d'Amico International Shipping SA

MIL:DIS

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Antonio Carlos Balestra Mottola, executive]

Okay. Good afternoon. Sorry, we had a few technical problems today. So, we are starting the presentation now. As usual, we start with an overview of our fleet. We controlled as at the end of June, 33 vessels, of which 25 owned, and 3 bareboat chartered-in, and 5 time chartered-in vessels. Since then, we exercise and received -- were delivered 1 vessel, which was previously time chartered-in. And so now we have 26 owned vessels and 4 time chartered-in vessels and 3 bareboat chartered-in vessels. It's a young fleet, we have an average age of 8.8 years and mostly Eco-design, 85% of the entire controlled fleet is Eco-design. And I pass it over to Federico now.

[Federico Rosen, executive]

Good afternoon. So as usual, here, we show our CapEx plan. In H1, '24, as you know, we ordered 4 LR1s and we already paid 20% installment on these 4 vessels for a total of $44.7 million. In addition to that, we had dry dock expenses for $6.6 million. In the second half of the year, you can see here on Page 8, $31 million that are related to the exercise of our purchase option on one of our time chartering vessels, the Crimson Jade, which was delivered to us earlier this week. And in addition to that, we're expecting to have $2.4 million of additional dry dock expenses in the second half of this year. Going forward, 2025, we just have some estimated dry dock expenses, and going to 2026 and 2027, we have the remainder of our CapEx plan due on the 4 new building vessels that I just mentioned before with a large part due, as you can see from here, Slide 8 to due in 2027 for an estimated total amount of $167.7 million.



Going to Page 9. Our debt repayment situation. As you can see from the graph on the left, we repaid $6.5 million related to the facility on the Glenda Meredith, the vessel that we sold and delivered to the buyers in the second quarter of this year. In addition to that, we used some of the substantial liquidity that we have at the moment to repay some of our more expensive facilities for a total of $30 million related to the facilities on 2 vessels. And at the same time, almost at the same time, we drew down for $32 million, 2 facilities on 2 vessels at a considerably lower margin relative to the facilities that we just repaid.



Going into the second half of the year, we're expecting to have a scheduled loan repayment for $14.1 million, so very similar to the first half of the year. In addition to that, we have already repaid $6.6 million on another of our own vessels. And we are going also to finance 2 ships that are currently free of debt for a total of $34.3 million. Again, a very attractive margins, given also our very strong credit rating. Going into 2025 and 2026, we're expecting to have $30 million more or less of scheduled loan repayments, no refinancing need for 2025 and very little refinancing needs for 2026 for only $6.6 million. On the right, as always, we show our daily loan repayment on our own vessels, which, as you know, dropped significantly from $6,100 a day in 2019, down to $3,000 a day in 2024, given also the fact that we are currently operating some of our own vessels, completely free of debt.



Go to the next page, purchase options on our leased vessels. As you know, we have already exercised several of these options. We could exercise also on the remaining options that we have, 2 ships already this year and 1 ship next year in 2025. We are very likely to exercise these options. These leases have, as we mentioned in the past, relatively low cost of funds. So, we are not in a rush to exercise them this year, but we could potentially exercise them in 2025. Next slide, Slide 11. This is the situation of our purchase options on the time chartered-in vessels that we have. We have already exercised our options on High Adventure and High Explorer in '22 and '23. As I mentioned before, we just exercised our option on Crimson Jade, an Eco-modern and a Japanese build vessel.



We have 3 more options that were very likely to exercise as well. One on the Crimson Pearl, on the High Navigator and on the High Leader. And so, we are expecting to exercise also these options between this year and next year. These options, as you know, they're all well in the money relative to their current market value. Next slide, our coverage. We had a 43% coverage ratio in the second quarter of the year at a very profitable level of $28,000 a day. Here, as you probably saw from our -- some of our last press releases, we also increased our coverage at very profitable levels. So, as we speak, we have 37% coverage for the second half of the year at $27,500 a day. And we also increased, obviously, the coverage that we have right now for 2025 and 2026 already at 19% and 12%, respectively. Also, as most of you are aware, we are increasing also the percentage of our Eco vessels, so which is now almost 84% of the total fleet that we operate.



