Stanislav Oleynikov

Fresh Valuations of Dry Bulk Shipping Companies

Mark Anthony:

I used the same assumption, calculating fleet values of all the companies, listed in the article. If EXM is undervalued, as you beleive, than other stocks must be even more overvalued.
Book values are meaningless, as they are not marked to market. The true value of a 2005 capesize vessel is same, no matter if was bought for $150 mln. in 2008 or for $60 mln in 2005. In 2009, we are close to $60 mln., agian.

I would be happy to discuss valuations of any particular type of ships. Current values in the second hand market of dry bulk vessels are the result of expected DCF based on current view on long-term sustainable freight rates. They are close to 2006 and are higher than in 2003. Distressed sales hasn't hit the market yet. Particulary all owners around the world got waivers on their loans. However, they are expected to appear next year, driving the market lower.

So, shipowners in good financial position, like DSX are going to benefit. EXM has the worst financial situation among all US listed shippers. According to the waiver deal, EXM has to divert all the generated excess cash flow toward early repayment of the debt.

Fresh Valuations of Dry Bulk Shipping Companies

Windsun33:

From the last DEF 14A filling:

Shares Beneficially Owned (1)
Name Number Percentage
Sophocles N. Zoullas (2) 569,676 1.2%
Joseph M. Cianciolo (3) 72,230 *
David B. Hiley (4) 67,896 *
Douglas P. Haensel (5) 66,230 *
Alan S. Ginsberg (6) 95,515 *
Alexis P. Zoullas (7) 21,667 *
Jon Tomasson (8) 66,230 *
Forrest E. Wylie (9) 66,230 *
Directors and Executive Officers as
a group (8 persons) 1,025,674 2.2%

So, insiders own just 2.2%

Fresh Valuations of Dry Bulk Shipping Companies

To Anthony:

Here's a link to ship by ship calculation of market fleet value for EXM:
seekingalpha.com/insta...

If you don't agree with anything in the EXM ship by ship valuation, I can explain every number and show recent comparable deals in second hand market.

The main reasons for similar fleet market values for EXM and EGLE:

1. Fleet values include ordered, but not yet delivered newbuildings. EGLE has a lot of them. Net debt is increased for the remaining payments for these newbuldings.
2.EXM has 7 vessels in the fleet which are not owned, but leased and at a rate above current market.

Fresh Valuations of Dry Bulk Shipping Companies

To Alan Young,

In my opinion, the company is worth as much as the market values its assets. At the moment, anyone with sufficient capital can form a company, buy some dry bulk ships and make an IPO that would result in ownership of stock valued several times higher than initial investment if this new company is valued in line with EXM.
It just takes some time. In 2007 and first half of 2008, such discrepancy lead to numerous IPOs of bulkers. Such companies, like SBLK, SB, PRGN, NMM and infamous DWT appeared exactly this way. If the discrepancy between the NAV and the market price of public dry bulk shipping companies stays for the next several months, such new companies will emerge again, pulling available capital away from existing stocks.

Fresh Valuations of Dry Bulk Shipping Companies

To John Cordes:

China has been importing record volumes of iron ore for the last four months. Based on already made fixtures, this trend is going to continue for the next couple of months. A lion's share of these imports came from traders hoarding ore in anticipation of higher prices. The amount of imported iron ore significantly exceeds demand from Chinese steel mills even running at full capacity. Such situation is not sustainable. Iron ore stockplies are at all time high at the moment and going to increase. Chinese government has already started to implement measures to curb speculative hoarding. Besides, as shipping rates increase, such operations become less attractive to traders.
As a result I believe iron ore shippings to China are going to decrease in not so distant future.
However, the rest of the world may start to restock iron ore supplies, as was stated in today's report of Omar Notka of Dahlman Rose, upgrading dry bulk shippers. However, I beleive that this amount is just a fraction of Chinese imports and is not going to have any significant impact on shipping rates.