General Overview   Shipping 20080820
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General Overview Shipping 20080820

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General Overview   Shipping 20080820 General Overview Shipping 20080820 Presentation Transcript

  • Overview in Shipping Markets General Overview Teddy H Tsai – Head of Research, Pacific Transportation Asia Pte Ltd. August 20, 2008
  • Current Environment  Rising commodity prices will be one of the long-term major issues. Rising prices for grains, oil, building materials are affecting all parts of the global economy, from fixed investments to consumer consumption. China and India continue to be the leading drivers of demand for commodities.  Commodity producers continues to promote a bullish view. Marius Kloppers, CEO of BHP Billiton, highlighted that strong demand from China will remain intact for the longer- term. Moreover, supply-side constraints will continue to favor commodity prices.  Vessel orderbook continues to grow for the larger, standard sizes. We need to remain alert of the orderbook, and avoid areas where the supply-side is being overbuilt. We continue to believe that niche markets have a more limited orderbook, where opportunities are present.  Areas to focus on are sectors with 1) old fleet, 2) limited orderbook, 3) fragmented market, 4) low rates with cyclical recovery outlook, and 5) organic growth. 2
  • Economic Overview
  • GDP Growth 2005 2006 2007 2008clsa 2009clsa China 10.4 11.6 11.9 10 8 Hong Kong 7 6.9 6.4 4.9 2.6  Slower growth regionally and India 9.4 9.6 9 7.5 7.1 higher inflation. Indonesia 5.7 5.5 6.3 4.9 2.9 Korea 4.2 5.1 5 3.9 2.8 Malaysia 5.3 5.8 6.3 5.3 3.3  Food price inflation raises policy Philippines 5 5.4 7.2 3.9 3.4 and political risk. Export Singapore 7.3 8.2 7.7 3.6 2.7 restrictions increasingly pervasive. Taiwan 4.2 4.9 5.7 3.6 1.5 Thailand 4.5 5.1 4.8 4.4 1.9 Vietnam 8.4 8.2 8.5 5 4  Asia trade is still driven by external trade 7.0 (%YoY) 6.0 Total  Euro currency weakness will 5.0 Excluding food 4.0 threaten Asian exports. 3.0  Slower Asian growth in 2H08. 2.0 1.0 Cycle trough as late as 2H09. 0.0 -1.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Weighted using 2007 GDP Source: CEIC, CLSA Asia-Pacific Markets 4
  • Inflationary impact – rising energy & commodity prices 900 US$/tonne 600 US$/tonne 800 700 500 600 683 400 500 300 337 400 300 200 222 200 100 100 0 0 Aug- May- Feb- Nov- Aug- May- Feb- Nov- Aug- Aug- May- Feb- Nov- Aug- May- Feb- Nov- Aug- May- 02 03 04 04 05 06 07 07 08 01 02 03 03 04 05 06 06 07 08 180cst bunker prices, Singapore US Gulf Wheat Price US Gulf Corn Price  We are now in an inflationary world.  Commodity prices coming off their highs, as the global economic condition deteriorates, but expectations are that long-term prices will stabilize at a higher level.  Transport costs will also stabilize at a higher level, due to the shortage of assets in “hot” markets, such as dry bulk, offshore rigs, etc. 5
