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GasLog: Good Results Despite The Writedown And Positioned Well For The Future


  • GasLog's headline numbers were rather disappointing.
  • This was driven by a writedown of its steam-powered ships and not by any real problems with its operations.
  • The demand for steam-powered ships on long-term contracts has weakened significantly over the past year.
  • The production of LNG will likely grow over the next five years and this will drive demand for new tankers.
  • GasLog is well-positioned to take advantage of this.
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On Thursday, February 6, 2020, liquefied natural gas tanker giant GasLog Ltd. (NYSE:GLOG) announced its fourth quarter 2019 earnings results. At first glance, these results appeared to be somewhat disappointing as the company managed to beat the expectations of its analysts in terms of top-line revenues, but it missed their expectations in terms of bottom-line earnings. In addition to this, the company posted a loss on a GAAP basis. However, a closer look at the actual results shows that things were not really as bad as they appear at first. The company managed to make some progress at reducing its debt and even ended up paying a special dividend to its investors. The market has certainly not been friendly to the company in the aftermath of these results though, which is partly due to fears that the COVID-19 (coronavirus) will shut down the Chinese economy. While this is certainly a very real concern, the future of the company continues to look bright. Investors may actually have an attractive opportunity here.

As my long-time readers are no doubt well aware, it is my usual practice to share the highlights from a company's earnings report before delving into an analysis of its results. This is because these highlights provide a background for the remainder of the article as well as serve as a framework for the resultant analysis. Therefore, here are the highlights from GasLog's fourth quarter 2019 earnings results:

  • GasLog brought in total revenues of $182.253 million in the fourth quarter of 2019. This represents a 3.39% decline over the $188.644 million that the company brought in during the prior-year quarter.
  • The company reported an operating loss of $82.133 million in the most recent quarter. This compares very unfavorably to the $104.997 million operating profit that the company reported in the year-ago quarter.

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This article was written by

Power Hedge profile picture

Power Hedge has been covering both traditional and renewable energy since 2010. He targets primarily international companies of all sizes that hold a competitive advantage and pay dividends with strong yields.

He is the leader of the investing group Energy Profits in Dividends where he focuses on generating income through energy stocks and CEFs while managing risk through options. He also provides micro and macro-analysis of both domestic and international energy companie. Learn more.

Analyst’s Disclosure: I am/we are long GLOP, GMLP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (44)

spend my cash profile picture
added one $GLOG.A
today. Hoping for the
Prepare for a blood bath in the entire sector today.
oil just crashed.
And going lower...

Thanks for the article and agree with most. Actually purchased another small block of GLOP last week in the mid $3s. Already down 18% on that purchase. For now, sitting on my hands, not buying any additional securities. Oil being pummeled and the virus fears growing. Accumulating cash and waiting.

Power Hedge profile picture
That is what I’m doing too. Stockpiling cash in my brokerage accounts so that I can take advantage of opportunities once the structural problems clear.
bluewings profile picture
Market recovery usually starts when there is still doubt. If you want to make sure everything is clear, the market will have already rallied quite a bit.
Power Hedge profile picture
That is correct. Best strategy is to cautiously buy in on dips.
MotorD1212 profile picture
Thank you for the write up. I'm sure that I'm not the only person in this same "boat" they are to embarrassed to say anything. I have had my ass handed to me in these two stocks lately, and, HMLP, yet I have been buy on the way down. I am a believer that as the new ships come on line I will be rewarded in spades by buying on the cheap an waiting. No one has explained in anything that I have read in a true manner with real hard data why steam ships are disliked so much. As a retired engineer from an engine company which builds large engines some of which went into ships which I have been on many times, I don't understand the dislike for steamers. Regardless of what they burn and with the addition of scrubbers or other emission devices the day rate can be adjusted to compensate for that until it's time to scrape them. Many of them are not near they life term, the bleed off rates are about the same. Maybe I'm wrong, but I would think you could go in with a rate low enough to be compedative an still be profitable. I am not a bean counter, may be on the tax side it is better to take the write down or write them off.
I’m heavy with 60K shares of GLOP so it has hurt but taking the long view on this and not selling.
taosjet profile picture
could a steamer be converted to burn LNG?
Power Hedge profile picture
I’m half tempted to start slowly buying in with prices at this level.

GMLP actually had a lot of success with its steamers in Q4. There were times though when Golar Maria or Golar Mazo were literally the only ships available.

GLOG/GLOP’s steamers are modern ships too. These aren’t the 20 year-old ones that other companies have.
Mktneutralhedger profile picture
I'm afraid that, regardless of fundamentals regarding the specific companies, shipping names were held by Energy funds that lately are experiencing terrible times due to the sector knocked down and very large outflows.
Power Hedge profile picture
I think that’s part of the problem here.
Likewise SA Authors didn’t foresee the domesday scenario approaching.
Power Hedge profile picture
At these prices, it’s like people are predicting that demand for natural gas from emerging markets is going to zero and that’s just not credible.

Europe is trying to get away from Russia exclusively as a natty gas supplier. Southeast Asia is still coming online. The need for LNG shippers is still there. GLOG doesn’t have a whole lot of exposure to the spot market and nearly all its contracts are with giant corporations. Unless you seriously think Royal Dutch Shell is going out of business within two years, this is the mother of all overcorrections.
It will take a long time before I recover from this stock. I have 10K shares so my loss was definitely in six figures. I have stated before this is a CON Company. I have researched their past earning calls and there was little mention of the doom and gloom that happened. I will most likely ride this stock out and hope for better days. Going from 20 to 3 is not panic selling. It is a lack of faith in management.
Pitivier profile picture
wait the end of coronovirus dont sell now is crasy situation
GLOG is better than GLOP GLOG is free at 5$ more the new construction soon
Don't feel like the lone ranger, liked it at $20 and added at the drop in the teens. Recently added at $3.90 --again at $2.99, in for a penny, in for a pound. Breaks my own 'rules' adding, but under $3 is ridiculous. I have to believe the company made the hard choices to better position in the future. Sad story...November was in the green in brokerage account, finger on the sell button and decided to hold for one more ex-div. Closing it out in that account and was to add small amount in Roth...it dropped, added in Roth ....now have boatload of shit! ...hang in there David. I ain't selling at no 75% discount.
Power Hedge profile picture
At below $5, GLOG could literally liquidate itself and profit. The tankers alone are worth more than that!
My $$ is on TGP. 3.85 DCF coverage of distribution, paying down debt, buying back stock, no new ships on order, and current fleet under LT contract. Buy, hold, DRIP, and retire rich!! P.S. the distribution goes to $.25 on next payout so figure your return on that basis.
Pitivier profile picture
TGP THE same situation wait for me 4$ to buy
GLOG made out ok but the unit holders of GLOP got screwed. Five of the six steam ships were on the books of GLOP. Management only gave rosy guidance when they knew that problems were developing with the steam ships. They kept the problem hidden.

They knew problems were developing so they ran out and cancelled the IDRs and issued GLOG a boat load of shares to lessen the impact when GLOP whacked their dividend. Helped keep the cash flow to GLOG going.

Well investors have seen through this and the shares of both GLOG and GLOP have been decimated.
Panzerman profile picture
GLOG.....I have it and it has hurt me as the stock price collapsed. However, as with many things these days, the shares have been sold off in panic. That said the company is in a decade plus growth area and is one of the better run LNG companies available in the market. So with some time and patience, this will work out. Lots of paranoia in the market at this time.
Long GLOG and HMLP in shipping
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