Compania Sud Americana de Vapores SA

SGO:VAPORES

Earnings Call Transcript 2021-Q3

[María Elena Palma, executive]

Welcome, everyone, to CSAV's third quarter conference call. First of all, we want to check if anyone speaks only in English. Otherwise, we will do the presentation in Spanish. So please raise your hand in case you need to be in English.

We have one person. So maybe we should move on in English, Oscar.

[Oscar Eduardo Hasbún Martínez, executive]

Yes, absolutely. That's alright. We're happy to speak in English to help foreign investors.

Okay, let's go ahead then with the presentation. Thank you for joining this call. And we're very happy to present very solid third quarter results. María Elena, you are moving the deck, correct?

[María Elena Palma, executive]

Yes.

[Oscar Eduardo Hasbún Martínez, executive]

Okay. We have in our CSAV results $1 billion in profits on the third quarter driven basically by the positive performance of Hapag-Lloyd and overall of the industry, which is since a few quarters already in a very special moment, given the congestion and the prices that have been increased substantially because of this congestion problems that I will try to explain once again a bit more during the presentation.

We are very happy also to have paid $450 million of interim dividend distributed in October 21. Since then, the price of the share has mostly recovered after the dividend, which is good because that's helping a bit the holding discount to be a bit smaller. And then when you look at the Hapag-Lloyd performance for the 9-month period, we have a very strong increase on the revenue mostly connected to higher freight rates, 66% year-on-year; and volume's a little bit more resilient to grow 3%, basically explained by the first half. Because as you will see on the third quarter, we have negative growth. Because the congestion was at its peak, thus eating up basically our capacity in traffic jams around the world, right? So we were not able to grow during the third quarter, and many of the liners were not able to grow because of the same problem.

But of course, this has been highly compensated by higher freight rates. Transport expenses also increasing. Since the beginning of the pandemia, we've seen a very significant increase on the transport cost, 11% year-on-year, mainly driven by handling and haulage. And also, we will see throughout the third and fourth quarter particularly higher bunker cost, because the price of the bunker has been going up together with the WTI, as you can see.

We've been integrating completely NileDutch, the acquisition we did in Africa. This is a small company, but finally it's been very attractive for us. Because Africa is a trade where we have a smaller participation, is one of the most -- the fastest-growing trades in the world. And the integration of NileDutch with our African operation is creating a lot of synergies, which will be very material when you will compare with the size of the deal, of course. Nothing that will move the needle very much at the overall volumes, but very significant for our operation in the particular region.

We have finally concluded, at the level of Hapag-Lloyd, the acquisition of a 30% stake at the container terminal in Wilhelmshaven. This is basically not creating any significant disbursement for the company. It's a very strategic acquisition because it will allow us to move significantly large vessels out of Hamburg, which is a difficult port to operate for very large vessels because of the river. And so will allow Hapag-Lloyd to have 2 main entrance ports in Germany. So this is very relevant also going forward for the operational continuity of our services and the things that we deploy to our clients.

In terms of new vessels, we have announced the conclusion of deal for 10 13,000 TEU vessels. 5 of them will be ours. 5 of them are being leased long term. Deliveries in 2022, 2023 and 2024. This is adding up to our order book of 12 23,500 TEU vessels, which will be 100% owned, all the 12 vessels, so thus creating a total order book for Hapag-Lloyd in the range of 24% of our fleet, which is quite aligned with the total order book of the market as you will see in a minute, which is also 23% of the fleet of the world.

We have announced also some new sustainability targets, very relevant for the current environment. We have announced a 30% reduction of the carbon emissions by 2030 compared to 2019, and 60% reduction of the carbon emissions compared to 2008. We are happy to say that we are quite on target to achieve these goals. So we expect this to be a success. Also, a little bit ahead of what the IMO is planning. We've announced we expect to be net zero carbon by 2045. We'll see this is a very ambitious target. For that to happen, honestly, the industry needs a new technology. Because today, there is no propulsion system which can run at zero carbon emission and is let's say, sustainable in terms of being available everywhere where we need it and for the distances we need and for the quantities we need. But of course, we expect that significant money will be deployed in this kind of friendly environment fuels. And then we should be able to take advantage of that new technologies.