Following slide, we give here a picture, a rough guidance on the third quarter of the year. So, as we saw in the previous slide, we have fixed 42% of our available vessel days in time charter at an average of $27,600 a day. In addition to that, we have fixed 28% of our available vessel days at $30,300 a day, which equates to a Daily blended TCE of $28,000, almost $700 a day for approximately 71% of our available vessel days in the third quarter of the year, which means that if we make on the remaining days on the 3 days, $27,500 a day, our blended Daily TCE would be $28,300 a day. If we make $30,000 a day, blended TCE would be above $29,000 a day. And if we made $32,500 a day, we would get very close to $30,000 a day as a blended daily TCE. So, we can reasonably say that we are expecting another strong quarter going forward.



Here, we show Slide 14, as always, the estimated evolution of our fleet on the left -- on the right potential upside to earnings, we're showing our sensitivity for every $1,000 of spot rate, which is currently $2.9 million for the remainder of 2024, and it's obviously higher for 2025 and '26 given our lower coverage at the moment for those years, which is now $9.2 million and $9.6 million, respectively. Also, down at the bottom, we show that if we had to run the second half of the year basically at a breakeven level, we would have made already $162.3 million of net profit based just on what we fixed already either in time charter or spot. And as always, we also show on the right, a little bit of a sensitivity to this figure. So should we make $20,000 a day on our free days, then our profit for the year would rise to $175.5 million. Should we make $25,000 a day on the free days, we would make almost $190 million of net profit. So, we make $30,000 a day, our net profit would be at that stage beyond $200 million.



On the cost side, Page 15, we discussed this in the past. We obviously were hit by some inflationary pressures. However, this has to be -- seems to be stabilizing a little bit now. As you can see, our figure of daily OpEx for H1 '24 of $7,700 a day is a bit slightly lower than in the same period of 2023. So that I believe is a good sign. G&A also on the right are also a little bit lower than the same -- than in the same period of 2023. As we discussed in this case here in the past, the big increase that you see in 2023 and 2024 relative to the prior years is mainly due to the variable component of the personnel costs, which is really the reflection of some very good years that we are having.



Moving to the next slide, Slide 16. Very strong financial structure for this. We had a net financial position of $122.2 million at the end of the period. Excluding IFRS 16 effects, our net financial position would be of $107.6 million, with cash and cash equivalents of almost $182 million. Our fleet market value as of the end of the period was $1,185.7 billion. And if you calculate the ratio of our net financial addition to the fleet market value this figure is 9.1%. So, very low leverage for DIS. I just would like to remind that this figure was 18% at the end of 2023, only 6 months ago, and it was even 73% almost at the end of 2018. So, this is really the result of a big deleveraging plan that we have been implementing so far.



Moving to the income statement, key figures of the income statements for the first half of 2024, total net revenue came in at $213 million, higher than the $206 million that we achieved in the same period of last year. EBITDA of $161.1 million versus $142.7 million, extraordinary also EBITDA margin of almost 76% in '24. So overall, we made a net profit of $122.9 million in H1 '24 against $99.8 million in H1 '23, and even excluding some extraordinary items that we had both in H1 '24 and H1 '23, we made a profit, excluding nonrecurring items of $118.4 million in H1 '24 versus $103.6 million in H1 '23. Also, a very strong Q2. We made a net profit of $66.5 million versus $45.7 million in the same quarter of last year.



Moving to our key operating measures. We achieved a daily spot rate of $41,404 a day in the first half of the year with a coverage -- contract coverage of approximately 42% at $28,000 a day, which translates into total daily blend at TCE. The last row is table of almost $35,800 a day, very strong Q2 2024. We achieved a spot of 45,000 -- almost $45,000 a day. And this is for us, our best quarterly spot result in our history so far. At the same time, in the quarter, we had 42.5% contract coverage slightly less than $28,000 a day for a total blended daily TCE of $37,698 a day. And I pass it to Carlos for the market overview.