  • Spot Prices on Coal and Iron Ore China Iron Ore Import Price (Beilun) 160 EUR/ USD/ 200 1,800 Yuan/mt metric ton metric ton 180 1,600 140 160 1,400 120 1,360 140 1,200 100 120 1,000 80 100 800 60 80 600 60 400 40 40 200 20 20 - 0 0 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- 06 06 07 07 07 07 08 08  Iron ore and coal prices are off from North West Europe Coal Prices - CIF basis (EUR/ton) their highs, but long-term outlook Richards Bay Coal Prices - FOB basis (USD/ton) remains strong, as highlighted by commodity producers. 6
  • Credit Conditions – Current Status USD 5-Year Interest Rate Swap (%) - Quarterly 8% 7% 6% 5% 4% 3% 2% 1% 0% Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- 97 98 99 00 02 03 04 05 07 08  Funding costs has sky rocketed.. From <50 bps to over 200 bps above LIBOR, even for quality borrowers. Interest rate swaps are 4.2% for 5 year, US dollar terms, and 5.1% for Euro dollar terms, up from our last update.  We estimate that funding costs should be 4~5% and gearing levels have dropped to 50-60%. The tenor of loans are being offered around 5 to 8 years, but with front loaded payments.  Timecharter contracts required for new startups range from 1-3 years, depending on the bank. 7
  • Demand for Shipping Assets  Tankers – World oil consumption and oil products trade  Imports and exports of refined products  Imports and exports of crude oil  Oil & Gas E&P – demand for offshore supply vessels and services  Dry Bulk – China demand for raw materials  Iron Ore, Coking Coal for Steel Production  Thermal coal for Power Production  Grains, Soybean, and the Agricultural-bulk trade  Containerships – Final Good Demand from Asia to Europe and US  Liner market – weak US and European growth  High oil prices impacting the market  Specialized Trades  Auto market – car carriers  Dredgers and Tugs – local port demand  Project cargoes – Heavy Lift, manufacturing location of large equipment shifting to Asia. 8
  • Valuations by Sector P/E P/BV EV/EBITDA Curre nt YR1 YR2 Curre nt YR1 YR2 T12M O YR1 YR2 Yie ld-Bas e d Com panie s 17.5 15.8 18.3 2.3 2.2 2.2 14.4 11.0 9.4 Tank e r Com panie s 13.6 12.4 10.8 1.7 1.3 1.3 14.1 9.8 9.5 Gas & Che m ical 21.9 26.8 13.9 1.3 4.9 4.6 10.2 8.5 7.7 Dry Bulk Shipping 7.9 5.6 5.5 2.8 6.5 6.7 17.3 5.7 6.5 Containe r Shipping Ope rators 6.5 9.5 8.4 1.0 1.4 1.3 11.0 5.7 5.4 Dive rs ifie d Com panie s 11.3 10.1 8.4 1.7 16.6 12.6 12.4 7.2 7.5 Shipbuilding 20.3 8.8 6.4 2.5 1.6 1.2 30.0 12.1 8.5 Ports 10.4 15.4 12.0 1.3 1.3 1.2 31.8 19.6 17.8 Ship Re pair / Building 15.3 12.8 11.1 3.4 2.9 2.6 17.4 9.9 8.5 Othe rs 11.7 14.7 11.1 1.6 