Saturday 23 February 2019

First Ship Lease Trust - Q4 earnings

FSL has released its Q4 results. All in all, a rather muted outlook. So here's a summary

Lower Cashflow generation

Year on Year cashflow generation ability has fallen to US$40 million range, previous year was US$51.4million Thereafter, this amount is likely to drop to US $20 million with the loss of the lucrative US$ 20 million evergreen charter come 2021.

Valuation based on Balance Sheet

On balance sheet, FSL has debts of $97 million 6.7% per annum interest and a 7% convertible bond of 6.3 million.

Using a simple cash flow projection, it is now estimated that FSL is likely to pay down this loan up to Year 2024. However this is unlikely to happen.

It seems FSL is planning to expand its fleet by adding brand new ships to its existing fleet. Cashflow wise, the conversion to interest only loans and that of convertible bonds ensures that the Trust will be able to finance the building of new ships which are to be delivered to the trust

This changes the entire situation and we will have to see how much yield does this new ships achieve when they are delivered to the fleet. Previously, I had valued FSL on an assumption that the trust will self-liquidate itself but things are now changing

No comments:

Post a Comment