Posts Tagged ‘First Ship Lease Trust’

Shipping trusts looking good?

In Uncategorized on 30/09/2011 at 7:58 am

Interested in the high yields (10% or more) they are offering? Especially as they make payouts in US$? 

Well they like other shipping firms are facing refinancing problems.  As European banks reduce exposure to this sector, the shipping industry will need to seek financing from the private equity and bond sector, executives told Reuters. And it ain’t easy.

First Ship Lease Trust looks interesting

In Energy, Shipping on 25/08/2011 at 8:33 am

Billionaire Wilbur Ross is betting that the slump in shipping which drove oil-tanker returns to a 14-year low is ending.

Ross & Co manages about US$10bn in assets, is part of a group (including China Investment Corp, China’s SWF) spending US$900 million on 30 ships hauling gasoline, diesel and other refined products. It is Mr Ross’s first shipping investment and deploying ‘another few hundred million’ in the industry ‘is certainly easy to do,’ he said in interviews in August.

That outlook contrasts with the pessimism of John Fredriksen, founder of Frontline Ltd, the biggest operator of the largest crude carriers. The 67-year-old billionaire said in May that it would probably be another year or two before ship values collapse and he can start adding to his fleet.

So can we imitate Ross by buying SGX counters? NOL and Samudera have container fleets. So do Pacific Trust and Rickers Maritime. BerlianLaju has the world’s 3rd largest chemical tanker fleet, more than 93 of them, but they are not the ships Ross and friends are buying.

But there is FSL. It has a fleet of 16 tankers and seven container vessels. Of the 16, 11 are product tankers (what Ross is buying), two crude tankers and three chemical tankers (presentation August 2011). But this is a tricky company to analyse, so do yr homework. It is also a shipping trust and such trusts are yield plays.

FSLP: For the brave heart

In Shipping on 25/01/2011 at 5:10 am

First Ship Lease Trust offers a  gd yield (a shade under 11%%) and trades (46.5cents) at a respectable discount below last reported RNAV of 57cents.

But as DBS Sec which calls it “Hold” says

While the distribution per unit (DPU) payout was maintained at 0.95 US cents for the quarter, the trust had to draw down US$0.7 million of working capital to distribute the US$5.7 million to unitholders, after the usual quarterly loan repayment of US$8 million.

The product tankers continue to be deployed in the spot voyage markets, but utilisation rates and net bareboat equivalent income remain below expectations. While freight income was higher q-o-q in Q4 2010, expenses were higher as well and the two tankers generated bareboat charter equivalent revenue of US$0.2 million in Q4 2010, compared to the US$3.8 million revenue per quarter applicable during the original charter. With tanker rates unlikely to perform in the near term, we choose to remain conservative on our earnings assumptions from these vessels in FY2011.

While the trust did not provide an update on fleet valuation of US$700 million as at end-Q3 2010, a big change is unlikely. This puts the current value- to-loan ratio at 154 per cent, and implies about 160 per cent coverage at the end of the waiver period in June 2011, above the requirement of 145 per cent. We expect DPU payouts to remain at the current level in the near term, and given that we have not yet seen any acquisition funded by the US$28 million placement proceeds raised in FY2009, we maintain our ‘hold’ call at an unchanged target price of $0.45.