Long-term or event-driven trade: Investor Sentiment in Shipping. June 2015

Transcription

1 Long-term or event-driven trade: Investor Sentiment in Shipping June 2015

2 There is no such thing as ONE shipping cycle Today: Arctic Securities view on position of main segments in their respective cycles LPG Crude tankers Product tankers Shipowners market Car carriers Charterers market Chemical tankers LNG Bulkers Container/Liners 2

3 but the various cycles move in different paces Where are we in two years? Product tankers Car carriers Crude tankers Shipowners market Bulkers Charterers market Container/Liners LNG Chemical tankers LPG 3

4 Capital markets activity: Maybe a bit much money chasing shipping in 2013/2014? Equity issues in shipping (dry bulk, tankers, LNG/LPG and diversifed) in period YTD Comment musd 7,000 6,000 5,000 4,000 3,000 2,000 1, ,334 1,311 1,276 1, , ,904 2,253 2,549 2,175 2, , , Massive amount of equity raised in 2013/2014: : USD 6.7bn : USD 5.2bn - Avg : USD 2.2bn Anything could be IPOed - Norwegian OTC reduced barriers to entry - Credit-focused funds were strangely comfortable with illiquidity. Liquidity has become a STRONG focus over past 12 months Follow-on Initial OTC/IPO 4

5 2013: Norwegian Vikings rule the show 2015: Frankie s Revenge New York, New York 2013: The Need for Speed N-OTC offering superior qualities in terms of time to market 2015: Liquidity is king, but issues largely pref deals or repair issues 3, , ,000 1, musd 1,500 musd 400 1, ,695 1, Oslo Bors (OTC) Oslo Bors New York Stock Exchange (NYSE) NASDAQ Oslo Bors (OTC) Oslo Bors New York Stock Exchange (NYSE) NASDAQ Follow-on Initial OTC/IPO Follow-on Initial OTC/IPO 5

6 Investor sentiment: How Arctic thinks it should be Where do I sign? Dry bulk: CashBulk play - Asset values at multi-decade lows - Plenty of forced sellers - Secondhand tonnage more attractive than newbuilds - Priced with negative CFs nearterm and not adding to supply - Demand: Maybe China isn t completely over the hill yet? LNG: Across value chain - Lower oil price environment has been blessing in disguise for FLNG - LNG prices depressed Golden Age of Gas will return - LNG shipping market WILL eventually strengthen - Lower prices boosts demand - Opens for more FSRUs Hmm, I need to do the work Crude tankers: Vessels on water - Cash yields strong supports growing NAVs - Supply side fast growing as rates remain surprisingly strong - Newbuild prices declining keeps lid on secondhand values Product tankers: Happy ower of STNG - 10 years of waiting for refinery additions appear to come to fruition - Supply side still high for 2015/ I ll just by STNG Chemical tankers: Waiting in the wings - Fast growth in supply is a concern - Opaque demand: Meeh, I cant get comfortable with 1.5x global Industrial Production I ll pass on this one LPG - 50% of fleet in orderbook is a tough sell - The ultimate derivative on US Shale production - Biggest names already listed and fully funded 6

7 Investor sentiment: Reality is a bit different Where do I sign Yield plays with LT cash flows: - LNG - Container - Niche plays with high barriers to entry Large, listed and liquid companies: - Can do issues for acquisitions Returns vs Career-issue: - Pitching shipping today is a hard sell for many event/momentumdriven funds Hmm, I need to do the work Crude tankers: - How long can it stay this good? - We already own tankers, rather sellers than buyers Product tankers: - I ll just buy STNG I ll pass on this one Any company trying to pitch a newbuild platform! Dry bulk: Demand woes - Easy to underwrite supply-story - Impossible to know direction of China LPG: Secondary market trade - 4 listed VLGC players all fullyfunded 7

8 Famous last words? We learn t one thing in 2014: Commodity shipping isn t investments...its trades. 8

9 Disclaimer THIS PRESENTATION (HEREINAFTER REFERRED TO AS THE PRESENTATION ) HAS BEEN PREPARED BY ARCTIC SECURITIES ASA EXCLUSIVELY FOR INFORMATION PURPOSES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY FINANCIAL INSTRUMENTS. THIS PRESENTATION INCLUDES AND IS BASED ON, AMONG OTHER THINGS, FORWARD-LOOKING INFORMATION AND STATEMENTS. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS REFLECT CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS. WE CANNOT GIVE ANY ASSURANCE AS TO THE CORRECTNESS OF SUCH INFORMATION AND STATEMENTS. SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY/IES MENTIONED HEREIN TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS DOCUMENT. WE DO NOT INTEND, AND DO NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION. THERE MAY HAVE BEEN CHANGES IN MATTERS WHICH AFFECT THE COMPANIES HEREIN SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THE ISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY/IES HAVE NOT SINCE CHANGED, AND WE DO NOT INTEND, AND DO NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANY INFORMATION INCLUDED IN THIS PRESENTATION. THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS, INVESTMENT OR TAX ADVICE. EACH RECIPIENT SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, INVESTMENT AND TAX ADVISER AS TO LEGAL, BUSINESS, INVESTMENT AND TAX ADVICE. WE MAKE NO UNDERTAKING, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING THE ACCURACY OR COMPLETENESS OF THE INFORMATION (WHETHER WRITTEN OR ORAL AND WHETHER INCLUDED IN THIS PRESENTATION OR ELSEWHERE), WHETHER SUCH INFORMATION WAS RECEIVED THROUGH US OR OTHERWISE. WE EXPRESSLY DISCLAIM ANY LIABILITY WHATSOEVER IN CONNECTION WITH THE MATTERS DESCRIBED HEREIN. THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS WITH OSLO CITY COURT AS EXCLUSIVE VENUE. 9

10 Mailing Address: Arctic Securities ASA P.O. Box 1833 Vika NO-0123 Oslo Norway Visiting Address: Haakon VII s gt 5 Phone: Fax: