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DMFR Insights January 2022
Contents
SECTION PAGE
A Summary 3
B Container shipping 4
C Port and terminal operators 10
D Dry bulk shipping 13
E LNG shipping 15
F LPG shipping 17
G Crude tanker shipping 18
H Product tanker shipping 20
2 Drewry Maritime Financial Research www.drewry.co.ukSummary
• Container shipping: The container shipping sector looks set to continue its extraordinary profitability cycle in 2022, given the current supply chain logjams and
the rising threat of the Omicron variant. We expect the situation to normalise slightly after the Chinese New Year when the manufacturing activities in the
country will be temporarily suspended. However, traditional seasonality indicates higher trade demand thereafter if the supply bottlenecks remain acute,
ensuring high profits for the global container shipping sector. This will continue to spill over to stock investors via soaring share prices and generous dividends.
• Port and terminal operators: Apart from facing congestion issues throughout 2021, the global port industry encountered additional headwinds from the new
Covid variants and also the swift shift towards a more hawkish stance by major central banks in 4Q21. These headwinds dampened the rally in port equities.
After three consecutive quarters of growth (3Q21: +3.8%, 2Q21: +9.6%, and 1Q21: +8.9% -- QoQ), the Drewry port equity index declined by 3.3% in 4Q21.
Cumulatively on YoY basis, the equity index gained 19.9% in 2021 (vs. 2020: -17.5% and 2019: +19.7%). Global/International terminal operators (GTO/ITO)
continued to outperform their regional peers (regional terminal operators - RTO) with a significant variance of 25.2 percentage points in 2021.
• Dry bulk shipping: Dry bulk trade flourished in 2021, with all indices and most share prices recording their best levels ever. Steep recovery in demand for dry bulk
commodities after some respite from the pandemic coupled with supply constraints led to a huge surge in the freight rates, cash flows and subsequently stock prices.
However, 4Q21 saw the rates softening primarily due to demand taking a hit as commodity prices soared and stimulus packages tapered off. As 2022 kicked off, the
slowdown has continued, and as of 19 January 2022, the average freight rates have touched around 10-month lows.
• LNG shipping: Drewry LNG shipping equity index increased by 54.3% in 2021, outperforming S&P 500 which grew by 26.9% on the back of strong LNG prospects in
2021. In 4Q21, Drewry LNG shipping equity index increased by 13% while in YTD 2021 (till 21 January 2022), the index declined by 26.5% driven by weakness in the
broader equity market and decline in LNG shipping spot rates. LNG shipping assets have become more attractive for long-term investors amid the energy transition. The
same can also be highlighted by the acquisition of three independent LNG shipping companies by private equity players in 2021.
• LPG shipping: Stock prices of all three LPG companies under our coverage declined in 2021, as they were mainly weighed down by the fall in spot LPG shipping rates -
Navigator Holdings (NVGS) share piece declined by 19%, BW LPG (BWLPG) by 15.2% and Stealthgas Inc (GASS) by 10.2%. YTD 2022 (as of 21 January 2022,) BW LPG
declined by 6.1%, the most among the three LPG companies we cover (NVGS -0.7% and GASS -0.5%). We expect LPG stock prices to benefit from expected
strengthening in LPG shipping rates.
• Crude tanker shipping: Drewry crude tanker equity index dropped by 18.9% in 4Q21, but it recorded a gain of 1.7% in 2021 primarily because of the rally
in late September and October ahead of the winter demand. The index underperformed key market indices – S&P 500 moved up by 10.6% whereas Dow
Jones Industrial Average (DJIA) and Nasdaq Composite gained 7.4% and 8.3% respectively in 4Q21. Despite the jump in both global oil demand (up 5.4
mbpd in 2021) and Brent oil prices (up 51.5% in 2021), crude tanker day rates failed to increase on expected lines because of the continued lack of crude oil
trade volumes amid curtailed supply from OPEC+ and reliance of major oil-importing countries on their inventories/strategic petroleum reserves (SPR). Meanwhile,
second-hand values strengthened during the year on the prospects of market recovery and rising newbuilding prices.
• Product tanker shipping: Drewry product tanker equity index declined by 14.3% in 4Q21 as it fell in November amid concerns of Omicron, which is the most
contagious variant of the virus thus far. The index underperformed key market indices such as S&P 500 (10.6%) and Dow Jones Industrial Average (7.4%)
during the quarter. The exponential rise in new infections in recent weeks can force several major economies to impose new rounds of mobility
restrictions that will lead to reduced demand and trade of refined products. Accordingly, we expect the product tanker market to come under pressure in
1Q22 before moving upwards in 2Q22.
3 Drewry Maritime Financial Research www.drewry.co.ukContainer shipping
Stock returns in a positive territory; Omicron to drive further gains
Container shipping stock price performance • Strong performance in the global container shipping sector has led to handsome
returns for stock investors with the average return of 13 carriers at 178% for FY21.
During the same period, Asian liner operators were the top performers, with Yang
SITC
Ming’s returns up by 314%, followed by Evergreen Marine’s gain of 250% and Wan
Hai’s 275%. More modest growth was seen for Maersk (+72%), Cosco Shipping
ZIM Holding (+53%), Matson (+58%), SITC (+68%) and HMM (+93%).
• Part of this remarkable performance can be attributed to strengthening balance
Regional Container Lines
sheets as data from 12 carriers suggests that the cumulative debt has reduced by
USD 3.5bn between end December 2020 and end September 2021 to USD 73.2bn.
Samudera Shipping Line Many carriers are in a net cash position, meaning their cash balance exceeds total
debt, a rarity for the sector.
Matson
• Clearly, the pandemic and ensuing supply chain crisis that has supercharged carrier profits
are the primary drivers for the share price bonanza. This was reinforced when share prices
OOIL
bounced back in November after the discovery of the Omicron variant, having been in retreat
since July when there was greater hope for swifter market normalisation. On YTD (ending 21
Cosco-A share January 2022), the Drewry container equity index has gained by 3%.
Yang Ming • To further boost investors’ confidence, major shipping lines are also buying back
shares. Maersk’s directors have approved an additional share buyback programme of
DKK 32bn (USD 5bn) between 2024 and 2025, bringing the total of outstanding
Wan Hai
share buyback programmes to DKK 64bn (USD 10bn) from 2022 to 2025. This was
reflected in its above-average 4Q21 stock price return of 35% when the average of
HMM 12 carriers were just 12%.
Evergreen • Maersk has also been at the forefront of expanding into logistics and utilising its excess
cash for M&As. Maersk finished the year by announcing its last acquisition of LF Logistics
on 22 December 2021. The deal will have a transaction value of USD 3.6bn and involve a
Hapag-Lloyd
network of 223 distribution centres in Asia. The logistics company is currently owned by
Li & Fung (78.3%) and Singapore’s sovereign wealth fund Temasek Holdings (21.7%).
