Jinhui Shipping and Transportation Ltd

OSE:JIN

Earnings Call Transcript 2018-Q3

[Wei Man Ching, Vice President]

Hello, everyone. This is the Raymond Ching from Jinhui Shipping. Can every -- can you all hear me? Hello, can you hear me, guys? Someone let me know, please. Yes or no. Yes, good. On behalf of Jinhui Shipping, thank you for calling in for the Q3 2018 results presentation. I believe, you all had a copy of the results as well as the presentation, so I shall begin.First of all, going through the highlights of the financials. For Q3 2018, revenue for the quarter is USD 18 million. We have recorded USD 6.5 million of net profit for the quarter, with EBITDA standing at USD 11.6 million. Basic earnings per share USD 0.059. We have reduced our gearing [ ratio as at 30 ] September 2018 at 1%.On the brief highlights of activities or events that happened during this quarter. The group exited and ended the intercreditor deed. As of the end of December 2017, we repaid all deferred installments during the forbearance period of USD 31.4 million to the respective lenders from internal resources in the beginning of the year as of January 2018. In order to reduce further interest expense, in anticipation of an interest rate upcycle, 2 vessel mortgage loans of $19.1 million with high interest margin were fully repaid. We have set up new bank loans -- revolving bank loans of USD 12 million for working capital purposes, in case we need it. We have reduced bank borrowings from $137.8 million as of the end of 2017 to $85.2 million as of end of September 2018.In order to shore up our finances, we dispose of 3 older Supramaxes in Q3 2018 for $25.7 million, recording a net gain of USD 5 million.In order to diversify our income and not rely on purely basic shipping assets, we will invest -- we've invested a moderate USD 8 million in real estate market. In order to extend the debt maturity profile of our existing debt, we have refinanced our loans, which was completed in October Q4, and the results will be -- we'll show you the results of the refinancing in the latter part of this presentation.On the next slide, a more detailed financial highlights for the quarter and the 9 months ended September 2018.For Q3 2018, as we mentioned just now, the revenue was $18.3 million. For the full 9 months 2018, revenue was $58.39 million -- $58.4 million, [ roughly ] . This represents for the 9 months, it represents a 11% gain. In terms of the gain on disposal of owned vessels that was all happened in -- that was all booked in the Q3 2018 and that's $5 million, and no impairment loss on assets held for sale. Operating profit as of Q3 2018 was $7.26 million. And for the 9 months 2018, it's $14.128 million. For Q3 2018, we have approximately $6.5 million net profit. And for the full 9 months 2018, we have a net profit of $11.8 million.For Q3, [adjusted ] quarter, the basic earnings per share is USD 0.059. And for the full 9 months, so far, 2018, it's USD 0.108. These figures represent a significant improvement from those from the figures in 2017.In terms of the financial ratios, as of Q3 2018, we have total assets of -- roughly rounding it off USD 360 million against debt of USD 85.2 million. The return on equity is 2.57%. Return on total assets 1.8%. Current ratio 1.53. Net gearing of 1%. And still fairly healthy available liquidity of -- [ opposed to ] rounding it off USD 83 million.On the next slide, it shows our fleet development. We now have 20 vessels in our fleet. We believe for -- at this juncture, for the time being, this is the right size. And on the next slide, it's the details of our fleet, which comprises of 18 Supramaxes and 2 Post-Panamaxes. The average age of our fleet is now just over 10 years. On the next slide, on the debt maturity profile, Page 9 of the presentation, this shows our debt maturity profile before the refinancing exercise.On Slide #10, it shows our debt maturity profile after we have concluded the loan refinancing. So after the refinancing, 24% of our total outstanding loan, which is at USD 85 million, 25% -- 24% of that will be repayable within 1 year; 10% will be repayable within 2 years; 30% will be repayable between 2 to 5 years; and 36% will be stretched out over 5 years. We believe this allow -- gives us a lot more financial flexibility.On the next slide, the cargo volume analysis, as of Q3 2018, 91% of our cargos were carrying minerals with 9% steel products. Coal has not been our freight in this quarter. On the next slide, Q3 2018 the loading port analysis. 