[Antonio Carlos Balestra Mottola, executive]

Thank you, Federico. And so, the usual slide here where we show a spot and the 1-year TCE rates on the left and on the right-hand side, our asset values. Spot rates continue at very firm levels in the first half of the year, and so have TCE rates, which are close to all-time highs. 1-year TCE rate for an Eco MR vessel is estimated at around $34,000 per day. So, I'm informed you're not seeing the presentation, so I'm going to try again.

[Federico Rosen, executive]

I think they're now seeing it.

[Antonio Carlos Balestra Mottola, executive]

So, we're on Page 20. Asset values, as I said, have been moving up. New building values are close to all-time highs, 10-year-old vessel values and 5-year-old vessel values are still at a 13% discount to the all-time highs. Trade disruptions. They had, of course, a very important impact, as we mentioned several times on the current market environment. And the most important factor, probably being the Ukrainian war and how that affected Russian exports, in particular, the sanctions that were imposed from February last year with Russian exports, which around 50% used to be exported to Europe, being rerouted to other locations, often much further away like China, India, the Middle East, and Latin America, in particular, Brazil. Some products stayed closer. They were exported to Turkey -- are being exported to Turkey and Africa, but often then re-exported from these locations. In the case of Turkey, they have their own refinery industry. So, they are importing more and exporting more products. So, this has led to an important increase in saving -- average saving distances, tightening the supply-demand balance.



Same effect for different reasons because of the trade disruption in the Red Sea following the Houthi attacks, which started at the end of last year and became much more effective at the beginning of this year, causing a rerouting of vessels around the Cape of Good Hope and an important drop in transit through the Suez Canal. Volumes transiting through the Suez Canal dropped by around 70%, vessels, which are still crossing and mostly linked to Russian or Chinese interest. These vessels are less targeted than the other vessels. Going the longer route means increasing saving distances between 30% and 67%, depending on the departure and arrival port. For example, on the Sikka-Amsterdam route, it also corresponds to a 15 day increase and saving time from 23 to 38 days.



So, it's quite an important increase. The effect on demand. Some analysts estimate between 5% and 7% increase in demand because of this, probably the effect is actually smaller because some arbitrages were closed because of the higher costs associated with saving this longer distance. The oil demand is increasing at a much slower pace this year than it has last year, as we were still benefiting from the effects of the reopening of some economies, in particular, China. But it's increasing by 1 million barrels per day -- expected to increase by 1 million barrels per day this year, which is nonetheless still quite a solid increase and which is back loaded in the second half of the year. If we see on the graph on the left-hand side, we see that the blue and the green lines are not that far away in the first 2 quarters of the year, but that this gap between the 2 lines increases in the second half as demand growth is expected to accelerate.



Refining throughputs also increasing this year relative to last year. And we see, for example, in August, that they are expected to be almost 2 million barrels per day higher than they were in August last year. So, trade volumes and refining throughputs at very healthy levels for the market. And they are also, of course, one of the reasons which -- for which the market has been so strong in the first half of this year. The supply picture, instead, here we see that supply is expected to increase by slightly less than demand this year. This is intentional and it's linked to the OPEC cuts, which have -- which aim to keep the market undersupplied further draw down oil stocks and contribute to a higher oil price. There has been quite good discipline so far in implementing these cuts.



And the outlook for next year for the oil supply will be dependent on the demand dynamics. If demand grows at a robust level next year, then some of these OPEC cuts might be unwound and oil supply might grow faster than this year, but there's ample supply available today to meet demand growth. So, supply is not an issue. It's good, however, for the tanker sector, that the additional barrels today are coming from countries such as the U.S. and Brazil and Guyana, which are quite far away from China, which is the marginal importer of these barrels. The product stocks are at low levels. They have increased slightly recently, but they are still below the 5-year averages. So, this is also supportive for the market. Refining margins have not been as brilliant lately as they were not long ago, but they are still at healthy levels.



