Hafnia Ltd

OSE:HAFNI

Earnings Call Analysis

Hafnia Achieves Strong Q2 2024 Results

In Q2 2024, Hafnia reported a net profit of $259.2 million, leading to a first-half net profit of $478.8 million, the best in company history. The high dividend payout of 80% of net income resulted in $0.4049 per share. TCE income reached $417.4 million for the quarter, with an average TCE per day of $39,244. The company reduced its net leverage ratio to 21.3%. Looking forward, Hafnia anticipates strong Q3 and Q4 performances, covering 45% of the earning days at $33,534 per day, and expects net profits to be between $800 million and $900 million for the full year.

Strong Financial Performance in Q2 2024

Hafnia reported an impressive net profit of $259.2 million for the second quarter of 2024, contributing to a total of $478.8 million for the first half of the year. This marks Hafnia's best performance since the start of 2023 and the strongest first half in its history. In recognition of this robust financial outcome, the company has declared an 80% dividend payout of net income for the quarter, translating to $207.4 million, or $0.4049 per share. This aggressive dividend policy reflects Hafnia's commitment to delivering value to its shareholders.

Market Dynamics Favoring Product Tankers

The product tanker market has shown significant strength due to various factors, including geopolitical unrest, changes in trade routes, and supply chain dynamics. With ongoing safety concerns in the Red Sea and low diesel inventories in Europe, Hafnia has capitalized on a robust demand environment. Notably, volumes of Chemical and Product Products (CPP) have increased, with a notable shift in trade routes, now around 20% of volumes being carried via the Cape of Good Hope. This shift has helped sustain high levels of CPP on water, contributing to higher transportation demand and, ultimately, earnings for Hafnia.

Future Guidance and Earnings Potential

Hafnia anticipates ongoing strength in earnings through the remainder of 2024 and has provided projections indicating that net profits for the full year could range between $800 million and $900 million. The company is well-positioned for the third quarter, with 72% of earning days covered at an average rate of $34,934 per day as of early August. They also indicated that a leverage ratio reduction below 20% is anticipated before the end of the year, which would trigger an increase in the dividend payout ratio to 90% of net profits.

Successful Financial Management and Sustainable Growth

Hafnia has steadily improved its balance sheet, achieving a loan-to-value (LTV) ratio of 21.3%, down more than 8% compared to the previous year. The company holds total liquidity of around $591 million, which includes $424 million in undrawn credit facilities. Such financial stability allows Hafnia to make strategic investments while reducing financial risks associated with high and volatile interest rates, thanks to a hedging strategy securing 88.6% of its loans at an average base rate of 1.77%.

Innovative Strategies and ESG Commitments

Hafnia is committed to sustainability and innovation in its operations, aligning itself with global ESustainability goals. Their joint venture with Big Hill for the development of low carbon intensity blue methanol and sustainable aviation fuel reflects this commitment. Additionally, with a strategy focused on fleet renewal to maintain a low average age, Hafnia aims to enhance fleet utilization and earnings potential while reducing environmental impact.

Industry Position and Competitive Landscape

Despite increased competition from the crude tanker segment due to the cannibalization effect in the LR2 market, Hafnia believes that this is a short-term challenge. The company remains optimistic, citing historical trends that suggest an increase in earnings for large tankers from late Q3 onwards due to expected OPEC export increases and a greater overall demand for tankers driven by global oil consumption patterns. This dynamic positions Hafnia favorably amid ongoing market transitions.

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to Hafnia Second Quarter 2024 Financial Results Presentation. We will begin shortly. You will be brought through the presentation by Hafnia, CEO, Mikael Skov; CFO, Perry Van Echtelt; EVP Commercial, Jens Christophersen; and EVP Head of Investor Relations, Thomas Andersen.

They will be pleased to address any questions after the presentation. [Operator Instructions] You will receive further instructions as required.

During this conference call, some statements may be considered forward-looking, reflecting management's current expectations. These statements involve risks, uncertainties and other factors, many of which are beyond Hafnia's control that could cause actual results, performance or plans to differ significantly from those expressed or implied. Additionally, this conference call does not constitute an offer or solicitation to buy or sell any securities.

With that, I am pleased to turn the call over to Hafnia's CEO, Mikael Skov.

