Seems a little optimistic. Considering the payback requirements, not sure how you get $0.80 dividend. Another ship purchase makes a dividend possible, but I expect it to be in the $0.40 range. IMO this stock is fully valued in the $5 range.
I very much disagree, even at $5.00/sh GSL is incredibly cheap. It's the cheapest container shipping company in the group by 2-3 Ebitda multiples and each 1.0 increase in Ebitda multiple equates to an incremental $2.00/sh of equity value. It's also 30%+ cheaper than peers based on NAV. The only reasons for the discount is GSL's lack of dividend (about to be resolved) , depressed industry charter rates (which are now steadily increasing - look at contex charter rates) and small market cap (low float). In addition, the initial dividend will be around $.40/sh, but their FCF payout ratio is extremely low and they'll call their bonds in a little over a year from now. Their replacement bond issue will have fewer restrictive covenants and they should be able to dramatically increase their payout ratio/dividend in mid 2016 (to $0.80+). In the next few months GSL will become the fastest growing containershipping play based on TEU with great dividend support, while trading at the cheapest multiples on every key valuation metric. Downside is extremely limited and the equity could still double from here over the next 18 months.
Sentiment: Strong Buy
I'm not seeing an $0.8 anytime soon, but I am long so would love to be wrong. Checkout my analysis and tell me why I'm wrong. Looking at GSL numbers they are doing about $20M/quarter in adjusted EBITDA. Annualize that plus the new ship they just announced and they are at about $90M/year. They have stated their fixed payment is $43M/year with bond holder optional $20M pay down requirement. That leaves them with $27-$47M to work with. They have to get 2.25x fixed coverage charge ($96M/year) before they can pay a dividend and likely used up much of their dry powder to do purchase recent ship. So, they need at least one more ship to hit 2.25x coverage and will essentially need to save up for a year to do it. Do you see another way for them to get another ship?
Once they get that ship though, I believe you are right and $0.80 is feasible.
that's a small part of the reason. Rates are actually hitting 3yr highs (during the seasonally weak time of year!) driven by a vastly improved supply/demand picture. Idle TEU is down to 228,000 (1.2%) on an active TEU base of 18.4m...this is down from 4.5% idle TEU 1yr ago. This sets up for a massive rate move higher over the coming year, especially with the minimal panamax ship orderbook and capacity rapidly tightening.
I'm guessing it still won't come for a year or two, considering the smart and conservative approach Ian takes, but definatly on the right track. Any guesses as to when we might see the dividend reinstated?
With the new ship, we are at ~98MM EBITDA, which puts the fix coverage ratio at 98/43=2.28, exceeding the 2.25 requirement for dividend payout. We are good to go, just need to wait for the revenues from the new ships to kick in.
they will tender for $20m of their bonds in April (30 day offer), then will restart the dividend around June. We expect $0.40/sh to start and it will ramp higher from there as they acquire more ships. They will call their bonds in a year and replace them with a less restrictive covenant issue, likely enabling them to dramatically increase their dividend to around $0.80/sh.
Seems like GSL is a few weeks behind schedule here. They have not even posted a date for release. Given recent ship transaction I would think they would be chomping at the bit to get numbers out.
Ian seemed to confirm a dividend sometime in 2015, so a new ship or a reduction in costs or something must be in works.
he has been saying that for 2 years now global economy is looking bad they show a loss for the 1/4 few months ago he was saying how strong shipping was no credibility if u ask me
I think one more investment or other action will likely be needed before they declare a dividend- unfortunately, since I am very long in this.