TIDMTMIP TIDMTMI
RNS Number : 8035I
Taylor Maritime Investments Limited
21 April 2022
21 April 2022
Taylor Maritime Investments Limited (the "Company")
Quarterly NAV Announcement, Publication of Factsheet and Trading
Update
Continued delivery of strong cash generation, earnings
visibility and compelling shareholder returns against backdrop of
anticipated further market strength
-- Unaudited NAV up c.22% since 31 December 2021 and c.78% since IPO
-- Interim dividend of 1.75 cents per share declared
-- Firm charter rates and cash yields in excess of 24%
-- Grindrod Shipping investment uplift of c.44%
Taylor Maritime Investments Limited, the specialist dry bulk
shipping company, today announces that as at 31 March 2022 its
unaudited NAV was $1.74 per share, an increase of c.22% since 31
December 2021 and c.78% since IPO in late May 2021.
The Company is also pleased to declare an interim dividend in
respect of the quarter ended 31 March 2022 of 1.75 cents per
Ordinary Share, in line with its dividend target and policy (7%
target dividend yield (on the initial issue price) paid quarterly).
Following strong trading conditions, the Board will consider an
extraordinary dividend in early May.
The fourth quarterly factsheet for the Company is also now
available on the Company's website,
www.taylormaritimeinvestments.com .
Key Highlights (all as at 31 March 2022)
-- The Market Value of the vessel portfolio was $546m, an
increase of 8% or $39m versus the 31 December valuation of the same
31 vessels. Robust operating profit of $33m and gain on Grindrod
Shipping investment (see below) contributed to an overall increase
in NAV to $576m
-- During the quarter, the Company took delivery of one vessel,
the final of the IPO Seed Assets, and completed the sale of 1
vessel. As at 31 March 2022, the Company's fleet stood at 31
vessels of which 29 were Handysize and two Supramax
-- In March, a total of three vessels were agreed for sale with
the transactions representing IRRs in excess of 100% and a MOIC of
1.4x to 1.7x. All vessels were IPO Seed Assets and sales are
expected to complete in Q2 2022
-- The fleet's average net time charter rate was approximately
$18,600 per day, with an average duration of six months and average
annualized unlevered gross return in excess of 24%
-- The new charters agreed through this quarter are in line with
the Company's strategy to have a mix of short, medium and long-term
time charters to strike a balance between attractive short-term
yields and longer-term earnings visibility including one vessel
fixed on a one-year time charter and one vessel fixed on a two-year
time charter
-- The Company completed its acquisition of a stake in Grindrod
Shipping Holdings Ltd. (NASDAQ: GRIN, JSE: GSH "Grindrod Shipping")
on 28 January 2022. This brought the Company's ownership in
Grindrod Shipping to 26.6% which was secured at an average price of
$17.60 per share. Grindrod's fleet of high quality, predominantly
Japanese built geared dry bulk vessels is highly complementary to
TMI's own portfolio
-- At 31 March 2022, Grindrod Shipping's share price was $25.44
per share. TMI's 26.6% ownership stake therefore contributed $125m
of NAV at year end, an uplift of $38m or c.44%. The Company
received a dividend of $0.72 per share from Grindrod Shipping paid
in March 2022 on its entire stake totalling $3.5m representing an
annualised yield of c.16% on the investment. The acquisition is
consistent with TMI's strategy of seeking accretive growth
opportunities to increase shareholder returns and effectively
recycle capital for TMI shareholders
-- In connection with the acquisition of the Grindrod Shipping
stake, the Company drew down $20m from its RCF taking the drawn RCF
to $140m at quarter end
-- A highly experienced shipping executive joined the Grindrod
Shipping Board on 17 February 2022 as a non-independent
non-executive director and representative of TMI
Post-Period Trading Update (since 31 March 2022)
-- Since quarter end, two vessel sales completed and two vessel
sales are still pending and are expected to complete within Q2 2022
(as announced previously)
-- Current average net charter rates have increased to
approximately $19,200 per day versus $18,600 at end March 2022
-- Minor bulk demand growth is expected to continue to outpace
fleet supply growth in 2022. Fleet growth is expected to be
negative in 2023 resulting in shrinking of the global Handysize
fleet
-- Further asset value upside is possible given inflation in
newbuild prices, with second-hand ships valued below Depreciated
Replacement Cost
Commenting on the trading update, Edward Buttery, Chief
Executive Officer, said:
"I'm delighted that we have delivered a first year of solid
financial results and cash generation with 4.0x baseline dividend
cover. We have created a differentiated shipping investment
opportunity offering growth and attractive shareholder returns as
well as effective recycling of capital. This is in the context of
our continued anticipation of two to three years of further
strength in the market."
