Taylor Maritime Investments Limited

26 July 2022

Taylor Maritime Investments (TMI)


Results analysis from Kepler Trust Intelligence

Taylor Maritime Investments (TMI) has reported a strong first set of results since IPO on 27 May 2021, with NAV total returns of 81.3% and share price total returns of 45.5%.

TMI declared dividends of 8.47 cents during the period, including three quarterly dividends of 1.75 cents and a special dividend of 3.22 cents. Annualised, this is equivalent to a c. 10% yield on the IPO price.

During the period, TMI bought a 26.6% stake in Grindrod Shipping Holdings Ltd., a dual NASDAQ and Johannesburg Stock Exchange listed shipping business for $17.64 per share. At 31 March 2022, Grindrod Shipping's share price was $25.44 per share, 44.2% higher than the purchase price. TMI also received dividends of $1.44 per share, representing an annualised yield of c. 16% on the investment.

Since the year end markets have sold off, and TMI's discount to NAV has widened to 22.12%.

Kepler View

Taylor Maritime Investments (TMI) is designed to offer investors exposure to the shipping industry with a low-leverage strategy focused on high-quality ships that transport food and other necessity goods, which have historically proven to be resilient to the broader industry's cyclicality. The first set of results are outstanding, and reflect a bounce back in global trade after economic shutdowns due to the pandemic. TMI has already been able to sell some of the seed assets for excellent gains, and recycle the cash into younger and more efficient ships.

Shipping can be a highly cyclical business, but manager Ed Buttery believes the Handysize segment is suffering a medium-term shortfall in supply which should create strong pricing pressure on ships and charters until at least 2024 subject to new supply coming onstream. In the longer run, ESG requirements are creating demand for more fuel efficient and environmentally-friendly ships which should also provide support to the price of younger and more modern ships, such as those owned by TMI.

TMI's shares have sold off since their peak in May. In general, markets have indiscriminately sold off during this period as fears of recession grew. It is possible in TMI's case that some investors decided to take profits after such an exceptional period of returns. With the current discount at 22.4%, we believe the shares are now offering some considerable buffer against the impact of any recession.


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