And diesel demand, in particular, has been slightly disappointing this year as we will see later in the presentation. I understand that in Asia refining margins over the last 2 weeks has improved slightly. Hopefully, that will drive more throughput in that region, which will help that market, which is today actually, at this very point in time, the weakest region for the product tankers. Here, we see at the demand breakdown per refined product. A number of commercial flights continued increasing at a good pace this year. And jet fuel demand, not surprisingly and therefore, increased and was one of the major contributors to demand growth this year. This was not what the International Energy Agency expected at the end of last year. So, this was a positive surprise, also a motor gasoline rule more than anticipated or is expected to grow more than was previously anticipated this year. NAFTA demand still expected -- growth still expected to be robust.



But what really disappointed this year was the diesel oil, as I was mentioning previously, where we are actually now anticipating a contraction in demand this year. And that is linked to a large extent to the weakness in the industrial sector in some important economies, in particular, in Germany, which is also linked to the disappointing performance of the Chinese economy, and because of its problems in the real estate sector. Going on to the following slide, we see here that there has been a gradual cleaning up of the LR2 fleet on the left-hand side. Now, the percentage of LR2 vessels trading clean is almost at the highest level since January 2020 at 63%. It was only higher in January '23 at 64%. And this is a reflection of the relatively weaker market, crude markets for these types of vessels. They are still trading at good levels. The vessels transporting crude, but they have performed slightly less well than the product tankers. And in particular, the VLCCs have underperformed this year.



And the orderbook for vessels transporting crude has grown from the low point reached at the end of '23 of 3.6% and out stands at 7%, still a very low figure by historical standards. So, very limited fleet growth expected in the coming year, I would say, and slight acceleration after that, but still very limited fleet growth going forward in the coming years, which should be supportive also for the product tankers. The one of the reasons the market today is slightly weaker or has weakened, I would say, East of Suez is that a lot of Suezmax tankers, many Suezmax tankers, and also a few VLCCs cleaned up to transport refined products. And given there's the size of these vessels, they can transport a lot of cargo and that really dampened a substantial demand for LR2s with a ripple-down effect on the other vessel classes, smaller vessel classes.



So going on to the following page, we see capacity additions. The slide we have been showing for many years. Last year, substantial additions in the Middle East. This year, additions are concentrated in Africa and China, mostly the African additions being related to the Dangote refinery in Nigeria. We expect less inputs into Africa, but possibly more exports out of Africa. The Middle East refinery capacity, which was added throughout last year, we are now fully seeing the effects of these additions this year and that has been very positive for the market.



Going on to the following slide, again, here showing the growth in the U.S. Shale oil, which has occurred despite actually a flat to decreasing rig count because of higher productivity in the oil wells. And there are many incentives that are spurring, that should spur demolition. But of course, there is one factor, very important factors stopping owners from demolishing vessels, and that is the very strong markets we are currently experiencing. But eventually, demolition will pick up as we see here on Slide 32. The fleet is aging rapidly. At the end of June, we had 47% of the fleet, which was more than 15 years old. And this percentage should -- is anticipated to rise to 55% by the end of '24. So, in only 6 months, it's a big leap in the percentage of vessels that are more than 15 and then reach almost 60% by the end of '25.



Also, the percentage of vessels, which are more than 20 years age has been rising fast and increased from 10.7% at the end of '23 to 13.5%. So, although the orderbook increased from 8.9% to 11.5% during the same period, the gap between the fleet, which is more than 20 years and the orderbook actually increased. It widened from 1.8% to 2%. So, the fleet is aging more rapidly than the orderbook is growing at this current point, despite a healthy number of vessels actually being awarded in the first half of this year. And going forward, the outlook is even more positive in this respect because starting from 2027, we have very high percentage of vessels, which are turning 25 years old. And unless we are in a very strong market, which we hope will be still by then. We are going to be seeing a lot of demolition. So, 2.1% of the vessels turning 25 and 27 and 4.1% in '28 and then this percentage rises reaching almost 10% by 2033. So, it's a lot of vessels that need to be demolished in the coming years, which should support the market.