Maersk
• The latest acquisition of LF Logistics was preceded by many similar deals in the fourth
quarter. On 2 November 2021, Maersk announced that it will acquire Senator International
-100% 0% 100% 200% 300% 400% 500%
Freight Forwarding Group, a Hamburg-based global freight forwarder specialising in air
FY21 4Q21 freight with more than 20 owned and controlled flights per week out of Europe into the US
and Asia. In addition to acquiring Senator’s air freight offering, Maersk acquired three
Source: Yahoo finance, Drewry Maritime Financial Research leased cargo planes (B767) to be operational from 2022 and purchased two new Boeing
Note: Share prices as on 31 December 2021 aircraft (B777F) to be deployed by 2024 for its Star Air subsidiary.
4 Drewry Maritime Financial Research www.drewry.co.ukContainer shipping
Container shipping equity index continues to outperform
Drewry container shipping equity index versus global Indices • At present, Maersk operates a fleet of 15 full freighter wide-body aircraft through Star
Air from hubs in Germany. Expansion into air freight cargo pits Maersk directly
800 against CMA CGM, which is planning to set up its own airline, having acquired four
600 A350Fs, two 777Fs and four A330Fs. Also, not to forget, Evergreen Marine too has a
20% stake in EVA Air, which made a profit in the third quarter and currently has six
400 777Fs cargo jets with the possibility of adding two more jets by the end of 2021. In
200 addition, there is also Ocean Network Express’s (ONE’s) parent NYK Line, which
owns Yusen Logistics and Nippon Cargo Airlines (NCA). NCA owns eight 747-8Fs.
0
• In December 2021, CMA CGM further expanded into global logistics with a USD 3bn
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deal to buy warehouses in the US and Europe and a cloud-based digital platform
from US technology group Ingram Micro. The new purchase of most of Ingram
Drewry container shipping equity Index Micro’s Commerce and Lifecycle Services operations include Shipwire, a cloud-based
Dow jones industrial average logistics technology platform, and 59 warehouses worldwide. The operations of
S&P 500 Ingram Micro bought by CMA CGM have an estimated annual turnover of USD 1.7bn
Source: Yahoo finance, Drewry Maritime Financial Research and employ 11,500 personnel. This transaction by CMA CGM was preceded in
Note: Drewry container shipping equity index is a market cap index and comprises of Maersk November by its agreement to buy Fenix Marine Services, a container terminal
group, Hapag-Lloyd, Cosco shipping Hldg., Yang Ming Marine, HMM, Wan Hai, Evergreen Marine, operator at the Port of Los Angeles, in a deal worth USD 2.3bn, including debt.
Samudera shipping line, Regional container lines, Matson, OOIL, SITC and ZIM • Furthermore, with the onset of the new year, CMA CGM announced the acquisition of EQT
Infrastructure III’s 90% interest in the terminal and, with the 10% stake already owned by
the Group, is now the sole owner of the FMS facility. FMS is the third largest terminal in
Taiwanese companies’ quarterly sales growth (YoY) the Los Angeles/Long Beach port area in terms of capacity, which is around 2.5 mteu, and
is also one of the largest in the US. CMA CGM has indicated that its first LNG-fuelled
300%
15,000-teu containerships will call at the facility from early 2022.
250%
• Meanwhile, besides Maersk, Cosco too announced on 6 December that the board
200% proposed a share repurchase mandate up to 10% of its A and H shares in issue,
150% pending shareholder approval. Cosco’s stock generated a relatively modest return of
100% 53% in FY21 and 8% in 4Q21. However, the stock has the potential to reward its
investors based on its strong financials. For its container shipping business, Cosco
50%
expects to increase the proportion of its contract business on the fronthaul Asia-
0% Europe route above 45% in 2022, as well as significantly increase its two- and three-
-50% year contracts with customers. The company is currently focusing on negotiations on
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the trade, with discussions over long-term contracts on the Transpacific.
• Cosco’s subsidiary, OOCL’s stock fared better, gaining 42% in 4Q21 and 147% in
Yang Ming Evergreen Wan Hai FY21. As a reward to its stock investors, OOIL’s board of directors announced an
interim dividend of USD 1.76 per ordinary share and a special dividend of USD 2.65
Source: MOPS, Drewry Maritime Financial Research per ordinary share in 1H21.
5 Drewry Maritime Financial Research www.drewry.co.ukContainer shipping
Danaos’ stock price outperforms among non-operating owners
Container shipping industry EBIT has high correlation with Panamax TC rates • The US Federal Maritime Commission (FMC) has started an investigation into the container line
Wan Hai over detention charges that the line allegedly levied on shippers related to return of
125,000 80
containers. In 4Q21 Wan Hai’s stock returns were negative 2% but overall generated a healthy
100,000 60 275% for the full year. Along with MSC, Wan Hai has also been very aggressive in acquiring
second-hand vessels. The company has allocated a budget of TWD 5.54bn (USD 200mn) for
75,000 40 the purchase of additional second-hand container tonnage according to a disclosure of the
carrier on the Taiwan Stock Exchange (TWSE). This decision has been taken despite
50,000 20 skyrocketing prices of second-hand container vessels in the past few months.
• Yang Ming generated the second highest return of 314% in FY21 among 13 operators but
25,000 0 gained just a miniscule 1% in 4Q21. Yang Ming continued to generate strong sales growth
with its 4Q21 sales surging by 122% while FY21 sales were up by 120% YoY.
0 -20 • The other Taiwanese major, Evergreen Marine also generated an above average return of
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250% in full-year 2021, but returned only 13% during the final quarter. Its FY21 sales were
up by 137% YoY while in 4Q21 sales were up by 142%. Reportedly, China's Hudong
TC rate - 4,250 teu (USD/day) Industry EBIT (USD bn)-RHS Zhonghua Shipbuilding, a division of China State Shipbuilding Corp (CSSC), floated
Evergreen Line's newest containership which is being called the world's largest
Source: Drewry Maritime Research, Drewry Maritime Financial Research containership based on rated capacity. The new ship Ever Alot will have a rated capacity of
24,004 teu compared to Ever Ace’s 23,992 teu introduced in the summer of 2021.
Non-operating owners: price performance • HMM registered one of its best EBIT margins of 59% in 3Q21 for the container business.
However, its investors suffered an erosion in their investment to the tune of 20% in 4Q21 but
turned gainers of 93% for the full-year 2021. During the last quarter investors reacted negatively
Atlas Corp. to its privatisation-related news. The stock is still languishing at about KRW 26,000 in early
(formerly Seaspan) January with speculation about a merger with SM Line taking centre stage. In a latest update,
SM Line is reported to have taken a small stake in the company after having paid USD 14mn
for a 0.49% share in HMM, which was described as an investment. In 2021, SM Line had
Danaos planned its own initial public offering (IPO) hoping to raise up to USD 722mn but thereafter
pushed back its plan when demand from institutional investors fell below expectations.
