Shipping and the Capital Markets in 2025 Craig Fuehrer Managing - - PowerPoint PPT Presentation
Shipping and the Capital Markets in 2025 Craig Fuehrer Managing Director Deutsche Bank Securities 28 th Annual Marine Money Week June 2015 Shipping is an under-appreciated sector for the value-add it provides Tale of the Tape
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Established in 1999 US$41 billion in assets 30 million packages delivered daily for items purchased from their site Leading internet commerce provider Established in 1973 US$12 billion in assets across offshore, gas and tankers 185 vessels 6,700 employees Handle 10% of the world’s oil
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Tale of the Tape Market cap: US$214 billion Market cap: US$3 billion
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Note: Gas peer group includes: Dorian LPG, Dynagas LNG Partners, GasLog, GasLog Partners, Golar LNG, Golar LNG Partners, Hoegh LNG Partners, Stealth Gas and Teekay LNG Partners Tanker peer group includes: Capital Product Partners, DHT Holdings, Euronav, Frontline, Navios Maritime Acquisition Corp, Navios Maritime Midstream Partners, Nordic American Tankers, Tanker Investments Ltd, Teekay Corp, Teekay Tankers and Tsakos Energy Navigation Bulkers peer group includes: Baltic Trading Ltd, Diana Shipping, Dryships, Navios Maritime Holdings, Safe Bulkers, Scorpio Bulkers and Star Bulk Carriers Market data as of 6/15/2015 Source: FactSet
$9.5bn $13.6bn $0.0 $4.0 $8.0 $12.0 $16.0 June 2010 June 2015 (Average market capitalization) 1,806 1,964
NYSE Shipping
$0.7bn $1.4bn $1.0bn $1.1bn $0.6bn $0.4bn $0.0 $4.0 $8.0 $12.0 $16.0 June 2010 June 2015 (Average market capitalization) Gas Tanker Bulkers
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Tankers Dry Bulk
Note: Tankers reflects 2000 year-built Suezmax vessels Dry bulk reflects 2000 year-built Capesize vessels Source: Clarksons
100 200 300 400 500 600 700 800 900 1,000 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 (Capesize newbuild orders) (Avg. Capesize c.2000-built spot rates) Spot rate Orderbook 20 40 60 80 100 120 140 160 180 200 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 (Suezmax newbuild orders) (Avg. Suezmax c. 2000-built spot rates) Spot rate Orderbook
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Outlook ? Is tanker rally going to last? – Is it just seasonal? – How long will recent earnings cycle continue? ? Won’t new orders be placed to kill rally? – Look at dry bulk – Companies need to renew fleets (buy existing versus build new) ? [TBU] ? Will the demand side ever come back? ? Too many ships….? Outlook
4 97.6% 54.4% 50.0% 46.2% 33.6% 21.2% 16.7% 16.1% 1.1% (20.9%) (24.4%) 7.7% (60.0%) (20.0%) 20.0% 60.0% 100.0% 140.0% TNK NAT TIL EURN TNP NAP FRO DHT NNA CPLP TK S&P 500 (37.8%) (62.2%) (66.8%) (75.6%) (75.7%) (78.5%) (82.1%) 7.7% (100.0%) (80.0%) (60.0%) (40.0%) (20.0%) 0.0% 20.0% DSX NM SB BALT SBLK DRYS SALT S&P 500
It is all about sustained returns on capital
(a) Share price performance since IPO on 11/13/14 Note: Market data as of 6/15/2015 Source: FactSet
1 year share price performance - Tankers 1 year share price performance - Bulkers
(a)
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Private Equity / Hedge Funds
Company Action
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Key IPO selling points
Large scale operations with 100% in house (“clean investment story”) and a $1.8bn market cap Increased potential share liquidity from near term exchange offer for Euronext shareholders Robust charter rate environment Strong industry fundamentals – Favorable supply/demand outlook – Increased ton mile demand – Contango effect Strong pre-marketing campaign aimed at increasing investor awareness for eventual IPO Experienced management team with clear and well articulated management presentation
Favorable charter market sentiment
Note: 1 and 3 year timecharter rates based on modern 310,000 dwt VLCCs. Source: Clarksons
Spot 1-year TC 3-year TC Current $69,801 $52,500 $45,000 1 mo. avg. $64,315 $40,583 $36,667 3 mo. avg. $50,018 $35,333 $35,067 6 mo. avg. $36,773 $32,339 $34,179 1 year avg. $29,201 $28,991 $30,759 3 year avg. $21,461 $23,769 $27,093 5 year avg. $22,574 $26,766 $30,182 On January 22, 2015, Deutsche Bank acted as the Lead Left Bookrunner
million (post-shoe) upsized Initial Public Offering of shares in the United States Euronav’s IPO captured a favorable turn in the crude tanker market charter sentiment as both spot and longer term TL rates were climbing
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$0 $20,000 $40,000 $60,000 $80,000 Apr-14 Jun-14 Aug-14 Nov-14 Jan-15
1 Year TC Rates 3 Year TC Rates Average VLCC 2010 Earnings
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Pricing date: Offering size: Shares offered: Offer price: Discount to launch: Deutsche Bank role: % of pre-deal mkt. cap:
Discount to last sale: January 22, 2015 $229.1mm (post-shoe) 16.3 million / 100% primary $12.25 12.4% (5.4%) Lead Left Bookrunner 41.5x (2.3%)
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Companies need to get bigger –market capitalization >US$1.0 billion as a start towards US$3.0 billion –larger companies will create path towards equity index inclusion which will open more doors to institutional investors Expand investor base more towards traditional institutional investor base –long only mutual funds versus fast money hedge funds –increased share liquidity will create more efficient entry / exit paths for investors Greater discipline on ordering…we have enough ships! Enjoy the good times…
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Greater push for sustained returns on capital