London-listed Tufton Oceanic Assets has issued a bullish bulletin on shipping as it seeks to keep investing in core sectors.
The shipowning fund, managed by Tufton Investment Management, said the industry is in "the early innings of a multi-year upcycle".
The company pledged to keep recycling capital across the tanker, bulker and containership segments.
In a quarterly update, Tufton Oceanic said its net asset value (NAV) was $312.65m as of 30 June, while the NAV return was 11.7% as containership and bulker values rose strongly.
The company noted strong underlying demand and port congestion in the two sectors.
Tufton Oceanic said benchmark 10-year-old containership prices rose 70% in the period due to strong competition to secure capacity.
Yields squashed
The company added: "Rising containerships asset values relative to time charter rates are leading to compression in yields."
However, the overall yield on the 21-ship portfolio was up at 14.2%.
"Although port congestion and demand growth may moderate in the second half of 2021, limited fleet growth expected over the period suggests that the containership market will find an equilibrium at levels significantly higher than 2019," Tufton Oceanic said.
The shipowner believes tankers remain weak, with global oil demand only likely to surpass 2019 levels in 2022.
The group's six product tankers are on long-term charters, fixed before current weak market conditions prevailed.
"While tanker yields are lower than the other segments at this point, the segment offers higher potential for capital appreciation," the company said.
Tufton Oceanic is paying out a dividend of $0.01875 per share for the second quarter.
Encouraged by the strong performance and increased portfolio yield, the board has raised its annual dividend target from $0.075 to $0.08 per share, starting in the third quarter.
In the quarter, the company sold two handysize bulkers for returns "materially exceeding targets", and added a bulker and a tanker.
The fleet has an average charter cover of 2.3 years.
Vessel operating profit was $0.028 per share to 30 June.