• Hapag-Lloyd’s (HL’s) stock generated 201% returns in FY21 and 47% in 4Q21. HL seems to be
Costamare charting a different course for itself, focusing more on keeping its return on invested capital (ROIC)
above the cost of capital. While this seems easy to achieve at the moment, it may become more
difficult in coming years when the supply chain situation normalises. As a result, the company
-100% 0% 100% 200% 300% hopes to reduce its cost base by 2023-24 by simplifying the network and using larger, newer and
more cost-efficient ships in addition to increasing exposure to contracted rates. Despite excess
FY21 4Q21 cash in its kitty, any major foray into new businesses looks unlikely. Rather, HL will choose to
Source: Yahoo finance, Drerwry Maritime Financial Research reward its investors through higher dividend pay outs. Guidance for dividends was over 30% pay-
Note: Share prices as on 31 December 2021 out ratio, but management recently revealed that would increase in coming years.
6 Drewry Maritime Financial Research www.drewry.co.ukContainer shipping
Drewry container shipping equity index moves in tandem with WCI spot index; asset prices surge
Drewry container shipping equity index vs WCI spot rates • Israeli-carrier Zim generated the highest returns of 412% in FY21 among 13 carriers that
800 we track. However, returns were muted at 16% in 4Q21 even though it posted strong
numbers in 9M21, reporting a free cash flow of USD 3.2bn. Going forward, a large part of
600 Zim’s cash balances will be used to distribute substantial dividends to shareholders, and
management reiterated that it is looking at some limited M&A with smaller liners, but that
400 no deals have materialised as yet. Management aims to pay about 30-50% of Zim’s net
income as dividends in 2021. In terms of investment, Zim has bought eight second-hand
200 vessels this year although it plans to stick to its chartering strategy for most of the fleet. In
addition, in the early months of 2021 it deployed part of the excess cash to buy container
0 boxes, while also investing in the digitalisation of the company. Share repurchases are
another capital allocation option that Zim’s management is considering.
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• Non-operating owner and operator of containerships, Seaspan Corp., a subsidiary of
Atlas Corp, announced it now has financing lined up for its entire 70-vessel newbuild
Drewry container shipping equity index programme. With the completion of the latest USD 1.4bn deal in December, Seaspan’s
financing proceeds are approximately USD 6.9bn. Seaspan’s USD 1.4bn will be used to
WCI spot rates (assessed by Drewry)
finance 10 LNG dual-fuel newbuilds of 15,000 teu each, the last of its recent USD 7.6bn
containership ordering spree, including three ships that have already been delivered.
Drewry container shipping equity index vs asset prices Atlas’ stock generated a return of 31% in FY21 but lost 7% in 4Q21.
(New build and Second hand) • Danaos’s stock too lost 9% in 4Q21 but was up by a staggering 248% in FY21 which speaks
600 volumes about its fundamentals. In October, Danaos announced the repurchase of 4,339,271
shares of its common stock for an aggregate purchase price of USD 31.1mn in privately
negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and
400 1,822,258 shares from Sphinx Investment Corp. These transactions will result in the
termination of the company's previously announced share repurchase programme.
200 • On 3 January, Costamare declared cash dividends to Series B, Series C, Series D and Series E
Preferred Stock holders from 15 October 2021 to 14 January 2022. The dividend will be paid on
0 07 February 2022 to all holders of record as of 20 January 2022. The company has rewarded
its investors decently by generating 53% in FY21 despite losing 18% of its stock value in 4Q21.
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Container asset prices and freight rate
• With rising demand for assets, the value of ships across all sizes and ages has gone
Drewry container shipping equity index up phenomenally. Drewry estimates that the value of a five-year-old Classic Panamax
4,000 teu (SH-5 yr old) (4,000 teu vessel) in December 2021 was ~4x the value in December 2020 (USD
5,500 teu (NB) 15.5mn in December 2020 to USD 59mn in December 2021). Meanwhile,
newbuilding vessel orders have surged just 1.5 times between December 2020 and
Source: World Container Index (WCI) assessed by Drewry December 2021, from USD 48mn for 5,500 teu vessels to USD 71mn.
7 Drewry Maritime Financial Research www.drewry.co.ukContainer shipping
Price gap between HFO and VLSO rises again
Bunker fuel prices • That said, the price differential between 5-year-old and 10-year-old ships has come
down as buyers have had to be less picky to acquire additional tonnage. Quick asset
700 plays between owners are becoming more frequent which, combined with carriers’
600 desire to find new capacity outside of the tight charter market, has propelled
transactions in the second-hand market this year.
500
USD per tonne
• Major global carriers like MSC and CMA CGM have been acquiring ships
400 aggressively. For example, MSC purchased 22 ships during 3Q21, whereas CMA
300 CGM bought seven. The buying spree of carriers has altered the ownership ratio.
Carriers’ share of the total fleet capacity increased from 53.6% in October 2020 to
200
55.1% in October 2021. This will go a little way to reducing lines’ exposure to the
100 surging charter market.
0 • With no end in sight to the elevated charter prices and a relatively modest influx of newbuilds
scheduled for 2022, Drewry expects asset values to stay strong throughout the year.
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• A surge in demand with limited rise in shipping capacity coupled with congestion and other
supply chain bottlenecks resulted in a historic increase in freight rates.
Source: DMFR Rotterdam IFO 380 Rotterdam VLSFO • For the week ending 6 January, Drewry’s World Container Index (WCI) was up by 1.1% WoW
and 80% compared to the same period in 2020. Container shipping rates from Shanghai-
Rotterdam grew by 1.5x between 7 January 2021 to 6 January 2022. The rates on Shanghai-
US Retail sales Genoa are also significantly up by 52% YoY. Meanwhile, the rates on Shanghai-New York
(+112%) and Shanghai-Los Angeles (+151%) also contributed to the surge.
45
• Separately, the new Omicron variant and the Chinese New Year will significantly challenge
30 the global supply chain industry in early 2022. Unavoidably, shippers, freight forwarders
and BCOs will face further difficulties in coming months as the port of Ningbo, one of the
% Change
15 world’s largest ports, has been blocked by the extensive lockdown measures introduced in
China. The impact is exacerbated by the peak season ahead of the Chinese New Year.
0 • With the oil price rising substantially, the gap between Heavy Fuel Oil (HFO) and Very Low
Sulphur Fuel (VLSFO) is also increasing. While in 2020, it dropped below USD 50/tonne
-15 during April-June, in 2021, it reached up to USD 133/tonne in November, with a year
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average of USD 110/tonne.
• Meanwhile, VLSFO prices reached USD 544 per tonne by the end of December 2021
2018 2019 2020 2021
compared to USD 378 per tonne in December 2020.
US retail sales MoM, % change • Oil prices have settled in recent months, but they remain prone to geopolitical tensions
that could force up bunker costs. The global scramble for natural gas supplies could lead
US retail sales YoY, % change
to further rationing of energy, creating bottlenecks in some manufacturing supply chains,
Source: United Stated Census Bureau, Drewry Maritime Financial Research particularly China.
8 Drewry Maritime Financial Research www.drewry.co.ukContainer shipping
Supply chain bottlenecks will continue to drive profitability
US Inventory / Sales ratio, monthly Macro
1.8 Spot rates to stay at peaks for longer: We expect spot rates to stay robust, especially in the
initial months of 2022, with a potential demand surge before 2022 Chinese New Year (CNY).