9.9 2.7 8.2 7.1 6.5 Div Yield ROE EPS Growth Debt / EBIT 2007 2008 Current YR1 YR2 2007 2008 EBITDA Margin Yield-Based Companies 7.8 9.8 18.6 19.3 20.1 17.0 21.9 5.9 46.9 Tanker Companies 5.5 8.1 19.2 30.3 19.7 14.7 10.8 5.8 22.5 Gas & Chemical 13.8 4.9 14.2 11.5 10.7 50.3 40.3 6.1 17.2 Dry Bulk Shipping 7.0 10.7 48.8 51.1 38.1 152.3 79.0 3.2 34.6 Container Shipping Operators 4.5 3.9 24.5 10.3 11.5 92.1 -38.6 2.8 8.3 Diversified Companies 2.7 3.9 16.9 21.2 19.2 26.2 29.7 3.2 18.4 Shipbuilding 1.0 3.2 21.9 26.8 35.1 149.2 111.2 0.9 7.6 Ports 1.7 3.6 14.8 9.3 10.3 41.1 -20.1 4.0 23.9 Ship Repair / Building N/A 5.7 23.2 24.8 25.6 5.8 36.1 1.2 6.2 Others 10.0 1.5 10.0 15.0 19.7 -17.3 -7.6 3.4 14.0 9
  • Asset prices
  • Cash Flow Multiples EBITDA M ultiple Charte rfre e 1-Ye ar 3-Ye ar 2003-07 Ship Type Sub-Type Value (US$ m n) Spot T/C T/C Ave rage Spot Tank e r VLCC Modern 300,000 dw t 165.0 5.3 5.4 7.1 7.6 Vintage 250-285,000 dw t 45.0 1.5 2.2 - 2.4 Suezmax Modern 150,000 dw t 105.0 2.8 7.2 7.2 5.9 Aframax Modern 95-105,000 dw t 79.0 4.1 7.3 7.3 6.1 Mid-aged 95-105,000 dw t 64.0 3.4 10.8 6.2 5.4 Clean Product Modern 70-75,000 dw t 60.0 3.0 6.0 7.0 5.6 Mid-aged 30-35,000 dw t 37.0 8.0 - - 4.6 Dirty Product Modern 45-47,000 dw t 54.0 3.8 7.3 7.7 5.2 Dry Bulk Capesize Modern 170,000 dw t 156.0 3.1 2.8 3.8 7.2 Mid-aged 150,000 dw t 116.0 2.7 2.1 2.8 6.7 Vintage 150,000 dw t 92.5 2.2 4.7 - 5.4 Panamax Modern 73,000 dw t 89.0 5.2 3.5 4.2 9.7 Mid-aged 72,000 dw t 77.5 4.6 3.1 3.7 8.6 Vintage 60,000 dw t 48.0 3.2 2.5 3.5 6.1 Handymax Modern 45,000 dw t 73.5 4.4 4.3 5.0 9.2 Mid-aged 42-45,000 62.0 4.2 3.7 4.2 7.9 Handysize Modern 25-30,000 dw t 54.0 - 4.3 4.3 - Mid-aged 25-30,000 dw t 46.5 - 3.7 3.7 - Container** Container Mid-aged 3,500 teu 48.3 6.0 - - 5.9 ** Updated Aug 14, 2008 (MMA) 11
  • Dry Bulk Asset Prices SSY Prices - Capesize Vessel SSY Prices - Handysize Vessel 160 60 50 120 40 US$ Millions US$ Millions 30 80 20 40 10 0 0 Jul-99 Jul-00 Jul-06 Jul-07 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jan-00 Jan-01 Jan-02 Jan-03 Jan-06 Jan-07 Jan-08 Jan-04 Jan-05 Jan-94 Jan-95 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-07 Jan-08 Jan-96 Jan-97 Jan-04 Jan-05 Jan-06 Simpson Spence Young SSY New Build Price Japan Handysize Vessel Simpson Spence Young SSY New Build Price Japan Capesize Vessel Simpson Spence Young SSY New Build Price South Korea Handysize Vessel Simpson Spence Young SSY New Build Price South Korea Capesize Vessel Simpson Spence Young SSY New Build Price China Handysize Vessel Simpson Spence Young SSY New Build Price China Capesize Vessel Simpson Spence Young SSY 5 Year Old Handysize Vessel Price Simpson Spence Young SSY 5 Year Old Capesize Vessel Price Simpson Spence Young SSY 10 Year Old Handysize Vessel Price Simpson Spence Young SSY 10 Year Old Capesize Vessel Price Simpson Spence Young SSY 15 Year Old Handysize Vessel Price Simpson Spence Young SSY 15 Year Old Capesize Vessel Price 12