Portfolio update since 31 March
After the agreed vessels sales complete, as mentioned above,
TMI's owned fleet will be 27 ships consisting of 26 Handysize
vessels and one Supramax vessel.
The Company continues to spread contracted revenue across short,
medium and long-term charters to achieve a balance between revenue
optimisation and earnings visibility. We recently fixed two longer
term charters (one-year and two-year) with high-quality charterers
and kept a significant portion of the fleet on short-term charters
where yields are higher, as we continue to believe the market will
strengthen particularly once the current China lockdowns ease.
After updating for new charters agreed post quarter end, the TMI
fleet average net charter rate is approximately $19,200 per day.
The updated average annualized unlevered gross cash yield for the
fleet is in excess of 25% based on increased FMVs at quarter end.
The updated average remaining charter duration is seven months. 21%
of the fleet is on charters with an average remaining duration of
12 months or more.
Handysize bulk market positive outlook
The Handysize orderbook continues to be at a historical low of
4.8%, the lowest compared to all larger dry bulk segments and
non-dry bulk shipping segments. This is the result of various
factors including newbuild price inflation, orders in other
segments filling yards and ongoing uncertainty around future ship
technologies. The Handysize orderbook has a staggered delivery
profile over the next three years with 2.0% coming in 2022, 2.1% in
2023 and 0.7% in 2024 ( Source: Clarksons). Beyond 2023, effective
supply is expected to decrease due to lower operating speeds
required to meet IMO emissions reduction targets.
Minor bulk demand growth of 2.2% in 2022 is expected to outpace
net fleet growth of 1.7%. With 8.3% of the fleet over 25 years old
and a further 1.7% turning 25 in 2022, research analysts expect
older, less efficient tonnage to be removed in 2023 and forecast
the Handysize fleet to shrink by 2.3% net in the absence of a
meaningful orderbook. This compounds the 2021 spread of 5.5% demand
growth against 2.6% supply growth (Source: Clarksons) .
Given the underlying fundamentals of the Handysize segment,
particularly tight fleet supply, the Company believes the 2022
outlook is positive. Nevertheless, TMI has considered and continues
to monitor the risk of macro uncertainties, in relation to
inflation, recent China Covid lockdowns (expected to be transitory)
and the Russia/Ukraine conflict and their impact on growth, trade
flows and food and energy security. A post-lockdown rebound to
China trading activity would lead to upward pressure on rates in
the current congested and inelastic market environment as reflected
in freight futures. Due to the Ukraine/Russia geopolitical
situation, steel, grains and coal from Ukraine and Russia bound for
European and Mediterranean markets are being replaced by sources
from further afield (China, Australia and east coast South
America). This has increased tonne-miles, effectively taking supply
out of the market for longer. Additional support for Handysize
freight rates continues from cargoes usually transported by
containership now carried on dry bulk vessels and port congestion,
both of which may recede in the medium-term.
Asset values increased during the quarter with Clarkson's
benchmark for a ten year old 32k dwt built Handysize rising to
$18.5m at quarter's end from $17.0m at the end of December 2021.
With the orderbook remaining at multi-decade lows for the Handysize
segment and net fleet supply forecast set to decrease next year
(and potentially beyond) and with even steady minor bulk demand
growth, we consider there is a supply shortfall of ships and that
there is further upside in second-hand asset values as 10 year-old
benchmarks are below Depreciated Replacement Cost (note: this
refers to the theoretical value of a second hand ship based on
prevailing newbuilding price depreciated to current age).
Financing
During the quarter, the Company drew down $20m from its RCF
ahead of completion of the Grindrod Shipping acquisition. The RCF
was $140m drawn at the end of the quarter. The current intention is
to repay drawn funds from pending vessel sales and future operating
cashflow.