Thereafter, there may be some moderation during the slack season post-CNY because
manufacturing activities would be suspended during the holiday. If supply bottlenecks do not
1.6 get alleviated - a more likely scenario with the onset of Omicron - then container carriers will
continue to experience favourable tailwinds similar to those in 2021.
Contract renewal season to bring benefits: As exporters focus more on supply chain
1.4 stability, there may be increases in both contract volume coverage and contract rates
from the upcoming contract renewal season.
Supply chain efficiency: The new Omicron wave is hurting the supply chain efficiency
1.2 again. For example, Ningbo Port has already put restrictions in place. China has a zero-
Covid policy and will take strict actions to restrict the spread of the virus. This means that
the shutting of factories and/or ports in response to Covid outbreaks is a major risk that
1.0 could lead to freight rates increasing once again. In addition, there have been trucking
shortages in the UK, US and Europe.
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Stock prices have been resilient: Container shipping stocks ended the year on a strong
2018 2019 2020 2021 note, despite anxiety in the last months of the year due to the emergence of the Omicron
variant. The resilience of markets was consistent with the broad trend of the pandemic, with
US inventory sales ratio (retail) US inventory sales ratio (wholesale) the harm to equities reducing with each successive wave. We would expect the market
impact of Omicron to follow this trend, as has been the case so far. Omicron is spreading
Source: United Stated Census Bureau, Drewry Maritime Financial Research
quickly, but available evidence points to it being relatively mild for vaccinated or pre-
infected individuals. We expect markets to gradually look beyond the fear of the virus and
focus on robust economic fundamentals. For investors, it is important to keep a longer-
term perspective amid shorter-term fears, and we recommend staying invested.
9 Drewry Maritime Financial Research www.drewry.co.ukPorts and Terminals operators
Multiple headwinds took a toll on port sector valuations
Price performance • In 2021, port sector stocks continued to ride the robust consumer optimism, which
started in 4Q20. Despite continuous congestion and the emergence of Covid-19
Tianjin variants, the Drewry port equity index returned to the pre-pandemic levels on the
GLPR back of excess global liquidity (2021: +19.9% vs 2019: +19.7). However, towards the
Santos Brasil end of the year, expensive valuations and the shift towards a more hawkish stance by
HPHT major central banks (to contain multi-year high inflation) led investors to book profits.
HHFA In 4Q21 the index declined by 3.3% after recording QoQ growth of 3.8% in 3Q21,
COSCO Ports 9.6% in 2Q21 and 8.9% in 1Q21. The downward trend is continuing even in 2022. In
Liaoning Port YTD ending (21 January 2022), the index has posted a decline of 1.6%.
Westports
• Global terminal operators (GTO) that formed part of the Drewry port equity index posted a
ICTSI
gain of 2%, significantly outperforming regional terminal operators’ (RTO), which declined by
CMPorts
8.2% in 4Q21. It is for the third consecutive quarter that GTOs/ITOs outperformed RTOs.
-20% -10% 0% 10% 20% 30% 40% 50% 60% • International Container Terminal Services, Inc (ICTSI) was the top gainer in the
FY2021 4Q21 Drewry port equity index with a YoY gain of 59%. For YTD 3Q21, the company
Source: WSJ reported an 11.3% gain in its container throughput to 8.3 mteu. Consequently, both
Note: Share prices as on 31 December 2021 revenue and EBITDA increased by 23.6% and 28.9% to USD 1.4bn and USD 829.4mn
respectively. ICTSI’s operating business unit in Argentina announced the launch of a
Revenue per teu (USD) barge feeder service creating a direct link to Brazil and Asia. The service will connect
150 30% Sta. Fe and La Plata, a market of approximately 80,000 teu. ICTSI also confirmed that
Insuga S.A. and Adecoagro S.A. started using this service to export bone meal to
Vietnam and milk powder to Singapore.
100 15% • The stock price of China Merchants Ports Holdings (CMPorts) moved up by 49.6% in
2021 (4Q21: +6.3%, 3Q21: +17.8%, 2Q21: -4.9% and 1Q21: 25.6%). The significant
rise came in after the subdued performance in both 2020 (-28%) and 2019 ( -5.9%).
50 0% CMPorts’ 2021 throughput increased by 11.8% to 134.8 mteu backed by double-digit
growth in both of its operating segments of (1) Mainland China, Hong Kong and
Taiwan (up 10.7% YoY and 75.3% of the total throughput), and (2) Overseas volumes
0 -15%
(up 15.3% YoY and 24.7% of the total throughput).
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• The stock price of Tianjin Port Development Holdings Limited (Tianjin Ports) posted a
marginal decline of 1.6% in 2021 (4Q21: -4.6%, 3Q21: +6.6%, 2Q21: -3.2%, and 1Q21:
Revenue/teu (USD) QoQ % change (RHS) +0.0%). Recently, the port confirmed that its operation remains largely unaffected
*Sample include HHLA, ICT, Santos and Westports despite the new confirmed Covid-19 cases. The company operates all container
Source: Drewry Maritime Financial Research terminals at the port of Tianjin and, in 1H20, lifted 10.3 mteu (vs 2020: 18.35 mteu).
10 Drewry Maritime Financial Research www.drewry.co.ukPorts and Terminals operators
The variance between Drewry’s port equity index and the broader S&P index broadens
Drewry’s port equity index vs S&P 500 • Recently, COSCO SHIPPING Ports Limited (COSCO Ports) announced its concession
of COSCO Ports’ Zeebrugge Terminal has been extended by 15 years to 2055. Under
170
the existing agreement, the concession of the terminal is for 36 years, from 1
January 2005 to 31 December 2040. COSCO Ports owns 85.45% in CSP Zeebrugge
130 Terminal. The terminal reported a 53% increase in volume to 0.9 mteu in 2021. The
total throughput of COSCO Ports increased by 3.7% in 2021 to 105.6 mteu mainly led
90 by the 5.5% growth registered in its overseas operations (28.4% of the total
throughput). China’s throughput was also up by 3.0% (71.6% of the total throughput).
50 Even though the stock performance was muted in 4Q21, it managed to post a robust
Mar-20
Nov-20
Mar-21
Nov-21
Sep-20
Sep-21
Jan-20
May-20
Jul-20
Jan-21
May-21
Jul-21
Jan-22
gain of 25.6% in 2021 (4Q21: +0.4%, 3Q21: +11.2%, 2Q21: +7.1%, and 1Q21: +5.0%)
after two consecutive years of negative returns (2020: -15.5% and 2019: -13.4%).
Port Index S&P 500 • Recently, Westports Holdings Berhad (Westports) reported operational difficulties
due to flooding after the heavy rainfall on 17-18 December 2021. Even though the
* Drewry's port equity index is an equal weighted index of 10 port stock (CMPorts, COSCO SHIPPING
container and conventional facilities of the company were not affected, staff
Ports, HHLA, HPHT, Santos, GLPR, Tianjin, Liaoning port, Westports and ICTSI), ** Both indices are
indexed to 100 at 01-Jan-2020,***As on 14 January 2022 absenteeism due to travel difficulties adversely affected the ports’ productivity and
Source: Drewry Maritime Financial Research, WSJ also resulted in berthing delays. This led the company to revise its guidance to
single-digit growth for 2021. As of 18 December 2021, the company’s YTD container
throughput volume totalled 10.12 mteu.