[Mikael Opstun Skov, executive]

Thank you. Hello, everyone. I'm Mikael Skov, CEO of Hafnia. Thank you for joining Hafnia's Second Quarter 2024 Earnings Conference Call. With me here today are our CFO, Perry Van Echtelt; EVP Commercial, Jens Christophersen; and EVP and Head of Investor Relations, Thomas Andersen.

Together, we will represent Hafnia's performance for the second quarter of 2024. Today's presentation agenda will cover 4 key topics: First, I will begin with a summary of our key achievements and events from the second quarter. Following that, I will provide an overview of Hafnia's key investment highlights. Next, we will discuss commercial updates and provide an outlook on the product tanker market. After that, we will delve into our financial performance for the quarter. And finally, we will conclude with an overview of our ESG projects.

Let's move to the next slide. The Slide #2. Before proceeding, you should all be aware and take note of the mandatory disclaimer. Some statements in this call may be forward-looking and carry inherent risks. This call does not constitute an offer to buy or sell securities. Thank you for your attention, and let's start the presentation. Let me begin by outlining some of the key highlights from the quarter.

On Slide #4. I'm pleased to announce another strong quarter of financial results for Hafnia. In the second quarter, we achieved a net profit of $259.2 million, bringing our total net profit for the first half of 2024 to $478.8 million. This quarter marks our best performance since the start of 2023 and represents the strongest first half result, in our company's history. In line with these robust results and our recent increase in the dividend payout ratio, I'm pleased to announce a dividend payout of 80% of net income for the quarter. This translates to a total distribution of $207.4 million or $0.4049 per share, approximately NOK 4.4.

For the second consecutive quarter, this marks the highest dividend payout ratio in Hafnia's history, underscoring our commitment to delivering strong shareholder returns. We anticipate further upside potential as we continue to reduce our leverage in these strong markets.

Slide #5. Moving on, I would like to provide an overview of Hafnia, which today offers unparallel investment opportunities. As an introduction, Hafnia's one of the world's leading tanker owners and operators within the product and chemical tanker market. As owners and operators of around 200 modern vessels across 8 pools, we offer a fully integrated shipping platform, including technical management, commercial and chartering services, pool management and an extensive bunker procurement desk, which has serviced over 1,400 vessels within our pool platform and for external ship owners.

At the end of the quarter, we owned and chartered a diversified portfolio of 133 vessels. Our owned and joint venture vessels have an average broker valuation of approximately $5 billion, resulting in an approximate net asset value of $4.5 billion. This translates to an NAV per share of around $8.77 or NOK 93.3. Through the implementation of our fleet renewal strategy, we aim to maintain a low average age for Hafnia's fleet. At the end of the quarter, our own vessels had an average age of 8.8 years. This strategy enhances fleet utilization, boost earnings potential and reduces our environmental footprint.

Let's move on to the next slide, which is Slide #6. Our key value proposition today runs deeper than ever. This has been achieved through our active management and deep understanding of market dynamics. Since our merger with BW tankers in 2019, our growth trajectory has been significant establishing us as one of the world's leading product and chemical tanker companies. Our approach to market assessment is to continue to seek advantageous opportunities as part of our active management strategy. Throughout our journey, we have executed several strategic acquisitions and joint ventures that are aligned seamlessly with our overall goals. Most recently, in 2023, we formed a joint venture with SOCATRA securing orders for 4 dual fuel methanol MR newbuilds, with expected delivery between 2025 and 2026.

Upon delivery, these vessels will be chartered out on long-term time charter arrangements to our long-standing partners, TotalEnergies. We remain committed to pursuing further strategic acquisitions and joint ventures that will drive sustainable growth and position us for long-term success. Additionally, we are dedicated to delivering strong and sustainable shareholder value. As you can see, we have consistently paid high dividends over the past year. We have actually worked to strengthen our balance sheet and reduce our leverage ratio. With the current strong markets, we anticipate further upside potential in our shareholder returns.

Jens will now be sharing an industry review and market outlook. Over to you, Jens.

[Jens Christophersen, executive]

Thank you, Mikael. Hafnia primarily operates within the cyclical and volatile product tanker segment, where charter rates and tanker capacities are influenced by multiple factors. Over the next few slides, we will provide an update on the current market conditions and share our expectations about the forward outlook. Since the beginning of 2024, an already strong product tanker market has experienced further positive momentum. Ongoing safety concerns in the Red Sea have led to shifts in trade routes with vessels rerouting from the Suez Canal to the Cape of Good Hope.

