Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping Company — Investor Presentation (June 2022)
30 slides from Great Eastern Shipping's investor presentation, Jun 15, 2022
Slide 1: The Great Eastern Shipping Company
The Great Eastern Shipping Company Sailing past every challenge 15th June 2022 1
Slide 2: Forward-looking statements disclaimer
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 directions, prospects and f
Slide 3: Agenda
Agenda 1. Company Overview 2. Business Segments 3. Investment Thesis 4. Current Shipping Market 5. Current Offshore Market 3
Slide 4: Company Overview
Company Overview 4
Slide 5: GESCO – 70+ years of Excellence
GESCO – 70+ years of Excellence Building a global brand… From a modest beginning… ..to most admired globally 1948 2022 5
Slide 6: Management Philosophy
Management Philosophy Focussed on the same business for 70+ years… Creating Superior Stakeholder Value Low balance sheet leverage; High Sector Agnostic; operating leverage Value based approach Maintain high cash not momentum balances; based Disciplined use of Leverage Committed to health & Opportuni
Slide 7: Successful capital allocation, supported by strong balance sheet
Successful capital allocation, supported by strong balance sheet 02 03 Effective Cost of Strong Liquidity Position Debt Cash Balance < 3.5% 01 US $400Mn High Un-levered Dollar Returns on investments since 04 FY17 = 17.7% 05 Low B/S Leverage 5 Year NAV based Dollar Net Debt/Equity Return (excluding G
Slide 8: Business Segments
Business Segments Shipping Offshore Presence - Global presence with Presence – Global, but majority of different asset classes assets in India Business Model - Tramping, Mix of Business model - Efficiently managing spot and time, Dynamically managing portfolio by fixing long term charters as
Slide 9: Shipping Business
Shipping Business Number of Vessels Key Strengths Product Carriers, • Dynamically Managing cycles 18 Gas • Diversified fleet Carriers, 5 • In-House technical & commercial management Dry Bulk • Healthy balance sheet & low cost of debt Carriers, 14 • Stringent adherence to risk management Crude Carrie
Slide 10: Offshore Business – Greatship (India) Ltd. (GIL)
Offshore Business – Greatship (India) Ltd. (GIL) Number of Assets Key Strengths • One of the very few companies globally to Anchor Handling Tug , 8 have deleveraged without restructuring Platform Supply , 4 • Focus on maintaining utilization and paying down debt in the down cycle of the last 7 Multi
Slide 11: Demand Drivers & Supply Drivers
Demand Drivers & Supply Drivers Supply Drivers Demand Drivers NB Ordering Scrapping Slow Steaming Fleet in Storage/ Trade Growth Trade Patterns Congestion Shipyard Age & Bunker Capacity Prevailing Prices Cargo Sourcing World GDP Growth Market Areas Replacement Demand Regulatory SPR/Inventory Levels
Slide 12: Investment Thesis
Investment Thesis 12
Slide 13: Investment Thesis
Investment Thesis Fleet operated at global Offshore fleet – quality standards, with a large operations with low number of international balance sheet leverage customers Prudent Capital Allocation across a Strong cash flows diversified fleet Strong balance sheet High level of operating enables capaci
Slide 14: International standards/ no. of customers
International standards/ no. of customers Port State Control 54 inspections with nil 54 observations Total Inspection 66 Unplanned technical downtime FY22 – 0.46% o 78 inspections carried out by oil majors with an average of 2.74 observations per inspection In FY 22, we carried cargo for a total of
Slide 15: Prudent Capital Allocation
Prudent Capital Allocation Transformation from Momentum Buying to Value Buying Sales & Purchase (Oil Tankers) vs Suezmax 5 year old Purchase (DryBulk) Vs Panamax Drybulk 5 year old Momentum Buying 90 Momentum Buying 105 80 95 70 85 60 75 50 65 Value Buying Value Buying 40 55 30 45 20 35 10 Dec-06 De