Volumes of major Chinese ports (% YoY) • In 3Q21, Liaoning port Co. Ltd (previously known as Dalian port (PDA) Co. Ltd) lifted 33.6%
20,000 50% more containers YoY. Consequently, its revenue and operating profit increased by 68.2% and
42.7% respectively and operating margin reduced to 23.6% (vs 27.8% in 3Q20). On 6
15,000 30% January 2021, the company merged with Yingkou Port through a share swap. Liaoning port’s
stock price went down by 6.6% in 4Q21 (QoQ) and 4.1% in 2021 (YoY).
10,000 10% • Recently, the Hamburger Hafen und Logistik Aktiengesellschaft (HHLA) intermodal
company Metrans acquired CL Europort, which operates a logistic center in
5,000 -10% Malaszewicze (Poland). The Western European and Russian railway systems meet in
Malaszewicze. Cl Europort is located enroute the important II pan-European transport
0 -30% corridor (Berlin, Warsaw, Minsk, and Moscow) with its logistics centre near the
border crossing with Belarus having easy access to the railway line in Terespol (4km)
Oct-18
Oct-19
Oct-20
Oct-21
Jan-18
Jan-20
Jan-21
Apr-18
Jul-18
Jan-19
Apr-19
Jul-19
Apr-20
Jul-20
Apr-21
Jul-21
and road in Koroszczyn (8km). Rail operator Eurotrans, with which Metrans has a
strategic partnership, is also active on this transport axis. As a result, HHLA’s stock
China Throughput in 000 teu YoY % increase (RHS)
price increased by 6.0% in 4Q21 (3Q21: -8.5%, 2Q21: +12.3% and 1Q21: +4.2%) and
Source: Drewry Maritime Financial Research 13.5% in 2021 (vs 2020: -26.2% and 2019: +40.9%).
11 Drewry Maritime Financial Research www.drewry.co.ukPorts and Terminals operators
Dearer valuations and hawkish central banks led to lower valuations.
Enterprise value / LTM EBITDA Multiple • After rising for three consecutive quarters in 2021, the stock price of Hutchison
15x Ports Holdings Trust (HPHT) declined in 4Q21 (-6.3% vs 3Q21: +6.7%, 2Q21:
+4.7%, and 1Q21: 8.6%), but on a YoY basis, it was up by 13.6% (vs 2021:
12x +15.1%). Recently, the company issued USD 5.0bn of 1.5% guaranteed notes due
Average: 8.9x
for maturing in 2026. The notes are unconditionally and irrevocably guaranteed by
9x
HPHT. The company plans to use the proceeds mainly to refinance its existing
6x debt and fund its capex requirements.
• DP World recently started the construction of the new Port of Ndayane (Senegal),
3x
which is approximately 50km away from the existing Port of Dakar. The company plans
0x to invest more than USD 1bn in two phases to develop the port. Phase 1 of the project
will include a container terminal with 840 metre of the quay and a 5 kilometre marine
Dalian
HHLA
GLPR
Tianjin
HPHT
ICTSI
CMPH
COSCO Ports
Westports
channel designed to handle two 336 metre vessels simultaneously. It will increase
container handling capacity by 1.2 mteu a year. In phase 2, an additional container quay
of 410 metre will be developed.
• Recently, Global Ports Investments PLC (GLPR) announced that its fully owned
Price / LTM Earnings subsidiary Vostochnaya Stevedoring Limited Liability Company (VSC) raised RUB 7.5bn
by issuing non-convertible interest-bearing bonds for a 5-year term with a fixed coupon
50x
rate of 9.55% per annum. The proceeds will mainly be used to refinance the existing
debt. Following this announcement, the company’s stock price gained 24.7% in 2021
40x
YoY (vs -21.1% in 2020) and 3.9% in 4Q21 QoQ (vs 3Q21: +4.7%, 2Q21: -1.7%, and
30x 1Q21: +16.7%). In YTD 3Q21, the company’s consolidated marine container throughput
increased by 4.0% (vs the Russian container market growth of 8.0%). However, when
20x compared with the more relevant regional market (including the terminals of Saint
Petersburg and the area in the Baltic basin) which grew by 4.6%, the variance reduces
10x drastically to 60 basis points.
• In 3Q21, SANTOS BRASIL PARTICIPAÇÕES S.A. (Santos Brasil) reported a consolidated
0x
volume increase of 26.4% to 321,448 teu. On a terminal level, volumes at Tecon Santos
Dalian
HPHT
HHLA
GLPR
Santos
Tianjin
CMPH
COSCO
ICTSI
Westports
Ports
and Tecon Vila do Conde improved by 30.7% and 11.1%, respectively. This was partially
offset by a 13% decline in volumes at Tecon Imbituda. The net revenue surged by
91.6% and EBITDA by more than 3x translating into a significantly higher margin of
Note: Values as of 14 January 2022
39.2% (vs 21.1% in 3Q20). The company’s stock price went down by 19.6% in 4Q21,
Source: Drewry Maritime Financial Research but posted a positive return of 17.1% for full-year 2021 (vs 2020: -32.9%).
12 Drewry Maritime Financial Research www.drewry.co.ukDry bulk shipping
Is the supercycle flurry over?
Price performance • The year 2021 was no less than a dream run for dry bulk operators and their
shareholders. Three companies doubled investors wealth, despite a rough last
PacBasin quarter. The question facing all the dry bulk operators and investors as we move into
2022: Is the rally over? Has the hyped commodity supercycle come to halt? Building
Navios on Drewry’s previous view of the rally lasting until the end of 2021, we maintain the
Diana Shipping same outlook and believe that the first quarter could be one of consolidation for the
overall dry bulk market.
DS Norden
• Stock of Star Bulk Carriers Corp. (SBLK), the largest operator under our coverage,
Golden Ocean lost a little over 6% in 2022 YTD (as on 19 January 2022) while 2021 gains stood
Star Bulk at 157%, the best in the dry bulk coverage. That does not reflect the highest ever
dividend paid in 3Q21 of USD 0.70 per share and USD 1.25 per share in 4Q21. As
-50% 0% 50% 100% 150% 200% a result of the gain in stock prices and capacity expansion, SBLK is now the
largest US-listed dry bulk company, both in terms of capacity and market
4Q21 2021 capitalisation. The company’s balance sheet is also supported by the more than
35% reduction in net debt.
Price to NAV • Golden Ocean (GOGL), a company whose policy is to hedge risk through
2.0 diversification in operations, saw its stock dipping 3.9% so far in 2022, after gaining
71.6% in 2021. Unlike most of its peers, GOGL has opted to buy newbuild vessels as
1.5 part of its fleet expansion plans rather than engaging in the second-hand vessel
market. As a result, GOGL turned out to be the only operator whose fleet contracted
1.0 in 2021 as it sold two of its old Panamaxes in October. However, as of 31 December
2021, GOGL has 25 vessels in its orderbook.