ESG
Sustainability is at the very heart of the way we manage the
Company, and the profile and management of the fleet is integral to
this. The ESG & Engagement Committee of TMI'S Board continues
to oversee our ESG approach and a comprehensive report on ESG will
be included in the Company's Annual Results for the period ending
31 March 2022 due to be published in July 2022.
TMI is committed to achieving a long-term target of running a
fleet comprising only zero-emission vessels by 2050, and to cross
industry efforts to promote and achieve that target. Substantial
technological advances are a key element of this for the broader
shipping industry, but TMI has clearly defined near-term
initiatives with incremental progress made so far. TMI has an
ongoing, comprehensive programme to improve vessel energy
efficiency, including retrofits at scheduled maintenance events,
such as boss cap fins, pre-swirl ducts and advanced hull coatings,
resulting in lower carbon intensity per vessel. From a marine
biodiversity perspective, TMI's entire fleet will be fitted with
Ballast Water Management Systems by the end of 2022, except for one
final vessel to be completed in 2023. TMI has successfully
implemented plastic reduction initiatives across the fleet,
including the phasing out of single-use plastic onboard and the use
of data app EYESEA to map ocean plastic pollution. In terms of
shoreside initiatives, TMI and its commercial managers have
committed to carbon neutral shoreside emissions by tracking,
minimising and offsetting office-based and business travel related
emissions annually. TMI remains committed to the safety and
wellbeing of seafarers and is now a silver sponsor of the Mission
to Seafarers' 'Sustaining Crew Welfare' campaign. The Company is,
in connection with the long-term emissions goals mentioned above, a
signatory to the Getting to Zero Coalition's Call to Action for
Shipping Decarbonisation. The Company's investment and ESG strategy
is aligned with specified UN SDGs, our acquisitions adhering to our
ESG commitments and focusing on vessels of relatively energy
efficient design, built in Japan.
LEI: 213800FELXGYTYJBBG50
ENDS
For further information, please contact:
Taylor Maritime Investments +852 2252 3882
Limited info@tminvestments.com
Edward Buttery
Alexander Slee
Jefferies International Limited +44 20 7029 8000
Stuart Klein
Gaudi Le Roux
Montfort Communications
Alison Allfrey
George Morris Seers
TMI@montfort.london
About the Company
Taylor Maritime Investments Limited is a recently established,
internally managed investment company listed on the Premium Segment
of the Official List and traded on the Main Market of the London
Stock Exchange. The Company invests in a diversified portfolio of
vessels which are primarily second-hand and which, historically,
have demonstrated average yields in excess of the Company's target
dividend yield of 7% p.a. (on the Initial Issue Price).
The Company's initial investments comprise Geared Ships
(Handysize and Supramax types) employed utilising a variety of
employment/Charter strategies.
The Company intends to pay dividends on a quarterly basis with
dividends declared in January, April, July and October. The Company
targets a Total NAV Return of 10 to 12% p.a. (net of expenses and
fees but excluding any tax payable by Shareholders) over the medium
to long-term.
The Company has the benefit of an experienced Executive Team led
by Edward Buttery. The Executive Team have to date worked closely
together for the Commercial Manager, Taylor Maritime. Established
in 2014, Taylor Maritime is a privately owned ship-owning and
management business with a seasoned team that includes the founders
of dry bulk shipping company Pacific Basin Shipping (listed in Hong
Kong 2343.HK) and gas shipping company BW Epic Kosan (formerly Epic
Shipping) (listed in Oslo BWEK:NO). Taylor Maritime's team of
experienced industry professionals are based in Hong Kong and
London.
For more information, please visit
www.taylormaritimeinvestments.com .
About Geared vessels
The Company specializes in the acquisition and chartering of
vessels in the Handysize and Supramax bulk carrier segments of the
global shipping sector. Geared vessels are characterised by their
own cargo handling equipment. The Handysize market segment is
particularly attractive, given the flexibility, versatility and
port accessibility of these vessels which carry necessity goods -
principally food and products related to infrastructure building -
ensuring broad diversification of fleet activity.
IMPORTANT NOTICE
The information in this announcement may include forward-looking
statements, which are based on the current expectations and
projections about future events and in certain cases can be
identified by the use of terms such as "may", "will", "should",
"expect", "anticipate", "project", "estimate", "intend",
"continue", "target", "believe" (or the negatives thereon) or other
variations thereon or comparable terminology. These forward-looking
statements are subject to risks, uncertainties and assumptions
about the Company, including, among other things, the development
of its business, trends in its operating industry, and future
capital expenditures and acquisitions. In light of these risks,
uncertainties and assumptions, the events in the forward-looking
statements may not occur.
References to target dividend yields and returns are targets
only and not profit forecasts and there can be no assurance that
these will be achieved.
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