As we see here, very little demolished since Q3 '22, creating pent-up need for demolishing vessels. In the future, the deliveries have been very limited in the first half of this year, but they're expected to stay at very low levels in the second half, 13 vessels in 1 quarter is actually quite low, and also in the first half of next year. But they will pick up the deliveries in the second half of '25 and we will see whether the market will be able to absorb comfortably also this accelerated pace of deliveries from the second half of '25. But the outlook looks very positive for the next 12 months, at least. Here, again, we see the number of vessels ordered in '24, 87 vessels, and the fleet growth here expected in '25, we are looking here only at the MR1, MR2 and LR1 segment. So, we don't include LR2. Otherwise, the fleet growth would be faster. But looking at only these segments and not assuming a big pickup, but nonetheless, a pickup in demolition, we anticipate a fleet growth of 1.5% next year, which is still a very low figure. And as we saw, it's mostly occurring in the second half of the year.



Our NAV has been increasing further in the second quarter of this year, reaching almost $1.2 billion, and the NAV per share reached $9.7 which equates to around EUR 8.9. And so as at the closing price at the end of June, we were at a discount of 19%. We were trading at a discount of 19% to NAV. Share price traded slightly down since then. So, the discount is closer to 22% today, but still a substantial discount whilst some of our peers are trading actually at the premium to NAV and others are trading around NAV. So, there's a lot of relative value, I would say, also some absolute value in our shares today.



And in terms of use of funds, this was partially covered already by Federico in the previous slide, but we show here what would be the needs associated with exercising all of the options which can still be exercised, as well as the new building vessels we ordered, and it would entail a use of funds of $124 million, excluding the first installment already paid for the new buildings. It is still an important use of funds of $380 million. And we have been returning more cash to our shareholders, both as dividends and buybacks. And given the outstanding results so far this year and a very positive outlook also for the second half of the year. We expect that dividends this year should be higher than they were last year, and the payout ratio should also rise and be closer to 40%, including the buybacks. The ratio of financial leverage to -- of net financial position to fleet market value has been steadily decreasing as commented by Federico previously and now stands at a very healthy 9%. And basically, that's it. And I pass it over to you for the Q&A session.

[Operator]

Thank you. This is the Chorus Call conference operator. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from Matteo Bonizzoni of Kepler.

[Matteo Bonizzoni, analyst]

I have 2 questions. The first question relates on the evolution of the spot rate for you in the second quarter. So, we have seen an increase, a sequential increase compared to the first quarter of over $6,000 per day. But if you look at platform for MR or also other kind of product tankers that was more or less a stability. So, the question is just to understand if there were some core company-specific issues, which impacted positively on our realized spot rate? The second question relates on the evolution of the spot rate in July. Always looking at platform, we have seen a weakening because the latest indicators are in a range between 25,000 and 30,000 per day. I think you have already said -- you have already mentioned some reasons for that, but the question is, can you little bit more elaborate on this weakening, and you think is temporary or it could last? And the third last question based on the misdelivery of MT Amfitrion now, the vessel which was supposed to be delivered in July. What exactly happened, just if you provide more color on that? And are you confident to find alternative solution in the short-term?

[Antonio Carlos Balestra Mottola, executive]

Thank you for the very good questions. So, one by one, I'll try to answer them as well as I can. On the spot rates, on a very strong performance in the first half of this year. I would say that the main contributor was our higher exposure on the LR1 sector that was intentional. We were seeing that already last year; the yellow ones were performing very well. We expected when we saw the escalation that was happening in the attacks in the Suez Canal, in the Red Sea, that because of the longer distances that product tankers would have to sail, the larger vessels were going to be the main beneficiaries. So, we refrain intentionally from fixing our LR1s on period contracts. We kept more -- a larger percentage of our LR1 fleet than usual on the spot market. And we instead covered -- we took coverage on our smaller vessels, the handy-size vessels. And that explains the very strong performance on the spot market. I think that is the main factor of let's say, our outperformance, if you look at our results and compare them to MR averages.