0.5
• DS Norden (DNORD) lost 6.5% YTD in 2022 after a 51% gain in 2021, thanks to its
0.0 exposure to the struggling product tanker market and asset management division.
Nov-21
Feb-21
Mar-21
Sep-21
Dec-21
Aug-21
Oct-21
Jan-21
Apr-21
May-21
Jun-21
Jul-21
Jan-22
However, the company has initiated a share buyback programme to support the
share price from November 2021 to February 2022 worth USD 40mn. As of 24
January 2022, the treasury shares stood at 6.94% of total outstanding shares, up
Star Bulk Golden Ocean DS Norden from 5% in November 2021. DS Norden was the only operator under our coverage
Diana Shipping PacBasin to report a positive movement in share price in 4Q21, as it reported its best quarterly
Source: Yahoo finance, Company filings, Drewry Maritime Financial Research results in over a decade, with the bottom line at USD 65mn (up from USD 27mn in
Note: NAVs have been calculated based on 3Q21 results. 3Q20), which ultimately led to the share buyback programme of USD 40mn.
13 Drewry Maritime Financial Research www.drewry.co.ukDry bulk shipping
Rising orderbook despite record newbuild prices
Orderbook as a % of fleet • Pacific Basin (2343:HK), the mid-sized vessel specialist based out of Hongkong,
gained a phenomenal 18.2% in 2022 YTD, after losing 17% in 4Q21. The rally in
80 8%
the Kamsarmax segment benefitted PacBasin greatly as the operator fixed charters
60 6% at rates more than twice that of breakeven levels. While the company may have
recorded the best first-half results in 13 years, it is gearing for an even stronger
40 4% closing to the year. The 3Q21 trading update confirmed our estimates, as for both
Handysizes and Supramaxes, record average TCE rates were registered at USD
20 2% 24,350 and USD 36,270pd, respectively. However, going slightly astray from its
normal charter covering strategy, as of the second week of October, PacBasin left
0 0% almost 30% of its 4Q21 charter days open, to take advantage of the spot market
Nov-21
Feb-21
Mar-21
Sep-21
Dec-21
Aug-21
Oct-21
Jan-21
Apr-21
May-21
Jun-21
Jul-21
strength. The strategy seems to have backfired, as the rates dipped substantially,
especially after the first week of November, which led to a decline in share prices
in 4Q21.
Orderbook as a % of fleet(secondary axis) Orderbook (mdwt)
• The long-term charterer Diana Shipping’s (DSX) stock price was the best
performer in our dry bulk portfolio (190%) in the first nine months of 2021, after
1 year TC rates for 5 year old vessels (USD per day) which it lost 30% in 4Q21, owing to fixtures at lower rates, which again extended
into 2023. However, so far in 2022, the stock has gained a decent 1.3%, as it
40,000 resumed fixing its vessels at substantially higher rates for long-term charters.
On 18 January 2022, DSX announced the fixture of its post-Panamax vessel until
30,000 March 2023 at USD 24,750pd, up from the current fixture of USD 12,100pd. We
continue to remain bullish on DSX, owing primarily to the stable cash flows
20,000 through 2022 and at least 1Q23, with limited impact from the volatility of the
spot market.
10,000
• The highly volatile Navios Maritime Holdings (NM) registered a loss of about 6%
0 YTD, after a loss of more than 23% in 4Q21. The already cash striped and debt-
ridden Navios closed on USD 550mn of financing in the first week of January
Feb-21
Nov-21
Mar-21
Sep-21
Dec-21
Aug-21
Oct-21
Apr-21
Jan-21
May-21
Jun-21
Jul-21
2022, to settle the debt maturing on 15 January 2022 and August 2022. Even
though the company has struggled in the past to meet breakeven rates, it seems
Handysize Supramax Panamax Capesize that things are slowly improving for the operator, as it secured a charter for 21%
of 2022 at USD 27,841 TCE per day against a breakeven cost of USD 10,713;
Source: Drewry Maritime Financial Research, Drewry Maritime Research indicating a slow but steady recovery for the operator.
14 Drewry Maritime Financial Research www.drewry.co.ukLNG shipping
LNG shipping stocks surge on buoyant demand in 2021
Drewry LNG shipping equity index vs. S&P 500 • Drewry LNG shipping equity index increased by 54.3% in 2021, outperforming S&P
200 500 which grew by 26.9% on the back of strong LNG shipping demand in 2021. Flex
LNG’s stock surged by 168.5%, primarily benefiting from long-term charter wins,
150 increased dividend (from USD 0.40/ share in 2Q21 to USD 0.75 per share in 3Q21)
and share buyback, while Golar LNG’s stock increased by 28.5% mainly benefiting
100 from the sale of its utility business and the recently announced spin-off of 8 TFDE
LNG vessels. The rise in Teekay LNG’s share price (up 47.3%) was driven by the
50 dividend increase (15% to USD 1.15 per common unit on an annualized basis in
1Q21 compared to 4Q20) as well as the company’s acquisition by Stonepeak.
0
• In 4Q21, Drewry LNG shipping equity index increased by 13% while in YTD 2021 (till
Feb-20
Feb-21
Dec-21
Dec-19
Dec-20
Oct-20
Oct-21
Aug-20
Aug-21
Apr-20
Jun-20
Apr-21
Jun-21
21 January 2022), the index declined by 26.5% driven by weakness in the broader
equity market and decline in LNG shipping spot rates. S&P 500 declined by 7.7%
Drewry LNG shipping equity index S&P 500 during the same period.
Source: Yahoo Finance, Drewry Maritime Financial Research • LNG shipping spot rates have declined since December 2021 as most LNG cargos
Note: Drewry LNG shipping equity index includes Golar LNG, Teekay LNG, Flex LNG and Nakilat, are moving from the US to Europe rather than to Asia as the latter’s demand has
Indexed as of 31 December 2019. Priced as of 31 December 2021 been lackluster on account of the relatively warm winter and higher LNG inventory
levels. US-Europe LNG price arbitrage has been higher compared with US-Asia LNG
LNG stocks’ performance – 4Q21 and 2021 trade. With cargoes going from the US to Europe, tonne-mile demand has declined
significantly, leading to a crash in LNG shipping spot rates.
Flex LNG • Despite the recent decline in LNG shipping rates , long-term LNG shipping prospects
remain attractive. About 80% of LNG ships expected to be delivered in the next three
Nakilat years have won long-term charters. The upcoming EEXI and CII regulations are
expected to see many steam turbine LNG ships being taken out of the trading fleet.
Golar LNG • LNG shipping assets have become more attractive for long-term investors amid the
energy transition. The same can be ascertained from the acquisitions, wherein three
Teekay LP independent LNG shipping companies were acquired by private equity players in
2021 – Blackrock acquired Gaslog Ltd, Stonepeak acquired Teekay LNG and Morgan
Stanley acquired Höegh LNG. In the latest, Höegh LNG Partners LP received a
-50% 0% 50% 100% 150% 200%
proposal in December 2021 from Höegh LNG Holdings Ltd to acquire all of its
2021 4Q21 publicly held common shares. Höegh LNG Partners is evaluating the offer. It is
notable that Morgan Stanley entities acquired 50% interest in Höegh LNG holdings
Source: Drewry Maritime Financial Research, various exchanges
earlier this year, which in turn owns 46% in Höegh LNG Partners.
