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).


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.


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.



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 

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.


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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April 21, 2022 02:01 ET (06:01 GMT)

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