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seems like a very reasonable call to me. interesting comments on the 27K/day for 5 year charter for 4250 vessels, certainly prioritizing long term cash flows to ups and downs of short term leasing markets. New CFO certainly has his work cut out for him, with all the financing and Capex requirements for the new build program. I initially thought it was a bad sign when the young CFO left, but Talbot certainly seems to have it together. Getting ratings from either S/P or Moody's with 1-2 year time frame for full investment grade. Seems like mostly going to be debt financing but with common shares yielding 3.5% an equity raise certainly might be in the cards and a smart thing to do.

As for APR, I guess we'll have to be more patient. they are viewing the renewal of the Mexicali contract as a big win, not just a simple renewal but better terms and longer contract duration. Also said utilization should be back up to 70 percent.
Madanagopal B profile picture
Thank you for writing to us regarding the error. The transcript has been updated with the correct CEO.
Juan M Gonzalez profile picture
Management does not seem to understand that at the moment some liner companies prefer leasing ( rather than purchasing) new buildings bcus these newbuildings are very likely to become technically obsolete during their lifespan due to environmental regulations. Even the LNG types.

At this time the industry still does not have a consensus on what is THE future technology for propulsion. So the lessor is taking a “technology disruption ” risk.

They also seem too casual about the new building tsunami that is likely to hit the industry in 2023-24 thus ending the party.

Further, they do not seem to be finding different businesses verticals to justify their self declared “asset manager” focus and they just keep stretching the balance sheet to invest in more of the same ie container ships.

In my view they continue to come across a bit as charlatans on the strategic issues.

With regards to financial performance, ATCO is perhaps the only publicly listed company in the container space without meaningful profitability improvements in 2021 relative to 2018-20 period. Past dilution does not help the per share metrics either.
valuinvst profile picture
@JM Gonzalez Yes, so naive of management and the board. What a bunch of dummies I guess. My guess is they are pretty smart and certainly can evaluate such a risk. What would you suggest, they go out of business because 20 years from now the business may change? or Don't grow because if you do too much, several years from now there may be a glut of vessels? They clearly have a strategy of long term contracting as well as diversification.
Juan M Gonzalez profile picture
@valuinvst Well, the reality is that despite being the largest containership lessor, their team has the least experience in the industry and it shows. As to your question : their peers have mostly invested in second hand tonnage which allows for growth whilst minimizing the technological risk. If you look at vessel resale values you will notice than older ships have the highest appreciation, for a reason...Finally, you might have noticed that Maersk has avoided ordering new buildings specifically because of the risk with current propulsion technologies and is instead investing in R&D...
@JM Gonzalez And what would ships be powered with? Are we going back to sailboats? LNG ships aren't going anywhere for at least three decades, probably more.

I share more concern about over extending the budget and committing to too many builds.
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