  • Tanker Asset Prices – Clean Product Tankers SSY Prices - 37K Ton Clean Vessel 50 40 US$ Millions 30 20 10 0 Jan-02 Jul-02 Jan-03 Jan-04 Jan-05 Jan-08 Jul-03 Jul-07 Jul-04 Jul-05 Jan-06 Jul-06 Jan-07 Simpson Spence Young SSY New Build Price Japan 37000-Ton Clean Vessel Simpson Spence Young SSY New Build Price South Korea 37000-Ton Clean Vessel Simpson Spence Young SSY 5 Year Old 37000-Ton Vessel Clean Price Simpson Spence Young SSY 10 Year Old 37000-Ton Vessel Clean Price Simpson Spence Young SSY 15 Year Old 37000-Ton Vessel Clean Price Single Hull Simpson Spence Young SSY 15 Year Old 37000-Ton Vessel Clean Price 13
  • Tanker Asset Prices – VLCC Tanker SSY Prices - VLCC Vessel 160 120 US$ Millions 80 40 0 Jan-97 Jan-99 Jan-05 Jan-07 Jan-95 Jan-98 Jan-00 Jan-01 Jan-02 Jan-03 Jan-08 Jan-94 Jan-96 Jan-04 Jan-06 Simpson Spence Young SSY New Build Price Japan VLCC Vessel Simpson Spence Young SSY New Build Price South Korea VLCC Vessel Simpson Spence Young SSY 5 Year Old VLCC Vessel Price Simpson Spence Young SSY 10 Year Old VLCC Vessel Price Simpson Spence Young SSY 15 Year Old VLCC Vessel Price Simpson Spence Young SSY 15 Year Old VLCC Vessel Price Single Hull 14
  • Freight rate conditions
  • Baltic Dirty Tanker Index, Clean Tanker Index 3,500 3,000 2,500 2,000 1,965 1,500 1,305 1,000 500 D 02 D 03 D 04 D 06 D 07 Ju 01 Ju 02 Ju 03 Ju 04 Ju 05 Ju 06 Ju 07 D 05 08 n n n n n n n ec ec ec ec ec ec ec D Baltic Dirty Tanker Baltic Clean Tanker  The Baltic Dirty Tanker measures freight rates for dirty oil products such as fuel oil, crude oil, residual fuels.  The Baltic Clean Tanker measures freight rates for clean petroleum products, such as jet fuel, gasoline, diesel, etc. 16
  • Baltic Dry Index & Sub-Indices 14,000 21,000 19,000 12,000 17,000 10,000 15,000 8,000 8,341 13,000 12,337 11,000 6,000 9,000 7,543 4,000 7,000 6,465 5,000 2,000 10/23/07 2/8/08 3/6/08 4/2/08 8/30/07 9/26/07 11/19/07 12/16/07 1/12/08 4/29/08 5/26/08 6/22/08 7/19/08 8/15/08 - '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 Baltic Dry Index Baltic Supramax Baltic Handysize Baltic Dry Index Baltic Panamax Baltic Capesize  The Baltic Dry Index is a freight rate index of dry bulk routes, carrying products such as iron ore, coal, grains, minor bulk, etc.  The BDI is composed of four sub-indices – Capesize, Panamax, Supramax, Handysize  Capesize and Panamax are the largest dry bulk, carries iron ore and coal mainly. 17