Additionally, droughts in the Panama Canal and low diesel inventories in Europe have further contributed to a robust second quarter. Volumes of CPP and chemicals on Water continued to steadily increase, largely driven by geopolitical unrest. Currently, approximately 20% of these volumes are rooted by the Cape of Good Hope, with Russian CPPs making up about 13%, double the pre-sanctioned average. We are experiencing historically high levels of CPPs on water, and we anticipate these elevated volumes will persist through the end of the year. The graph on the right-hand side shows transportation demand development expressed in CPP tonne days and how this has impacted MR and LR1 earnings.

Next slide. Similarly, when we examine the tonne-mile effect, we observed a significant impact. Since 2018, we have witnessed a steady rise in daily CPP and chemicals loadings. This disproportionate rise in tonne-miles can be largely attributed to the geopolitical unrest and the dislocation of refineries with Eastern refineries increasingly supplying Atlantic consumers via the Cape of Good Hope.

On the other hand, crude and DPP daily loadings and tonne-miles have seen a slight decline as they continue to struggle under the weight of OPEC plus production cuts. Looking ahead, we anticipate that the high tonne-mile levels for CPPs will persist, driven by the ongoing dislocation between refining capacity and end users.

Next slide. In addition to the impact of geopolital unrest, global inventory levels and the evolving refinery landscape are having a significant impact on the product tanker market. In 2023, export-driven volume gains were largely fueled by refinery startups in the Middle East, including Al Zour in Kuwait and Duqm in Oman. The commencement of production at Nigeria’s Dangote refinery and the expected ramp up in Chinese refineries by late 2024 is anticipated to further boost global refinery operations. According to the IEA, global refinery throughputs are focused to increase by 0.8 million barrels per day, reaching 83.3 million barrels per day in 2024.

We reflects approximately 100 MRs equivalents of additional transportation demand. Conversely, continued refinery closures in regions such as the U.S. and Europe, would likely necessitate that these oil consuming regions seek imports from refinery resources further away. And this shift in global oil trade flows will contribute to increased transportation demand. Whilst we are currently experiencing record high volumes of CPP on water, it's noteworthy that global product inventories remain below average, even when combined land-based inventories with CPP on water.

Given that elevated oil and water levels so far that marginal impact on land-based inventories, we assess that we are continuing to transport to fulfill demand rather than strategic inventory builds. And this suggests a long runway for the current high earnings environment as there will be a need to replenish inventory levels in the near future, supporting tanker demand.

Next slide. In recent months, we have observed an increase in cannibalization from the crude sector, primarily driven by the spread in earnings between LR2s and Suezmax. This shift has led to more crude tankers converting their tanks to carry clean cargo and thereby introducing greater competition in the product market, especially within the LR2 segment where these VLCCs and Suezmax are now competing. However, we believe this impact will be short lived. Historically, earnings for large tankers tend to rise from the latter part of Q3 and onwards. With higher OPEC exports anticipated, crude rates are expected to increase, which should reduce the cannibalization effect starting from Q4 2024.

Next slide. Looking at the product tanker supply, the average age of the global product tanker fleet is steadily increasing, with vessels over 20 years old, now comprising a larger share of the global fleet. This trend has significant implications for fleet dynamics and market supply as older vessels are underutilized compared to vessels under 15 years of age. The trend is generally that vessels above 15 years of age tend to become less efficient over time as customers tend to prefer younger tonnage. However, the recent market strength in 2024 has provided some tailwind also for the owner vessels. As the worldwide fleet age increases in the coming years, we can expect the fleet [ Audio Gap]

Next slide. On the flip side, despite the increasing average age of the global product tanker fleet, contracting activities in the sector continue to rise. As of August 2024, the order book-to-fleet ratio for deliveries going out to 2028 stands at approximately 20%. However, it's worth noting that the LR2s account for over 50% of the tonnage to be delivered in the next few years. Historically, around 70% of LR2 capacity deliveries has been absorbed into the dirty and crude petroleum product trades.

Additionally, the crude sector is getting increasingly old, and the order book on the crude side remains at a relatively low only 19% ratio. We anticipate scrapping levels to exceed deliveries over the next 4 years, effectively removing tonnage supply and pushing more LR2 capacity into the crude and DPP trades.

So, looking ahead, the outlook for product tankers remain highly positive. Despite global oil demand showing signs of slowing in 2024 with the IEA reporting a year-on-year increase of only 0.9 million barrels per day in the second quarter, primarily due to reduced consumption in China, the underlying market fundamentals remain strong.

