Thursday, June 14, 2012

First Ship Lease Trust (FSLT SP) - Not Out Of The Woods (UOBKH)

First Ship Lease Trust (FSLT SP) - Not Out Of The Woods
(NOT RATED/S$0.169)
Key takeaways from our meeting with management:

Investment Highlights
• Vessels redeployed. First Ship Lease Trust (FSL) has secured three-year time charters with Petrobras for the FSL Hamburg and Singapore, while the FSL New York, London and Tokyo will be redeployed in the Nordic Siva pool by 1H12. These vessels were redeployed after the previous lessees Groda Shipping & Transportation and PT Berlian Laju Tanker defaulted on charter payments.

• Renegotiated contract. FSL also renegotiated the charter rates for two product tankers leased to a wholly-owned subsidiary of TORM A/S (TORM). The adjusted charter rates will be based on variable rates that TORM achieves in the market, which are significantly lower than the original bareboat charter rates. FSL will also be allocated equity in TORM in exchange for the rate concessions.

• No near-term plans to expand or dispose fleet. In light of the tough financing environment and depressed vessel prices, FSL does not have any plans to expand or dispose off its vessel fleet in the near term.

Our View
• Risk of further defaults. Although FSL has entered into fixed, long-term bare-boat charters with its customers, the group faces the risks of further defaults or contract renegotiations in a prolonged shipping downturn as most of the previously contracted charter rates are significantly above market rates.

• Risk of declining asset prices. FSL’s debt covenants require the group to maintain a security-to-loan ratio of more than 125%. Currently, the security-to-loan ratio stands at 130%. As the value of the loan security is based on vessel prices, FSL may breach its loan covenants if vessel prices fall further.

• Cut distributions. Given the challenging operating environment, FSL aims to shore up its balance sheet and preserve capital. As a result, the group has cut 1QFY12 distribution by about 90% yoy to 0.1 US cents. In our view, distributions are likely to remain at this level until the balance sheet improves.

Valuation
• Trading at significantly lower yield. FSL is trading at a gross yield of 2.9%, significantly lower than Rickmers Maritime’s 9.6%. Based on P/B metric, FSL’s P/B of 0.3x is comparable to Rickmers Maritime’s.


Source/Extract/Excerpts/来源/转贴/摘录: UOB Kay Hian research
Publish date: 14/06/12

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock