Shipping — 3Q 2018 Earnings Presentation on 6ix