Jinhui Shipping and Transportation Limited (JIN) Earnings Call Transcript & Summary

Good morning, and good afternoon to all of you, ladies and gentlemen. Thank you for joining Jinhui Shipping and Transportation Limited Q3 2024 Results Presentation. I hope everyone can hear me. Can someone confirm that you can hear me? Thank you. I believe you would have all had a look of the results, third quarter results as well as 9 months report. Let's not wait any longer and begin. First things first, financial highlights. Q3 revenue for the quarter, USD 46 million. Earnings before interest, tax, depreciation and amortization at USD 22 million -- sorry, another 2 joining. Net profit for the quarter, USD 8 million. Basic earnings per share, $0.07 per share. For the 9 months 2024, we recorded a revenue of USD 115 million. Earnings before interest, tax, depreciation and amortization, USD 55 million. Net profit for the period, USD 19 million. Basic earnings per share at USD 0.172 per share. Gearing ratio as of end September 2024, 12%. We've had a busy quarter. Given the rebound of the market freight rates driven by strong demand for dry bulk commodities, a limited supply of vessels and the increase in number of owned as well as chartered-in vessels, we recorded a significant increase in performance for the 9 months ended 2024. Sorry, there are still people joining. The group reported a consolidated net profit of USD 8 million for Q3 alone and USD 19 million for 9 months into 2024. The chartering revenue increased to USD 46 million for the current quarter as compared to USD 20 million for Q3 2023. This represents a doubling of revenue for chartering year-over-year. Reported Q3 2024 average time charter equivalent of the group's fleet is significantly stronger than in Q3 2023. This increased 74% to USD 15,290 per day for Q3 2024 as compared to USD 8,796 per day for Q3 2023. Jinhui achieved an average time charter equivalent of $14,555 for Panamax fleet and $15,228 for Ultramax/Supramax fleet for the current quarter as compared to $15,104 for Panamax fleet and USD 8,531 per day for Ultramax/Supramax fleet for Q3 in the previous year. Shipping-related expenses increased to $24.1 million, mainly attributable to the rise in higher payments as the group entered into certain inward time charters engagements during the 9 months of 2024. Hire payment of USD 8 million on short-term leases was incurred during the quarter. We have been rather active not just engaging our owned ships, but also increased our tonnage via chartering in third-parties' vessels. The daily running cost of our owned vessels slightly increased from $5,181 of Q3 2023 to $5,302 of Q3 2024 as certain initial running costs and expenses were incurred for our newly delivered vessels. We recorded a net gain in -- on financial assets at fair value through the P&L of USD 2.1 million. A CapEx of USD 68 million was incurred for the first 9 months of 2024, mainly on acquisition of 2 vessels and capitalized of -- our drydocking. During the 9 months of 2024, a drawdown of USD 51 million and a repayment of USD 52 million bank borrowings in which the vessel mortgage loans were fully repaid in the first quarter of 2024. As at the end of September 2024, secured bank loans amounted to USD 87 million with current portion and noncurrent portion of USD 17 million and USD 70 million, respectively, [ USD 17 million and USD 70 million ]. As at the end of September 2024, 24 owned vessels and 9 chartered-in vessels are operating within Jinhui with a total carrying capacity of approximately 2.15 million metric tons. In Q3 2024, the group entered into a contract to acquire a 2008-built Capesize at a consideration of USD 24 million. This is expected to be delivered in the final quarter of 2024. A 2012-built Capesize was acquired at a consideration of USD 31 million and was delivered to the group in August 2024. I think our numbers are relatively simple and self-explanatory, so I won't waste any time on this page. Key financial ratios. As of Q3 2024, we recorded a good increase. Total assets is now USD 514.29 million. Total equity, USD 367.5 million. Secured bank loans, USD 87 million. Current ratio, 1.16:1; net gearing, 12%; available liquidity, USD 43 million and a return on equity of 2.09%. We have been very, very careful and has been [ responsing ] to how the market trend and slowly increasing our fleet. As of November 2024, we have 24 owned vessels. Here's the list of our fleet. We're mainly focusing on the Supramax, one Capesize, one Kamsarmax. Actually, maybe I can slightly correct because the -- to be accurate, the 63,000 are not really quite Supramax now. We are doing everything to watch out for opportunities to modernize our fleet, both in terms of age as well as the spec as well as carrying capacity. In response to opportunities in the market, we have been increasing our activity in chartered-in vessels. We have chartered in 2 Panamax, 2 Ultramax for long-term, one Panamax and 3 Ultramax for short-term. And you can see the names as well as the size and built of these long-term chartered-in vessels. The total capacity for chartered-in vessels was 556,000 deadweight metric tons. In terms of our debt maturity profile, we have been working to stretch the maturity profile. And I'm delighted to report to all of you that we have successfully increased our -- stretch our maturity profile as of Q3 2024. The total debt as of end of September 2024, USD 87 million. 