There are plenty of shipping companies right now that would love to have equities analysts remark that there is “definitely no drama here”.
But while Oslo-listed Belships has earned that accolade in a recent analyst note, it can also claim another: “takeover candidate”.
The bulker owner’s chief executive, Lars Christian Skarsgard, told TradeWinds he regards the takeover talk as a compliment.
“I will leave it to others to speculate how attractive a target we are. I’ll just take it as a sign we’re doing something right,” Skarsgard said.
Norne Research analyst Mindaugas Cekanavicius described Belships as drama-free on Wednesday, shortly after the bulker owner had filed its latest round of results that beat consensus estimates.
That said, there was a rare stirring of intrigue around the company at the end of April when the shipowner sold its stake in the Asia arm of its affiliate commercial platform Lighthouse Navigation. The deal was sealed for $14m plus an extra 33% of Lighthouse’s Oslo-based operation, which took Belships’ shareholding to 67%.
Analysts at Clarksons Securities said the Lighthouse transaction would streamline Belships and make it “an easier takeover candidate”. The deal followed the sale of Belships’ Singapore-based crew and technical management company to V.Ships last year.
“Simplifying the company and reducing the exposure to the operating business should make things easier and lessen the discussion around the ‘actual’ NAV [net asset value],” the analysts said in a note at the time.
‘Highly sought-after staff’
“Although the Oslo-based operator company remains, it has a simple structure and, according to management, has a highly sought-after staff.”
Asked about the takeover talk, Skarsgard did not comment on the possibility — or not — of a future merger.
Belships reported a net profit of $15.7m for the first quarter of this year, down from $27.8m a year ago.
The net result came despite a $1m year-on-year increase in net freight revenue to $112m on the back of better-than-expected freight markets during the quarter.
“The lower net result is primarily caused by a lower Ebitda contribution from Lighthouse Navigation,” the shipowner said in its quarterly report.
The operating platform contributed $4.7m to Belships’ total $31.3m Ebitda.
The shipowner will pay NOK 0.60 ($0.05) per share, the same as in the previous three months.
“We just run our business and develop it and that should increase the value of our company,” he said.
This is something that Belships has been doing industriously through a string of vessel deals. It currently has 10 ultramax newbuildings on order in Japan, which will be acquired on long-term leases with purchase options attached.
The company’s growth is borne out in the numbers. Norne Research estimates that Belships’ enterprise value has grown by NOK 1bn ($100m) over the past year and currently sits at just over NOK 11bn.
Clarksons estimates Belships’ NAV at NOK 30 per share, double its estimate at the end of 2022.
Operating profit generated by Lighthouse has made sizeable contributions to Belships’ bottom line over the past few years, especially when freight markets have been high. Analysts expect that contribution will be more muted going forward.
“We expect continued profits from our operating business and that will contribute to Belships’ dividends,” Skarsgard said.
Lighthouse expansion
The plan is to expand Lighthouse’s Oslo office, which is led by managing director Jan Christian Tungland.
“We are looking to hire in our operating business; you can say they invest first and foremost in people,” Skarsgard told TradeWinds.
Lighthouse provides chartering and operational services for the Belships fleet and manages a chartered-in fleet of bulkers across the supramax, ultramax and handysize segments.
“We are asset-heavy, just look at our balance sheet. There is nothing light about it,” Skarsgard said.
“We are just trying to play to our strengths and for Belships it makes for a good match, the current set-up. Maybe we can make a case for being asset-heavy but light-footed.”
The strength of Belships’ commercial platform is made clear in new research.
Belships was the highest-placed pure-play bulker owner included in Liengaard & Roschmann’s annual Vesselindex Report. The highly regarded annual report ranks publicly listed bulker owners by how far they outperform the relevant indices published by the Baltic Exchange.
Belships’ fleet generated an average daily premium of $5,703 over the index last year, equivalent to 46.2%. This is more than double the average outperformance generated by other companies included in the rankings.
“We have refinanced Belships and reorganised Lighthouse so something around the fleet is probably next,” Skarsgard said.
“Sure, we will sell a vessel or two … and just recently we added two to make it 10 newbuildings.”
As TradeWinds has reported, Belships said it had agreed to offload the 57,700-dwt supramaxes Belfriend and Beltide (both built 2016) to an unnamed buyer for $28.3m each.