94% of our cargoes were loaded in Asia, excluding China and 6% from Australia.On the next slide, on the discharging port, 99% of our cargoes are discharged in the Chinese ports, 1% in Asia, excluding China. So China is a very important market to drive our freight at least for us anyway.On the next slide, on the time charter equivalent of our own vessels, as of Q3 2018, our Post-Panamax fleet as the time charter -- the TCE for our Post-Panamax is USD 11,245 per day. Our Supramax fleet, the average TCE is USD 9,967. And on average, it's USD 10,096 per day. We can see a good healthy increase on our TCEs compared to same quarter in 2017 as well as when you compare the 9 months figures in 2018 versus 9 months figures in 2017.If you look at the TCE numbers and compare them with the cost side of our own vessels, which is on the next slide, we believe we're in good healthy territories to generate a healthy profit from our fleet.As of Q3 2018, our total cost of vessel, including finance costs and depreciation is $6,344 per day. If we just look at just the running costs, again, we have kept it in check the running cost is now USD 3,881 per day. Finance cost USD 364 per day. Now the daily running cost is calculated as the aggregate of crew expenses, insurance, consumables, spare parts, repairs and maintenance and other vessels' miscellaneous expense is divided by ownership days during the period.We recorded a drop in the finance costs, mainly due to reduction in loan principal from repaying all deferred installments of the loan restructuring in early 2018. And we also repaid 2 vessel mortgage loans with high-interest margin in the first quarter of 2018.We believe all these are actions that we have taken has resulted in driving the cost down, although [ it's the interest rate is still it's ] driving down the cost side of our business, allowing us to have higher operating leverage should the market improve in the coming future.In terms of outlook, outlook is beyond, of course, the first 3 quarters, we're now in November already. I mean, it's no -- it's public information, everybody knows this, market sentiment has weakened lately. There's a general fear, not just in shipping, but in all business or different industries that there is a fear of a global slowdown, mainly because of the instability in the global geopolitical arena, mainly because of the U.S. China trade dispute. This continues to hinder business sentiment. And looking at how things are evolving, it doesn't look like that it will end in the short term. Of course, this is -- no one has a crystal ball, we are all now witnessing what will happen in the next few days, how the leaders of China and United States, how they will interact with each other. For us, China is an important market. Of course, we watch very closely on the economic growth in China. And of course, I think in this kind of sentiment, economic growth in China will somewhat be affected, although the renewed focus on infrastructure and more fixed asset investment in the shantytown, et cetera, is a positive.On the bright side, we believe in the growth in the trade volume in the dry bulk market, especially the commodities [ vessels ] to be discharged in China will remain stable. The growth in the absolute trade volume might be low figure, but let's do not forget that the pie has grown so large that a moderate percentage of growth increase still makes a big difference in terms of the absolute volume.Now of course, from our perspective, the most important is that the supply of new vessels continue to [ be ] moderate, to be under control. We believe that is the -- an ultimate factor for healthy freight market.Despite having a very healthy balance sheet right now, because of the uncertainty on the global economic trend as well as regulations in our sector, for example, the 2020 sulfur cap, right now we do not have any plan for capital expenditure in terms of new buildings. However, we've been watching how things unfold, and we remain to be very cautiously optimistic and a key, again, we had -- we do not -- we cannot stress enough is to remain financially nimble. That's all for me. And I will take any questions that you may have.

[Wei Man Ching, Vice President]

Anyone has any questions? If no one has any questions, I shall call this end. Anyone has any questions? Okay. Thank you very much for dialing in. Thank you for supporting Jinhui Shipping. We'll do our best to continue to generate good results in the coming quarters. Thank you.