Taylor Maritime Investments (TMI) has published its first set of full year results for the period to 31 March 2022, which shows NAV and share price total returns of 81.3% and 45.5% respectively (around two-thirds of its profit before tax came from fair value gains on its portfolio). The results include the following key highlights:
- Fleet of 31 vessels with total market value of US$546m, comprising US$480m of vessels and US$66m of assets held for sale
- Average net time charter rate of US$18,600 per day
- Average annualised unlevered return in excess of 24%
- Audited NAV per ordinary share of US$1.74 and Total NAV of $575m
- NAV total return of 81.3% and share price total return of 45.5%
- Profit before tax of $253m (US$79m operating profit and US$174m fair value gains)
- Dividends paid in respect of the period, including special dividend, of approximately 10% on annualised basis
- Grindrod Shipping investment amounted to $125m of the Group’s NAV
Manager’s commentary
- Taylor Maritime Investments Limited concluded a successful initial public offering on 27 May 2021, raising US$254 million (comprising US$160 million cash and US$94 million in consideration shares), followed by a subsequent capital raise of US$75 million on 28 July 2021
- At 31 March 2022, the Group’s fleet consisted of 31 vessels (including vessels contracted to sell) with a total market value of US$546 million. Of the 31 vessels, 29 were Handysize and 2 were Supramax. The average age of the fleet is 11.4 years
- Audited NAV per Ordinary Share of US$1.74 as at 31 March 2022, delivering Total Net Asset Value (‘NAV’) return per Ordinary Share of +81.3% for the period from the Initial Public Offering (‘IPO’). This was driven by operating profit, increased vessel values and an attractive gain on the Grindrod Shipping investment which appreciated substantially over the investment cost
- The Company’s Ordinary Shares closed at a price of US$1.42 on 31 March 2022. The Company’s Total share price return per Ordinary Share was +45.5% for the period from the IPO to 31 March 2022 (excluding the interim dividend for the quarter ended 31 March 2022 and the special dividend which both went ex-dividend after the period end).
- Profit for the period before tax was US$253 million, comprising (on a look-through basis) US$79 million of operating profit, after finance costs, and US$174 million fair value gain
- The fleet’s average net time charter rate at 31 March 2022 was approximately US$18,600 per day, with an average duration of six months and generating an average annualised unlevered return in excess of 24%. This compares favourably with the same figures as at the end of 30 June 2021 (the Company’s first quarter end), when the average net time charter rate for the fleet was approximately US$15,600 per day, with an average duration of 10 months and an average annualised unlevered gross yield of 20%
- During the period, the Group completed an acquisition of a 26.6% stake in Grindrod Shipping Holdings Ltd., a dual NASDAQ and Johannesburg Stock Exchange listed shipping business (NASDAQ: GRIN, JSE: GSH “Grindrod Shipping”) secured at an average price of US$17.64 per share. At 31 March 2022, the Grindrod Shipping’s share price was US$25.44 per share, amounting to US$125 million of the Group’s NAV. The Group also received two dividends of US$0.72 per share in both December 2021 and March 2022 (total dividends of US$1.44 per share for the period) from Grindrod Shipping, representing an annualised yield of c.16% on the investment
- Total dividends paid in respect of the period ended 31 March 2022, amounted to 8.47 US cents, representing a dividend yield on the Initial Issue Price of approximately 10% on an annualised basis
- The Group announced its commitment to achieving a long-term target of zero carbon emissions by 2050. Substantial technological advances are a key element of this for the broader shipping industry, but the Company has clearly defined near-term initiatives with incremental progress made through the period, including investment in vessel modifications, primarily retrofits during regular maintenance periods nd ongoing dialogue with major customers around trialling lower carbon fuels and energy saving measures
Manager’s outlook
TMI’s manager says that it expects a continued strong market for 2022 with 2.1% tonne mile growth for minor bulk and 2.7% for 2023 expected against net fleet supply growth of 1.9% and -2.2% respectively and subject to actual fleet removals (Clarksons Research). The short-term impact of the war in Ukraine has seen a shift in trading patterns for the shipping of necessity goods, both to source alternative suppliers and with Russia exports shipping to different destinations. So far, the net change to demand seems to be negligible for TMI’s segment, once the decrease in volumes is offset by increased tonne-miles. The manager expects current Covid lockdowns in China to be transitory and for demand to rebound, as experienced following previous lockdowns. Acknowledging uncertainty in the wider economy, the manager remains optimistic about the Handysize segment given tightening supply over the next two years and possibly longer. The orderbook remains at historical lows and a significant uptick in newbuild contracting remains unlikely for now given both cost inflation and pending more deep-seated change to ship designs to meet evolving environmental demands. This dynamic will continue to support firm asset valuations and charter rates.
Comments from Nicholas Lykiardopulo, Independent Chair of TMI
“TMI has made a dynamic and successful start as a listed investment company as this outstanding first period of trading testifies, with excellent levels of profitability and cashflow. Our leading position in the Handysize dry bulk vessel segment, the workhorses of the dry bulk shipping trade, continues to deliver strong shareholder returns. We remain confident that market fundamentals will lead well into 2024 and we will continue to monitor the orderbook for indicators on market direction beyond that period”.
Comments from Edward Buttery, CEO of TMI
“I am delighted that the differentiated shipping investment opportunity we have created for investors continues to deliver sustainable yield and capital appreciation from our high quality assets. Our focus will remain on managing the company with a carefully balanced chartering strategy, strong liquidity and financial prudence to deliver consistent earnings and compelling dividends”.