Slide 16: Balance Sheet Discipline
Balance Sheet Discipline Net Debt to Fleet Ratio o NCD Ratings – CARE ratings AA+; BRICKWORK AAA GESCO 0.1 o Effective cost of debt <3.5%; lowest amongst peers PEERS 0.42 0.49 Net Debt Reduction Phase Net Debt Expansion Phase 0.39 0.41 0.39 0.17 0.15 0.12 114 307 326 361 258 141 107 FY 2016 FY 2017
Slide 17: EBITDA Over the Years
EBITDA Over the Years Consolidated EBITDA (Rs. Crores) 1,931 1,695 1,508 1,428 1,345 FY18 FY19 FY20 FY21 FY22 17
Slide 18: Current Shipping Market
Current Shipping Market 18
Slide 19: Tanker Market
Tanker Market Avg Suezmax Earnings (USD/Day) Avg MR Earnings (USD/Day) 1,00,000 40,000 80,000 30,000 60,000 20,000 40,000 20,000 10,000 0 0 FY21 FY22 FY23 FY21 FY22 FY23 USD/Day FY21 FY22 % Change USD/Day FY21 FY22 % Change 12M 18,970 9,079 -52% 12M 12,040 7,597 -37% Sources – Industry Reports 19
Slide 20: Dry Bulk Market
Dry Bulk Market Avg Baltic Capesize 5T/C Avg Baltic Supra Earnings BSI-58 10T/C Earnings(USD/Day) (USD/Day) 80,000 40000 60,000 30000 40,000 20000 20,000 10000 0 0 FY21 FY22 FY23 FY21 FY22 FY23 USD/Day FY21 FY22 % Change USD/Day FY21 FY22 % Change 12M 16,012 32,642 104% 12M 10,631 28,728 170% Source
Slide 21: LPG (Gas) Market
LPG (Gas) Market Avg VLGC Earning (USD/Day) 1,20,000 1,00,000 80,000 USD/Day FY21 FY22 % Change 60,000 12M 45,500 32,100 -29% 40,000 20,000 - April May June July Aug Sep Oct Nov Dec Jan Feb Mar FY 21 FY 22 FY23 Sources – Industry Reports 21
Slide 22: Asset Price Movement (Over the Last 5 Years)
100 110 120 130 90 75 95 115 135 May-17 May-17 Aug-17 Aug-17 Nov-17 Nov-17 Feb-18 Feb-18 May-18 May-18 Aug-18 Aug-18 Sources – Industry Reports Nov-18 Nov-18 Capesize Suezmax Feb-19 Feb-19 May-19 May-19 Aug-19 Aug-19 Nov-19 Nov-19 Feb-20 Feb-20 May-20 May-20 Aug-20 Aug-20 Nov-20 Nov-20 Feb-21 5 Yr O
Slide 23: Scrapping
Scrapping Fleet Vessel (mn Dwt) Scrapping (% of beginning world fleet) Category May 22 Q1CY2022 CY2021 CY2020 CY2019 CY2018 CY2017 CY2016 CY2015 CY2014 Crude 438 0.31% 2.47% 0.53% 0.55% 4.39% 2.43% 0.39% 0.38% 1.75% Product 174 0.47% 2.11% 0.57% 0.60% 1.72% 1.22% 0.54% 0.62% 1.10% Dry Bulk 953 0.11%
Slide 24: Lowest Order Book to Fleet Ratio
Lowest Order Book to Fleet Ratio Order Book as a % of fleet Historical Order Book as a % of fleet 90% 80% 70% 60% 50% 40% 6.83% 6.62% 30% 4.98% 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Crude Tankers Product Tan
Slide 25: Current Offshore Market
Current Offshore Market 25
Slide 26: Market Trends
200 250 300 350 400 450 Jan 2010 May 2010 Sep 2010 Sources – Industry Reports Jan 2011 May 2011 Sep 2011 Jan 2012 May 2012 Sep 2012 Jan 2013 May 2013 Market Trends Sep 2013 Jan 2014 May 2014 Sep 2014 Jan 2015 o Firming Jack-up rig demand in the Middle East May 2015 Under Contract Sep 2015 Jan 2016 M
Slide 27: Fleet Supply
Fleet Supply Large number of Cold Stacked Rigs Number Jackup Rigs PSVs + AHTSVs Current Fleet 488 3,515 Contracted Fleet 350 2,157 Orderbook 28 132 O/B to current fleet 5.7% 3.8% Total Scrapping since January 2016 (nos.) 141 507 No. of Vessels/Rigs more than 20/30 years 33% 19% old (as %age of fleet
Slide 28: Greatship Evolution
Greatship Evolution Last seven years • Most challenging years for the offshore sector since the late 80s. • Utilization levels across asset classes dropped to historic lows, charter rates came down to levels that barely generated any +ve EBIDTA. • Large part of the industry went through financial re
Slide 29: Price at a significant discount to NAV
Price at a significant discount to NAV At current P/Consolidated NAV, GESCO trades at 0.55 800 1 Share Price to Consolidated NAV 0.9 700 0.8 600 0.7 500 0.6 400 0.5 0.4 300 0.3 200 0.2 100 0.1 0 0 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Consolidated NAV Share Price/ Consol NAV * For FY22 we have taken sh
Slide 30: Thank You
Thank You 30
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