And instead, in July, the weakness is associated with the factor -- mainly associated with the factor I previously mentioned because volumes -- traded volumes are actually at quite healthy levels. And I think that as the figures -- the updated figures from the July report, from the International Energy Agency confirms that refineries are working actually at quite healthy levels. Utilization in the U.S. Gulf, for example, it's around 94% currently. And however, the weakness for vessels operating in some crude tanker segments, the relative weakness, let's say, encouraged some owners, operators of these vessels to clean up the vessels to transport to transport gas oil in particular. Of course, they had to accept the discounts went to transport in the gas oil, but it was a backhaul, let's say, trade for them but they did quite a -- I believe I read around 12 Suezmax did this and 4 VLCCs at least. And that has a huge impact in the market.



VLCC can transport much more than an MR or even than an LR2. So, it does impact the market substantially. These are very long trips that they are performing as we saw in the slide where we showed the distances for these voyages from Asia, Middle East to Europe. It can last around 40 days, and there will be a need for transshipment once these larger vessels arrive in Europe, in particular in the Mediterranean. And they are, therefore, after they perform these voyages unlikely to go back to the Middle East to take up new clean cargoes. Because by September, October, we usually, for seasonal reasons, if not for anything else, we do see a pickup in volumes in demand for crude tankers. So most likely, after they perform these voyages, which we expect to be a one-off, they are going to be transporting crude and be dirty up again. And so, we will not have the strike on the clean market going forward.



There are still a few vessels, which are apparently crude tank as cleaning up to transport clean refined products, but much less than in the past month. And so, this factor should be much less important going forward. We are seeing that the market is -- the averages, of course, came down quite a lot, but the weakness is really concentrated east of Suez, and which traditionally, over the last 2, 3 years has been the strongest market. And we are seeing, however, quite healthy levels in the Atlantic, both in the continent and in the U.S. Gulf, and a slight uptick actually in freight rates over the last few days in these areas. Still not at exceptionally strong levels with some volatility, but healthy volumes coming out of these areas, partly the arbitrage for the TC14 U.S. Gulf to Europe is wide open, and there was a very healthy number of vessels being fixed over the last few days in these areas. So, we expect this weakness to be temporary and for the market to pick up.



In addition, I'd like to also add a comment that I checked when we provided the half year update last year at around the same time this year. What was our average for the Q3 fixtures at that point in time. And we had fixed 30% of our spot days at 27.5%. So, and now we are at 28% at 3,300. So, more or less the same percentage fixed, but a much higher figure despite the weakness that we are seeing right now. So, it is not unusual for the market to be weak this time of the year. But last year, we saw a big improvement in August and in the beginning of September. And hopefully, we will see the same this year.



And then finally, on the Amfitrion, unfortunately, was our mistake. I mean, we bought the vessel from a very unreliable counterparty. They did not respect the lake can, although it was very long since we agreed with the purchase and we signed them more. They had several months before he had to deliver the vessel to us. The vessel was not delivered and could never have been delivered on time. And when we try to reach an agreement which would have compensated us for the delay in delivery, we could not reach such an agreement. And we therefore, decided to cancel the contract and we reserve our rights to make a claim against the seller. And we will be looking for new opportunities, but we are not in a rush to buy a new vessel. If we had acquired that vessel, we would have probably accelerated on the disposal of an older vessel, given we did not get all of that vessel, we might delay slightly the disposal of one of our older vessels. But we are quite content with the we have today, and we are confident that opportunities will eventually emerge. And so, we will patiently look for the right opportunities and be more careful next time who we buy vessels from.