  • Freight Forward Agreements Product MR - Singapore to Japan Clean Crude VLCC - Arabian Gulf to Japan 90000 13000 80000 11000 US$/day US$/day 70000 9000 60000 7000 50000 40000 5000 Sep- Dec- Mar- Jun- Sep- Dec- Sep- Dec- Mar- Jun- Sep- Dec- 08 08 09 09 09 09 08 08 09 09 09 09 Bulk - Handysize Bulk - Capesize 40000 150000 38000 140000 US$/day US$/day 36000 130000 34000 32000 120000 30000 110000 Sep- Dec- Mar- Jun- Sep- Dec- Sep- Dec- Mar- Jun- Sep- Dec- 08 08 09 09 09 09 08 08 09 09 09 09 18
  • Offshore Supply Vessel Charter Rates 120,000 £/Day £/Day 45,000 40,000 100,000 35,000 80,000 30,000 25,000 60,000 20,000 18,832 40,000 15,000 33,557 12,450 26,375 10,000 20,000 5,000 0 0 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 AHTS Rates (7-10,000 BHP) £/Day PSV Rates (>2,000 DWT) £/Day AHTS Rates (10,000+ BHP) £/Day PSV Rates ( Less Than 2,000 DWT) £/Day 19
  • Supply outlook
  • Age of Fleet Average % over 20 15-19 10-14 Clarkson Data Age Years Years Years 5-9 Years 0-4 Years Handysize Bulkers (10-40,000 dwt tonnes) 17 63% 4% 11% 11% 11% Feeder Containerships 100-500 TEU 17 51.5% 9.3% 28.0% 9.1% 2.1% Combined Carriers 18 46% 33% 13% 5% 3% Other Specialised Tankers < 10K DWT 14 37% 14% 13% 14% 22% Multi-Purpose < 5,000 dwt 14 35.4% 10.6% 13.0% 22.1% 18.9% Handy Products Tankers (10 - 60,000 dwt tonnes) 10 23% 8% 11% 17% 41% Handymax Bulkers (40-60,000 dwt tonnes) 11 23% 6% 19% 21% 30% Panamax Bulkers (60-100,000 dwt tonnes) 11 22% 7% 19% 24% 29% Capesize Bulkers (100,000 + dwt tonnes) 11 19% 12% 21% 15% 32% Sub-Panamax Containerships 2-3,000 TEU 10 18.7% 7.9% 15.4% 24.6% 33.4% Feedermax Containerships 500-1,000 TEU 10 18.5% 6.8% 22.7% 19.2% 32.8% Multi-Purpose > 5,000 dwt 10 18.5% 8.2% 10.5% 39.9% 23.0% Panamax Tankers (60-80,000 dwt tonnes) 8 18% 8% 6% 12% 57% Handy Containerships 1-2,000 TEU 11 17.8% 9.1% 26.5% 21.8% 24.8% Handy Chemical Tankers (10 - 60,000 dwt tonnes) 9 16% 4% 12% 25% 43% Aframax Tankers (80-120,000 dwt tonnes) 9 9% 15% 12% 22% 42% Panamax Containerships >3,000 TEU 8 7.5% 10.4% 20.0% 18.0% 44.0% Suezmax Tankers (120-200,000 dwt tonnes) 9 5% 18% 14% 28% 36% VLCC Tankers (200,000 + dwt tonnes) 9 3% 14% 21% 31% 30% Post Panamax Containerships >4,000 TEU 5 0.0% 1.3% 8.9% 27.2% 62.6% 21
  • % of Orderbook by Vessel Type OB as % of OB as % of Ranking Type Clarkson Data Fleet (#) Fleet (dw t) (dw t) 24 Feeder Containerships 100-500 TEU 0.5% 0.6% 1 30 Reefers 1.3% 2.6% 3 28 Ro-Ro < 5,000 dwt 2.7% 3.2% 4 31 Other Dry Cargo > 5,000 dwt 12.7% 10.1% 5 27 Ro-Ro > 5,000 dwt 11.9% 13.5% 6 26 Multi-Purpose < 5,000 dwt 13.1% 13.7% 7 13 Small LPG Carrier (< 8,000 cu. m.) 10.7% 15.8% 8 23 Feedermax Containerships 500-1,000 TEU 18.3% 21.1% 9 21 Sub-Panamax Containerships 2-3,000 TEU 23.0% 23.3% 10 22 Handy Containerships 1-2,000 TEU 25.1% 25.8% 11 17 Handysize Bulkers (10-40,000 dwt tonnes) 22.9% 26.8% 12 8 Other Specialised Tankers < 10K DWT 22.3% 28.4% 13 12 Mid Size 2 LPG Carrier (8-20,000 cu. m.) 29.9% 28.6% 14 25 Multi-Purpose > 5,000 dwt 24.5% 31.0% 15 33 Offshore 16.9% 