19% of this debt will be repayable within the next 12 months, 8% within the next 2 years and 73% will be 3 years or more. In terms of the cargo mix analysis, 72% of the cargo we carry are minerals, 15% coal, 5% steel product, 2% agricultural products, 1% cement and 5% other [ cargos ]. Another objective going forward will be, we will try our best to diversify or increase the mix of cargo that our fleet carry going forward. In terms of the loading ports, 50% of our cargos are loaded in Asia, excluding China, 29% China, 8% Australia, 6% Africa, 5% South America, 2% North America. I hope all of you would notice that even in terms of cargo, we are also aiming to further diversify in terms of the geographical spread. In terms of discharging of cargo, 40% of our cargos are discharged in China, 35% Asia, excluding China, 17% Africa, 5% North America and 3% Europe. Again, on the discharging port analysis, we are also positioning our fleet as well our customers as business mix in order to achieve further diversification. Time charter equivalent of our fleet. For Q3 2024, we have our Capesize fleet, USD 23,788 per day. Panamax fleet for Q3 2024, USD 14,555. Ultramax/Supramax fleet, USD 15,228. I think it's self-explanatory. We are seeing a market improvement year-on-year. And also comparing the 9 months 2024, 9 months 2023, we are recording a significant improvement. Sorry, another 2 person has joined. We have a pretty good 37 participants today. And as of today, to give all of you some idea on our coverage, we have successfully covered 73.91% and 62.75% of our Capesize and Ultramax/Supramax vessel days for the fourth quarter of 2024 at an average of USD 28,000 and USD 15,271 per day, respectively. For Panamax, we have covered 100% of our vessel days at USD 15,616 for the fourth quarter of 2024. For our daily vessel running costs of owned vessels, this is calculated as the aggregate of crew expenses, insurance, consumable stores, spare parts, repairs and maintenance and other vessels' miscellaneous expenses divided by the ownership days during the year or period. Since we have taken delivery of some new vessels, or newly delivered vessels, there will be a slight increase in daily running cost. The daily vessel finance cost is calculated as the aggregate of vessel's finance cost divided by the ownership days during the year-end period. Vessel mortgage loans were fully repaid during the first quarter. Now if we look at Q3 2024, the running cost, $5,302, a slight increase compared to Q3 2023. Depreciation, $3,467. And as of this Q3, we have no finance cost. The reason being -- for this is we have changed the mode of financing. So we have paid back shipping mortgage and instead use corporate facility instead, for the time being. In terms of outlook, we believe and expect the market to be rather muted and quiet in the next few months. Hence, we locked in our vessels, some of our vessels at least, at -- when the market is good, I think, at a fairly respectable rates. In order to control risk, as our fleet expands, we also like to increase revenue visibility. However, given the overall picture of the fleet, the global fleet profile, we believe there will be further opportunities going forward for renewal opportunities. However, this is extremely hard to plan, especially we're operating in -- against an economic backdrop, which is now characterized by volatility and uncertainty. However, we'll be very -- we'll remain nimble and react quickly and promptly to any market opportunities. Jinhui has been operating in the market for many -- for a long, long time. We've seen a number of cycles. We're not going to be carried away when the market is good, nor are we going to be too concerned when the market is quiet or slightly depressed. I think at Jinhui, we have seen very good times, and we have experienced also very bad times. And we will remain very, very prudent, and we will balance our ambition to grow the company without sacrificing financial stability. That's all for me from now. If you have any questions, please type it in the group chat so that it's -- everybody can see it and it won't create chaos by participants screaming across.

