London-listed fund Tufton Oceanic Assets has signalled a potential return to the boxship arena after plunges in asset values.
The shipowner, managed by Tufton Investment Management, said in a first-quarter update that the container ship sector “is starting to look interesting again”.
This is because vessel values have fallen to about 80% of depreciated replacement cost (DRC), while time-charter rates have risen since late 2023, aided by supply disruptions, the company explained.
Yields are now between 12% and 15% in the sector, Tufton said.
Between mid-2021 and early 2023, Tufton sold all its container ships as they soared above 200% of DRC in record markets.
The fund is also looking to fix more of its bulkers on longer and higher fixed-rate charters as rates improve, Tufton said.
The net asset value total return was 4.5% for the first quarter.
Operating profit was in line with expectations at $0.04 per share or $11.76m, but slightly lower than the fourth quarter of 2023, when it was $0.046 per share.
The drop was due to the scheduled step-down in rates on the time charters of three product tankers.
In March, the company said net earnings in the six months to 31 December were $37.3m, from a loss of $4.2m a year ago.
Tanker deals stretched
Both the clean tanker and bulker markets strengthened as supply constraints added to tonne-mile demand growth, the owner said.
An “investment grade” oil major has exercised options to extend charters on two unnamed clean tankers, Tufton added.
TradeWinds understands one of these is the 57,000-dwt MR2 Olaf (built 2010).
VesselsValue lists the ship on charter to ExxonMobil for six months plus six months of options at $27,000 per day.
The vessels’ firm employment periods now run until late 2025 at slightly higher yields, the owner added.
“There has been no direct impact on the company or any of its vessels from the escalation of hostilities in the Red Sea. All our vessels are fully insured, and we continue to monitor the situation,” Tufton said.
The company declared a first-quarter dividend of $0.025 per share, payable on 10 May.
Tufton believes shipping is in the middle of a supply-driven upturn.
“Industry conditions should support continued strength in newbuild prices which should flow through to second prices,” the fund added.