31.3% 16 11 Mid Size 1 LPG Carrier (20-60,000 cu. m.) 35.0% 31.4% 17 18 Combined Carriers 10.6% 34.9% 18 4 Panamax Tankers (60-80,000 dwt tonnes) 36.9% 38.6% 19 1 VLCC Tankers (200,000 + dwt tonnes) 37.8% 39.4% 20 29 Pure Car Carrier > 5,000 dwt 36.1% 40.2% 21 2 Suezmax Tankers (120-200,000 dwt tonnes) 38.7% 40.3% 22 3 Aframax Tankers (80-120,000 dwt tonnes) 38.7% 41.4% 23 5 Handy Products Tankers (10 - 60,000 dwt tonnes) 35.8% 43.6% 24 20 Panamax Containerships >3,000 TEU 41.7% 43.7% 25 15 Panamax Bulkers (60-100,000 dwt tonnes) 40.5% 45.2% 26 10 Very Large LPG Carrier (60,000 + cu. m.) 44.2% 45.6% 27 16 Handymax Bulkers (40-60,000 dwt tonnes) 48.7% 56.5% 28 6 Handy Chemical Tankers (10 - 60,000 dwt tonnes) 64.8% 59.7% 29 9 Liquid Natural Gas Carriers 51.2% 65.9% 30 14 Capesize Bulkers (100,000 + dwt tonnes) 83.5% 89.6% 31 19 Post Panamax Containerships >4,000 TEU 84.0% 111.0% 32 22
  • Fragmentation of Owners Top 50 Owners as a % of Total Fleet Vessel Types with Less than 50 Owners # of Ships Total DWT Avg DWT Combined Carrier 85 8,156,617 95,960 Shuttle Tanker 62 7,294,976 117,661 Bulker 37.0% Lakes Only Bulker 97 3,177,265 32,755 General Cargo 37.5% Cement Carriers (10K + dw t) 81 1,454,844 17,961 IMO I Chemical 102 2,575,405 25,249 Offshore 40.9% Poly Chemical 9 184,303 20,478 LNG Gas Carrier 263 18,462,444 70,199 Products Tanker 45.2% Ethylene Gas Carrier 119 984,588 8,274 LPG 60K + Cu. M. 115 6,036,449 52,491 Chemical 45.6% LPG 40K-60K Cu. M. 23 1,023,100 44,483 LPG 20K-40K Cu. M. 77 1,974,332 25,641 Tanker 48.7% Diving Support Offshore 67 78,967 1,179 Gravel / Stone Discharge Offshore 10 23,057 2,306 Ro-Ro & Passenger 52.7% Heavy Deck Cargo Offshore 48 1,204,733 25,099 Reefer 66.5% Heavy Lift / Crane Offshore 27 156,235 5,786 Maintenance Offshore 47 36,105 768 Gas Carrier 68.5% Mooring Offshore 13 1,266 97 Oil Well Service Offshore 16 31,607 1,975 Container 76.7% Pipe Layer Offshore 14 309,248 22,089 Pollution Control Offshore 6 7,942 1,324 FPSO/FSU 86.3% ROV / Sub Support Offshore 9 11,057 1,229 Misc Offshore 40 25,630 641 30.0% 50.0% 70.0% 90.0% Cable, Umbilicals & FP/Flow line Lay 40 235,746 5,894 Post-Panamax Container 586 48,918,550 83,479 23
  • Conclusion  To summarize -  Keeping an eye out on rising commodity prices and supply outlook is critical  Funding and operating costs (such as crewing and fuel) are rising  Near-term difficulty would result in opportunities for cash rich players (such as ourselves)  The key factors to watch for includes –  Areas where supply growth is restricted (limited orderbook)  Areas where the fleet is old and likely to be retired  Areas where we can achieve dominant market share quickly  Areas where rates are depressed (but likely to recovery)  Areas where we see strong organic growth or shifts in trade patterns. 24