And Perry will now bring you through the key financials of the second quarter.

[Perry Van Echtelt, executive]

Thanks, Jens. As highlighted by Mikael and Jens earlier, we've seen a continued strong market in the second quarter of the year. As a result, we experienced sustained high earnings across all segments, generating a TCE income of $417.4 million and bringing our half year TCE income to $796.2 million. This is against the $726.5 million for the first 6 months last year, the highest in Hafnia's history for both periods. Our fee focused business has also benefited from the strong rate environment, generating $10.7 million from our commercial managed pool and bunker procurement business.

These adjacent business streams have continuously performed well. Our balance sheet has further strengthened with a cash balance of $167 million at the end of the quarter and a total liquidity of around $591 million. This includes $424 million in undrawn credit facilities. At the end of the second quarter, approximately 88.6% of our loans were hedged at a weighted average of 1.77% base rate or on a SOFR basis. This hedging strategy has largely protected us against the high and volatile interest rate environment and thereby controlling the finance costs.

During the quarter, we further optimized our balance sheet by reducing our leverage ratio. Our net LTV ratio has further decreased to 21.3% at the end of June, driven by higher vessel valuations, strong cash flow generation and the subsequent debt repayments.

Net LTV has been on a steady downward trajectory, reducing by more than 8% compared to the second quarter last year. This deleveraging has gone in parallel with increased shareholder distributions in the form of cash dividends. Of course, depending on markets and valuations, we do anticipate reaching our next milestone in our dividend payout policy of a net LTV below 20% before the end of the year. This will trigger a further increase of our payout ratio to 90% of net profits for such quarter.

We move to the next page. On to the operating summary. So in the second quarter, our TCE was based on 10,635 earning days, and we generated an average TCE per day of $39,244 by focusing solely on spot earnings for the quarter, we generated an average spot TCE per day of $40,995 reflecting our ability to capitalize on the strong market backdrop and strategic positioning.

Then looking forward to our coverage for the third quarter, we're well positioned for another strong quarter when compared to a year ago. As of the 9th of August 2024, we had 72% of the total earning days in the third quarter of the year being covered at an average of $34,934 per day. And for Q3 and Q4 of this year, 45% of the earning days are covered at an average of $33,534 per day. Despite the recent market softness, we still expect a strong quarter ahead.

If we move to the next page. As we conclude the second quarter and look forward to the remainder of the year, Hafnia is well positioned to continue to capitalize on the favorable market dynamics and we're set to deliver another strong year of results. Benefiting from strong market fundamentals, including rising global oil demand, limited fleet growth and a significant exposure to the spot market provides us with a solid foundation to maximize earnings in this environment.

This slide presents a comparative analysis of 3 scenarios, outlining our potential full year earnings. These scenarios include: firstly, the consensus forecast from the equity analysts. Second, an extrapolation of the Q3 covered rates applied to the available earnings days in the rest of the year, covering '24. And finally, a scenario based on Q3 to Q4 covered rates similarly applied to available earning days in 2024. In each scenario, Hafnia's projected to deliver exceptionally strong financial performance with net profits estimated to range between $800 million and $900 million.

Mikael, over to you, for the remainder of the pages.

[Mikael Opstun Skov, executive]

Thank you so much. We're now on Slide 19. Moving on, I would like to provide insight into Hafnia's ESG strategy and targets. As we navigate the evolving maritime landscape, we acknowledge the inherent responsibility across our operations and are committed to minimizing our environmental footprint. Additionally, we are focused on fostering diversity, inclusion, belonging and equity, as well as maintaining high standards of corporate governance within our organization. We recognize that collaboration is key to overcoming the challenges within our sector. That is why we actively engaged with industry peers, international organizations and other stakeholders to address these challenges collectively and effectively.

Slide #20. Next, I would like to highlight some of the key ESG projects Hafnia has actually engaged in as we lead the way towards a more sustainable maritime industry. To realize our vision of green and maritime sector and in preparation of an increasingly technologically advanced world, we are involved in several forward-looking projects that align with our long-term ESG goals and the broader global energy transition. We are exploring a joint venture with Big Hill on the development of a hydrocarbon fuel plant that will produce low carbon intensity blue methanol and in the future, sustainable aviation fuel. Still subject to FID, this project will develop new sustainable shipping opportunities within the CO2, methanol and sustainable fuel sectors.