No. Actually -- thank you for your question in terms of operating the Capesize. This is not the first time that we operate Capesize. It's just there has been a number of years that we have not been running Capesize. In fact, Capesize in terms of operations is even easier than our Supramax/Ultramax fleet. For example, just to point out the obvious, the absence of cranes, for example, means that there's a lot -- there's a significant less amount of work to -- for our crew to look after. And also in terms of complexity of operations, the Capesize will be visiting ports with automated loading and unloading facility. So, operation is actually even easier. In terms of -- thank you. I think I received your e-mail before on the Parakou legal dispute. Yes, there's USD 3.5 billion in Q2 and so far nothing in Q3. Because legal outcomes is -- the timing is very, very hard to point out and when do we receive the money because the legal process is actually in the hands of the court and not us. That's why we have not been too descriptive about this. Since you asked the question, I would be happy to let all of you know that we have brought an end on the Parakou saga, okay? After all these years, the settlement sum is being calculated and will be distributed hopefully early next year. The exact sum, it's still being calculated, so I'm not going to disclose it here. I believe we will know firmly the amount, and this will be announced in the final annual results where the actual sum [ we'll ] receive will be fully disclosed there. But we will be spending minimal before the whole saga comes to an end. And we will focus our energy on business rather than fighting these long-term or long-standing legal saga. Intrinsic value of the company, share buybacks, dividends. I have not had any instructions or comments from the Board of Directors about share buyback or dividends at this juncture. Again, I think the last time -- the last quarter presentation I was saying to all of you that I hope that we can -- I can bring good news in terms of financial performance. I hope this quarter we have shown some improvement on the operation as well as the business performance. Let's hope that next quarter I can bring you further good news on this front. Although we have a low gearing, I believe here at Jinhui, we do not think spending money on share buybacks to boost short-term financial performance or stock price performance is the best way to deploy the capital. We are working hard on the business. We're working hard on the operation. We -- hopefully, with time, when we deliver better and better results, the intrinsic value of the stock price will be reflected. Q1 '25. I do not wish to convey too much forward-looking statements in this -- in the presentation or in our financial announcements. We are subject to 2 jurisdiction regulations in terms of listing regulations. So forward statement is often very, very sensitive because we do not only need to adhere to the Oslo Stock Exchange rules, but also the Hong Kong Stock Exchange rules. But to give you some light and hint, I would say that, no, not most of our vessels. We have locked in some visibility into the Q1 2025 for part of our fleet, but not most of our vessels. We hope that I will be allowed to shed further light, but this will have to be done properly and officially through statutory announcements and presentations in the next quarter of -- or year-end announcements. It's hard to say. But I think on this front, as shipping executive for quite a number of years, I always resort to fundamentals. Looking at the supply and demand of different types of ships, at the moment, I think Capesize, in comparison to other size ships on this metric, the supply/demand is more favorable for Capesize at this juncture. But then again, I will remind you all that Capesize, when the market is good, obviously, it's very, very good. But in terms of cargo flexibility, it's not as good as Ultramax and Supramax. So we are trying to strike the balance on this front so that we can capture both relative stability and flexibility -- well, stability in earnings and flexibility in cargo, but at the same time, with some exposure where we can take advantage of dislocation of supply and demand in certain types of ships. If you look at the presentation, the size of our owned fleet and the [ TC-in ] fleet is in there. If I quickly go to that page, if you look at -- hold on a second. We have 1.542 million deadweight metric tons, 24 owned vessels on our owned fleet and for our chartered-in fleet, 556,000 deadweight tons. Can I indicate the ideal size of the [ Jin-owned ] fleet and TC-in fleet? No, I cannot indicate that, I'm afraid, because, as I previously described, shipping is a business that is characterized by uncertainty, volatility. I don't want to waffle and give you some kind of arbitrary target and say -- and then not achieve it. We are actually very, very frank with you that we do not have any particular plan. We are not Apple. We are not a manufacturer of iPhones or -- sorry, let me step back. I'm not an OEM manufacturer of Apple iPhones that I receive an order from Apple of so many units of Apple iPhones, so I can expand my manufacturing lines according to a contract. We don't do that. To a certain extent, we are -- it's a high-risk, high capital-intensive industry. We often have to be very nimble and response to market conditions. Regarding our fleet renewal, do you have any plans to increase your fleet any further by S&P or how is general condition of the older [indiscernible], do you need -- a need for selling these off? I think for older vessels, there's a way to operate older vessels that can remain -- still remain profitable. We maintain our older vessels still at very, very respectable conditions. And should the S&P -- should the market goes red hot or will improve, we are obviously open to sell older ships in exchange to buy some younger ships. But again, we don't cast any of these in stone as a plan. As I said, the magnitude of the settlement of the Parakou place is not -- has not been pinned down yet. It's now working between the lawyers. I prefer to actually ascertain this and receive this and then let all of you know what is the amount. It's better that way. It's not going to be some kind of [ colossal ] something you're imagining. I'm afraid not. No M&A ideas are on the back of our minds or on our tables. Yes, the gearing is low. Share price, yes, it may be depressed, but we are working -- we rather -- again, we'd rather focus on the business and let the share price reflect itself. In terms of dividend, again, I have no instruction from the Board of Directors on any dividend payout. I hope going forward, I will bring such good news to you. For new buildings to be delivered right now, they are on schedule. If there are any change in delivery schedule, we will let all of you know. Just to cover your thought in case you think that I ignore you, I see your question on the magnitude of the amount. But again, I cannot give you any magnitude because there are no plan on the magnitude of share buyback nor any magnitude of dividends at present. I'm -- I'd like to be conservative and only deliver news to you that are concrete, deliverable news. I hope you are sympathetic to me on that front. Okay. I presume there are no more questions. Any further questions? If there aren't any further questions, then we will all go back to deliver and work hard on the business and hopefully deliver better results to you -- even better results to you in the next quarter and year-end. Okay. Thank you very much. I'll call this an end to the presentation. Thank you so much for joining. I hear you guys. I will let the Board of Directors know about your wish for share buybacks, M&A, et cetera, et cetera. And I will again update you, if necessary, in strict accordance to the rules and regulations by announcement. Otherwise, I look forward to delivering results and good news to you again in the final quarter of 2024. Thank you very much.