Note: Priced as of 31 December 2021
15 Drewry Maritime Financial Research www.drewry.co.ukLNG shipping
LNG shipping spot rates crash in January 2022 due to higher US-Europe price arbitrage
Drewry LNG shipping equity index vs. LNG spot prices • Higher LNG price arbitrage in US-Europe than in US-Asia was due to stronger LNG
demand in Europe, uncertain supply and lower LNG inventory levels in the region.
200 100
This resulted in a wave of cargo diversions from Asia back towards Europe in
150 75 December 2021 in addition to some cargos being diverted from Africa as well. Asian
USD/ Mmbtu
LNG prices continued to decline in mid-January as demand remained lukewarm amid
100 50 ample stock levels and a relatively mild temperature forecast. Some Chinese buyers
50 25 (Sinopec and CNOOC) have offered tenders to sell LNG cargos.
0 0 • Golar announced execution of terms agreement to spin-off its 8 TFDE LNG carriers
into Cool Company Ltd (CoolCo) with Eastern Pacific Shipping being the largest
Nov-21
Dec-20
Feb-21
Mar-21
Sep-21
Dec-21
Apr-21
Aug-21
Oct-21
Jan-21
May-21
Jun-21
Jul-21
shareholder of CoolCo. Golar LNG’s share price has increased by 17% since the time
the spin-off was announced on 15 December as the company can now focus on its
Drewry LNG shipping equity index JKM (RHS) core business of FLNG. The spin-off values Golar LNG ships of 6 years on average at
Henry Hub (RHS) TTF (RHS) USD 145mn per vessel, which we believe is in line with the value of these ships in
the second-hand market.
Source: Drewry Maritime Financial Research Drewry Maritime Research, Indexed as of 31 December 2019
Note: Priced as of 31 December 2021 • Cool Company Ltd will have an initial market capitalisation of about USD 375mn and
Golar will retain shareholding of a minimum of USD 125mn. As part of the
Drewry LNG shipping equity index vs. second-hand asset prices transaction, CoolCo would raise around USD 250mn of external equity through
private placement. CoolCo expects to list on the Oslo OTC exchange in February
150 2022 and will target an additional listing on an internationally recognised stock
exchange during the year.
100 • Nakilat has partnered with ABS to develop the decarbonisation strategy. ABS will help
Nakilat in preparing decarbonisation pathways for the company's fleet of 69 LNG
carriers and 4 Very Large LPG Gas Carriers. Once completed, the project will see
50 Nakilat's vessels receive the ABS Sustain notation. Recently, the company published
its first ESG report..
0 • While we saw three publicly listed LNG shipping companies getting delisted in 2021,
new LNG shipping companies are looking to list. Excelerate Energy has filed
Feb-20
Feb-21
Dec-19
Oct-20
Dec-20
Oct-21
Dec-21
Aug-20
Aug-21
Apr-20
Jun-20
Apr-21
Jun-21
registration statement with the U.S. Securities and exchange commission to raise
about USD 100mn in an IPO on the New York Stock Exchange. The company
Drewry LNG shipping equity index DFDE (5yr old) operates one of the largest fleets of floating storage and regasification units (FSRUs)
with 10 vessels ranging between 138,000 cu m and 173,400 cu m.
Source: Drewry Maritime Financial Research, Drewry Maritime Research
Note: Indexed as of 31 December 2019 and priced as of 31 December 2021
16 Drewry Maritime Financial Research www.drewry.co.ukLPG shipping
Weak freight rates weigh on LPG shipping stocks
LNG stocks' price performance • Stock prices of all three LPG companies under our coverage declined in 2021, as
they were mainly weighed down by the fall in spot LPG shipping rates – Navigator
Holdings (NVGS) share piece declined by 19%, BW LPG (BWLPG) by 15.2%
BWLPG and Stealthgas Inc (GASS) by 10.2%. In 4Q21, GASS declined by 21.3%, while BW
LPG was up by 4.3%. YTD 2022 (as of 21 January 2022,) BW LPG declined by 6.1%,
the most among the three LPG companies we cover (NVGS -0.7% and GASS -0.5%).
The steep decline in BW LPG stock YTD is mainly driven by the fall in VLGC rates
NVGS
with the narrowing price arbitrage. BW LPG owns one of the largest fleets of VLGCs
worldwide (41 VLGCs) and most of these vessels trade in the spot market.
• We have seen a historically high correlation between asset prices and stock prices.
GASS
This is especially true for VLGC spot market players like BW LPG. However, with
recent decline in BW LPG share price, this co-relation has deviated a bit. However, as
-25% -20% -15% -10% -5% 0% 5% 10% we expect LPG shipping rates to improve, LPG companies’ stock prices are likely to
strengthen, which should align them more with the asset prices going forward.
2021 4Q21
• BW LPG has taken advantage of the recent decline in its share price by introducing a
share buyback programme. The company purchased a total of 802,879 of its own
VLGC asset values vs BW LPG stock price common shares between 17 January 2022 and 25 January 2022. BW LPG (BWLPG)
160 recently entered into an agreement with Maas Capital shipping to sell a minority
interest in BW LPG India, the company’s Indian subsidiary. BW LPG will own 67% in
120 BW LPG following this transaction. Mass Capital is the world’s leading equity investor
for institutional shipping. We believe BW LPG is well-positioned to benefit from the
expected recovery in LPG charter rates given its large VLGC fleet.
80
• Apart from weak LPG freight rates, a 19% decline in NVGS stock is mainly due to the
40 stock transaction through which NVGS acquired the fleet of 18 vessels of Ultragas
ApS in 3Q21. The company issued 21.2mn new shares to Ultranav and assumed a
net debt of USD 175.2mn of the latter. NVGS’ operating income increased by 6.7%
0
YoY to USD 33.1mn in 3Q21, primarily benefiting from the expanded fleet.
Nov-14
Nov-19
Sep-15
Mar-18
Sep-20
Jan-14
Jan-19
Jul-16
May-17
Jul-21
• Stealthgas (GASS) announced the completion of the spin-off of its tanker-owning
subsidiary, Imperial Petroleum Inc, effective 3 December 2021. Imperial Petroleum
VLGC Asset values BW LPG Inc owns four tanker vessels. We view the spin-off positively as it will help GASS to
focus on its LPG shipping business. We maintain our neutral outlook on the stock, as
Source: yahoo.com, Drewry Maritime Financial Research, Drewry Maritime Research, as of 31 rates for LPG shipping are expected to strengthen and the downside on the
December 2021, Indexed to 100 as of 1 January 2014. company’s financials are limited.