We are also co-founders of Complexio, a foundational AI company that is trained on big data, which will ultimately streamline tasks and enhance value extraction within our organization. Our ESG focus extends beyond these projects and is deeply embedded in every employee. We continue to seek innovation and collaboration across this space and remain firmly committed to making significant strides towards advancing sustainability across the maritime sector.

Slide 21. To conclude, I hold a positive outlook on Hafnia's ongoing commitment to fostering a green and maritime sector and leveraging our strategically positioned modern fleet. We will continue to build on this strong momentum to produce even greater results. This will allow us to pursue our objectives, invest in a greener future and provide greater returns for our shareholders.

This concludes our presentation. With that, I would now like to open the call for questions.

[Operator]

[Operator Instructions] Okay. So for the sake of good order, we'll take the questions with the raise hand function first. So Omar Nokta, may I ask you to unmute yourself.

[Omar Nokta, analyst]

Thank you. A couple of questions on my end. Maybe just on the first one, it looks like your realized averages across all 4 segments were higher sequentially which we really haven't seen this earnings season from your peers. The LR2s were notably quite strong at 60,000. I know it's not a big part of your fleet. But just can you maybe discuss what drove that outperformance in the second quarter? And how do you think that this market is developing as we look into 3Q and beyond given all the talk of Suezmax and VLCCs looking to catapult onto that strength?

[Jens Christophersen, executive]

Omar, this is Jens. Good question now. On the LR2 segment, as you know, we have relatively few ships compared to some of our peers. But the good result is really down to good positioning of the ships and a quarter that spans 90 days. So there's an element of accounting principle in it. Today our LR2 fleet is equally balanced between East and West, where the markets are also more or less at the same earnings levels. You also asked a little bit about the VLCCs and Suezmax that have been cleaning up and taking out clean cargoes. And yes, we felt that in the LR2 and LR1 segment in particular as well. But I think it's noteworthy to see that we are in the lowest season in the quarter of the year, and that we're still producing good earnings despite all that volume have been taken out of our markets.

So we are constructive for the end of Q3 and the start of Q4 where we expect the crude chips to pickup in freight rates again, already now, we see less of that cannibalization than we saw just a month ago simply because traits have sort of aligned themselves a bit. I hope that answers your question.

[Omar Nokta, analyst]

It does, and maybe just a quick follow-up just on that point. We've seen the LR market has definitely been a strong performer since 2022, and VLCCs have generally lagged. So just maybe what do you think -- why do you think there's been that surge this year? Is it really the rate differential between the large crude ships and the LRs? Is it just the rate -- or is it really the -- is a rerouting and going around the long haul from Middle East to Europe. Is that what's driving that trade? I know it's tough question, but [indiscernible].

[Jens Christophersen, executive]

It's a good question. So it's the rates that is the end so. And what we saw in Q2 was the LR2 freight from the Middle East to Europe ran all the way up to $8 million a ship. And with that type of freight, it became more beneficial for some of our customers to take the risk, clean up Suezmax and VLCCs and simply get the benefit of scale on these bigger ships on the diesel that they've been transporting. So that's what we saw. The concept of Suezmax and VLCCs transport and clean products is an old one that trade has always been there, but it's been predominantly done on new buildings in the past. So the development we saw here, we see that as a one-off [indiscernible] went up as much as it did.

[Omar Nokta, analyst]

Got it. Okay. And final one, and I'll turn it over after this one. Just wanted to ask you mentioned in the financials, getting down to the sub 20% is happening before year-end, which would then trigger the payout to 90%. Is that something you see happening sooner? Could that happen by the end of 3Q? Are we on pace for that? Or do you think this is more of a 4Q event?

[Perry Van Echtelt, executive]

Sorry that is too long to find the unmute button. Hi Omar, good question. We've indicated second half of the year. I mean it really depends on where values are going. But obviously, the trajectory is to go below 20%.

[Omar Nokta, analyst]

Okay. I appreciate that, Perry. That's it for me.

[Operator]

Thank you, Omar. Frode Morkedal, may I ask you to unmute yourself?

[Frode Morkedal, analyst]

Just a quick question on the markets. Regarding the Panama Canal, I guess, it's been in focus recently. I just wondered if you have any views on the impact on the product tanker market. I think it was a positive event initially. And then, we've seen some normalization, so to speak. Do you think it has already happened negatively speaking, in terms of the impact? Or is this more to go, what do you think?