[Operator]

The next question is from Daniele Alibrandi of Stifel.

[Daniele Alibrandi, analyst]

You now have exercised quite a few purchase options, and I was wondering if you have to understand where do you see your cash breakeven going by the end of this year and maybe next year from the level that you usually call out to be around $15,000 per day.

[Federico Rosen, executive]

Look, in terms of cash breakeven, we're definitely -- as we discussed before, reducing our level, I would say that for 2024, our cash breakeven could be probably in the tunes of $14,000 a day, 1/4 as a whole for the year. And then let's see a little bit what happens for the following years for '25 and '26, also depending a little bit on the timing of the exercise of our purchase options, but that is a ballpark figure that I would consider.

[Operator]

The next question is from Massimo Bonisoli of Equita.

[Massimo Bonisoli, analyst]

Good afternoon. A couple of questions. I just wanted to touch on that loan to value now is below 10%, and you are still generating a good amount of cash. So just a question on your approach regarding leverage. Would you maintain, let's say, very low leverage or even a net cash position in your balance sheet? Do you have any reference for us? And the second question on the buyback, since some buyback has started over the past few weeks. And any color on your policy here on the buyback, any price or volume reference for any period of time?

[Antonio Carlos Balestra Mottola, executive]

So, as we presented in one of our slides here, I don't know if you're seeing the presentation here, but on your slide on Slide 38, we show our use of funds here in relation to the exercise of the options on the TCE and double charter in vessel. Also, there is a quite substantial use of funds here going forward of around $380 million. That is excluding the $44 million that we already paid for the first installment for the new building. And in addition, we also plan on distributing more cash to our shareholders, both as buybacks, but mainly, I would say, as dividends. Although we don't have a dividend policy. I would anticipate that our payout ratio for these 2 purposes should be of around 40% of our net profits this year.



So, substantially, more than was distributed last year, where we distributed $50 million in dividends and purchased shares worth $7 million. So, share repurchases this year have been quite limited. They are opportunistic when we see unjustified weakness on the shares. We see an opportunity to buy, and we reactivate the purchases. But we don't have any specific objectives in that respect. And so, we cannot guide you in this respect. Yes. So, that's on the buyback. However, there is the authority to buy back up to 15% of the shares issued, including the shares which were already repurchased.

[Massimo Bonisoli, analyst]

And if I may squeeze in another question on the MT Amfitrion. Are you eligible for any reimbursement here?

[Antonio Carlos Balestra Mottola, executive]

Well, we will definitely get back -- be reimbursed for the deposit, 10% deposit that we -- that was in an escrow account. And we also, of course, incurred some costs related to the inspection of the vessel, spare parts, which were bought for this vessel. And we will seek to obtain reimbursement of these costs also as well as from other indirect losses, which were incurred potentially, let's say, from the cancelled purchase of the vessel. So, we prefer not to quantify this at this stage, but we will try to reach a commercial settlement with the counterparty. If that is not possible, then we will evaluate what course of action to take.

[Operator]

[Operator Instructions]. The next question is a follow-up from Daniele Alibrandi of Stifel.

[Daniele Alibrandi, analyst]

Just a follow-up question on the other direct cost line, which is down 5% here in H1, 8%, 9% in Q2. Should we expect the trend, this downward trend in the mid-single digit also for H2? Is this a proxy? Or should we factor in maybe some --

[Federico Rosen, executive]

Sorry Daniele. The line is pretty bad. I think I understood your question. No, I would not expect a decreasing trend on OpEx. And as I mentioned before, what I would expect this inflationary pressure to stabilize. So, I would expect going forward a kind of stable level relative also to the previous year.

[Operator]

[Operator Instructions]. Mr. Balestra di Mottola, there are no more questions registered at this time.

[Antonio Carlos Balestra Mottola, executive]

So thank you very much, everyone, and I wish a very good summer to everyone, and talk soon. And yes, thank you for your time today.

[Federico Rosen, executive]

Thank you. Bye-bye.

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.