17 Drewry Maritime Financial Research www.drewry.co.ukCrude tanker shipping
Curtailed OPEC+ supply and surge in new infections played spoilsport for tankers
Price performance • Drewry crude tanker equity index was on an uptrend in the beginning of December, but it
slid by 2.8% during the month and registered a decline of 17.8% in 4Q21 as the limited
increase in crude output by OPEC+, release of SPRs and mobility restrictions due to the
Tsakos Energy Navigation
surge in daily Covid-19 cases played spoilsport for crude tanker companies in an
Nordic American Tankers otherwise seasonally strong market. Overall the index inched up by 1.7% in 2021 on the
back of improving oil demand and trade during the year. The sector index has substantially
Teekay Tankers underperformed key market indices such as S&P 500 and Dow Jones Industrial Average
(DJIA) which gained 10.6% and 7.4% in 4Q21 and 26.9% and 18.7% in 2021 respectively.
DHT Holdings The crude tanker equity index fell 6.2% in the first three weeks of 2022, and is expected to
remain under pressure because of the fast spread of the Omicron variant.
Frontline • Crude oil prices were largely trending upwards in 2021 because of a sharp recovery in
demand over the past one year as the resumption of economic activities and rapid
Euronav
recovery in mobility led to a massive increase in energy demand that outpaced the growth
in supply. Global crude oil demand surged by 4.8% YoY to 98.6 mbpd in 4Q21 whereas
-60% -40% -20% 0% 20%
OPEC+ remained apprehensive about the recovery in oil demand and kept a tab on supply.
2021 4Q21 Major consumers such as the US, China and India were forced to release supply from
Source: NYSE, Drewry Maritime Financial Research inventories/SPRs to meet the growing demand. Overall, ICE Brent surged by 51.5% to USD
77.78 per bbl in 2021 while the WTI rallied 43% to USD 71.69 per bbl over the same
period. Crude oil demand will continue to rise further, but the prices may remain range
BDTI seasonality bound in 1H22 because of additional supply from SPRs.
2,500 • In its 3Q21 result DHT Holdings (DHT) announced that the TCE revenue dropped by
68% YoY to USD 37.7mn as the average day rate of USD 16,300pd during the quarter
2,000 was 66.1% lower YoY. DHT continued its share buyback programme in 4Q21 with the
purchase of 561,111 of its own shares at an average price of USD 5.2848 in December.
1,500 These shares are equivalent to 0.3% of DHT’s outstanding shares and have been retired
upon receipt. DHT’s market cap eroded by 20.5% in 4Q21 whereas the company’s stock
1,000 registered a marginal decline of 0.8% in 2021 because of the rally between mid-August
and mid-October with recovery in demand and trade.
500 • Nordic American Tankers’ (NAT’s) 3Q21 TCE revenue plunged by 75% YoY to USD
9.3mn as the realised TCE at USD 5,800pd during the quarter of the company’s fleet
0 was much lower than the USD 25,000pd in 3Q20. Accordingly NAT posted a record net
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan loss of USD 44.7mn during the quarter. The company’s board members bought
150,000 shares of the company at an average price of USD 1.91 per share for an
2015-2020 2019 2020 2021 aggregate of USD 286,475. NAT’s stock prices rallied during 1Q21, but it felt the heat of
the decline in realised spot rates for its vessels. NAT stock prices dropped by 34% in
Source: Baltic Exchange, Drewry Maritime Financial Research 4Q21 and the company’s market cap eroded by 42.7% in 2021.
18 Drewry Maritime Financial Research www.drewry.co.ukCrude tanker shipping
Demand to rise further but trade to remain muted amid limited production
Drewry crude tanker equity index vs second-hand VLCC prices • Frontline (FRO) sold four of its scrubber fitted LR2 tankers built in 2014 and 2015 for an
aggregate price of USD 160mn to SFL Tanker Holding, a related party. While three vessels
150 90 have been delivered to the new owner, the fourth vessel Front Panther is expected to be
130 80 delivered in 1Q22. The transaction is expected to generate net cash proceeds of nearly USD
67mn after repayment of existing debt on vessels. FRO expects to realise a total gain of USD
USD mn
110 70
11.2mn. FRO’s stock inched up by 3.2% in December to register a full-year gain of 13.7%
90 60 because of the gradual recovery in demand and trade of crude oil despite the 24.5% erosion
70 50 in the company’s market cap in 4Q21 mainly due to weak winter demand and rapid spread of
Omicron in major economies in the latter months of the year.
50 40
• In Euronav’s (EURN) 3Q21 results the company’s TCE revenue plunged by 66.8% YoY to
Aug-20
Aug-21
Mar-20
Nov-20
Dec-20
Feb-21
Mar-21
Nov-21
Sep-20
Oct-20
Sep-21
Oct-21
Dec-21
May-20
Jun-20
Jan-21
May-21
Jun-21
Apr-20
Jul-20
Apr-21
Jul-21
USD 68.8mn as it witnessed the most challenging freight market in the past 20 years. This
was driven by a lack of commercially available barrels and oversupply of vessels. Spot
Drewry crude tanker equity index VLCC 5 year old (RHS) earnings of VLCCs and Suezmaxes stood at USD 9,000pd and USD 10,250pd compared to
USD 42,000pd and USD 23,500pd respectively a year ago. EURN used the low freight rate
VLCC 10 year old (RHS) environment to accelerate dry dockings and completed 23 dry dockings in 9M21. EURN’s
Note: Indexed on 31 December 2020 stock price declined by 8.9% in 4Q21 despite a rising trend in the beginning the quarter,
Source: NYSE, DMR, Drewry Maritime Financial Research primarily due to the continued decline from the third week of October, but the stock gained
11.1% in 2021 on the back of recovery in the tanker demand.
• Tsakos Energy Navigation (TNP) announced long-term charter contracts for two Aframaxes
Drewry crude tanker equity index vs major indices and two VLCCs with provision of profit sharing with oil majors. With these transactions, TNP
140 secured long-term business for 10 vessels in the past four months. These 10 fixtures
coupled with the minimum charter proceeds of the LNG carriers and the Shuttle tanker to be
130 delivered in 1H22 are expected to generate gross revenues of nearly USD 500mn. TNP’s
120 stock price declined by 9.8% in 2021 and the company’s market cap eroded by 32.3% in
4Q21 after reaching the 52-week high at the beginning of the quarter as limited availability of
110 oil for shipments put pressure on vessel earnings and stock prices.
• In Teekay Tankers (TNK) 3Q21 results, the TCE revenue fell sharply by 66.6% YoY to USD
100
37.6mn as crude tanker spot rates declined to multi-decade lows during the quarter
90 because of continued lack of crude oil trade volumes coupled with drawdown of oil
inventories. Accordingly, the company registered an adjusted net loss of USD 50.1mn
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compared to an adjusted net income of USD 2.3mn a year ago. In early November TNK
refinanced four vessels with lower-cost sale leaseback financing totaling USD 69mn which
Drewry crude tanker equity index S&P 500 DJIA will reduce the interest burden of the company in future. TNK’s market cap eroded by 25%
in 4Q21 because of the steep decline in its stock in November whereas the company's
Note: Indexed on 31 December 2020 stock registered a minor decline of 1% in 2021 because the rally seen in August and
Source: NYSE, Drewry Maritime Financial Research September was offset by the plunge seen in latter months of the year.
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