[Jens Christophersen, executive]

Hi Frode. This is Jens. Our observation is that the delays in the Panama Canal has abated, and we are back to the daily number of transits that we saw before the drought kicked in at the back end of 2023. So we feel that all that, let's say, improved efficiency on the Panama Canal has already been factored into the market.

[Frode Morkedal, analyst]

Okay. That's good to hear. I was -- well, I also get some incoming question on Russia, Ukraine and impact of product tankers. Do you have any updated view on the -- what the impact has been so far in terms of tonne-mile improvements?

[Jens Christophersen, executive]

I think we do our numbers and everybody do their numbers. There's probably a level of uncertainty to it. we've been measuring CPP on water. And what we see is the Russian volumes themselves, they have doubled their presence on water compared to pre-sanctioned level. So that's probably an increase of maybe 5%, 6% in the demand.

[Frode Morkedal, analyst]

Okay. What if at some point that ends, is there any shadow fleet? What's your view on there? Could there be some type of mitigating factor by the shadow fleet being removed, so to speak.

[Jens Christophersen, executive]

I think that's a very big question. It's too difficult to put any precise numbers on that without a doubt, it would have an impact on demand if the sanctions on Russia, they were lifted. But, what would happen after that is hard to speculate on at this point in time.

[Frode Morkedal, analyst]

Yes, I understand. Yes, that's the question we're receiving, right? So a tough question, obviously. But I guess it might be some type of supply mitigation, so to speak, as well, on fleet being scrapped or moved in. Anyway, maybe another time for then. Thank you.

[Operator]

Thank you, Frode. Sherif El Maghraby, may I ask you to unmute yourself?

[Sherif El Maghraby, analyst]

So you mentioned the start-up of Dangote, can you give us some color on how that's changed trade flow since coming online? And also, how do you see that impact going forward as the refinery produces [indiscernible] starting next month gasoline as well?

[Jens Christophersen, executive]

Yes. Good question. The expectation of the industry has been for many years, this would be a negative for product tanker demand. Our expectation so far from having observed the trade floats around the Dangote refinery here in the first 4 to 6 months has been that it's created more cargo activity and more trading in and out of Nigeria. So we feel it's been positive so far. It will be interesting to follow the development. That is the quality of the Dangote production picks up. It is a refinery that's designed to produce higher specifications on what's required in Nigeria. So, from that perspective, we believe that there's definitely potential that gasoline could be moving out of Dangote towards the U.S. or other markets where they have higher requirements to quality. So overall, we think it's a positive thing for the product tanker market.

[Sherif El Maghraby, analyst]

And then on the 4 methanol capable new builds, do you expect them to run on methanol when they hit the water? And given last week's cancellation of the Swedish project for Marine methanol -- can you speak to the availability of methanol bunkering over the next few years?

[Jens Christophersen, executive]

In terms of our 4 MRs, we really don't know if they will be running on methanol or standard fuels. It's up to our customers who make those choices. And in terms of the availability of methanol bunker fuels, it's too early for us to make any comments on the availability of it.

[Operator]

Thank you, Sherif. [indiscernible], May I ask you to unmute yourself?

[Unknown Analyst]

You've been historically mostly exposed to the spot market, while also having some time charter cover, especially on the LR2 side. But, you shifted towards higher spot exposure over the past few years, which so far has been the right decision. How are you thinking about potentially adding some cover at prevailing period rates?

[Jens Christophersen, executive]

As you say, it's been a good decision for us to have a higher exposure towards the spot market for the past couple of years. And with time charter rates having increased as much as they have, we are also looking at increasing our coverage potentially. But this is something we value it as and when we go buy during the upcoming quarter.

[Unknown Analyst]

That's helpful. I also wanted to ask about the synthetic hydrocarbon your planned JV with Big Hill. What kind of time line is the project targeting? And secondly, should have ideally reached? What kind of equity outlay should we expect net to Hafnia?

[Unknown Executive]

Production will be in '28/'29 only. Equity wise, we are in it for the shipping. So that will be to invest in ships on those also long-term contracts.

[Operator]

I'm not actually seeing any more raised hands. I'll give a few more seconds in case anyone has any last minute questions. Otherwise, moving on to the Q&A box, I also don't see anything there. Okay. So then we come to the end of today's presentation. Thank you all for coming to the Second Quarter 2024 Financial Results Conference. We will upload the recording of this presentation to our website shortly after this. Thank you, everyone. Goodbye.