Yes, let's move on the next. Well this, we've shown a few times already. But here what you can see is what happened since the COVID started in the first quarter of 2020 with the global demand. You see that on the first 6 month of 2020, we saw a shrinking plunge on the global demand, which was rapidly absorbed by a reduction of the fleet being deployed. We -- the industry basically idled around 10% of the fleet of the world at that time, thus creating a very stable situation in terms of the utilization of the systems. Rates were more or less flat in 2020 compared to 2019. So that did not affect very much the rates, but it created a very significant shortage on stocks of the retailers. Because what happened in reality is that they were assuming that the COVID will create a shrinking of the demand of goods. What happened was that this didn't happen because of the fiscal stimulus all around the planet basically. We saw demand moving normally and showing in some of the markets, particularly in the U.S. So the market from Asia to the U.S. grew 2 digits all along.

The problem is that as they did not import adequately in the first half of 2020, that completely depleted the inventories of the world. Because they were selling the stock, the inventories, and then that was eating up the reserves. And that's the reason why since then if you go in any department store, you will struggle to find sizes, colors and products, because this has not been able yet to be recomposed. Then we saw, of course, a lot of companies trying to pick up on bringing more stock of goods. And that's been creating significant congestion, particularly in the U.S. where we've seen a 2-digit growth on a very large market. And 40% of the cargo in the U.S. enters in the Long Beach port where the infrastructure is extremely weak. The infrastructure -- port infrastructure in the U.S. is weak in general. And that created a significant traffic jam where in November we saw a peak with 90 vessels waiting outside Long Beach. That creates, of course, delays everywhere, disrupts all the logistics chain.

And this has been also on top of this, we've seen shortage of drivers everywhere. And so the speed of the land-based logistics has been limiting the capacity significantly. We estimate this at around 20% to 25% less productivity. This creating, of course, that around 10% to 12% of the vessel fleet of the world has been stopped in a traffic jam is -- But it has, in practical terms, the same effect as if you would scrap the vessels or they wouldn't exist at all, right? So we saw a peak on demand been facing basically a logistic chain which has been strained by the problems of congestions in the U.S. and shortage of productivity provided by COVID and people who doesn't want to come to work to the same jobs they used to have. And this is something which has not been so far we saw. We expected actually that [indiscernible] will be spreading around.

Can I ask maybe for those who are not talking maybe to just turn off their mics? Because there's some background noise. That may be good to just -- I don't know if you, María Elena can block the mics. But anyway.

So what I was saying is basically big demand increase facing a less productive logistic chain in the land is created this scarcity of containers, scarcity of vessel space. And therefore, that has propelled the rates up, right? Unfortunately, this has not been so far resolved. People are not coming yet back to work. Probably costs will need to go up. They are already going up in terms of trucking in the U.S. and everywhere, because otherwise we won't be able to bring the drivers back into the trucks. And so probably what we will see, the aftermath of COVID is -- permanently increased cost of the logistics chain, probably not at the levels that you see today, but higher than what we saw before the COVID.

So well here, there is a lot of that on what I'm saying. I don't want to go deeper on this, unless on the questions at the end of the presentation, you guys want to have a bit more insight on this.

Well, this is talking a little bit about the same when you see the average berth duration so when the vessel is at berth at the port. The average time of that has increased 14% because you have to move 9% more boxes but the productivity of the terminal is 5% lower. So this is also, of course, keeping the vessels more time than usual at berth. But the time of the vessel which is not at berth but anchored outside also has increased significantly.

So all in all, we have a very inefficient use of the assets at the moment. And that's the main reason why you see the lack of space. We've at Hapag-Lloyd been taking a lot of different actions in order to improve this situation. I mean we've done a lot of work optimizing the network. We have moved capacity from trades of weak demand to trades of higher demand, so to be able to serve that extra demand. We have to bypass congested ports and rerouting cargo to alternative gateways. And this is not easy but is helping. It creates some disruptions but allows you to not wait 15 days outside a big port to get download.

We have also increased the number of vessels we are using. We have chartered secondhand tonnage. We have bought secondhand tonnage as well. And we're chartering additional vessels in order to deploy extra loaders, which are running in parallel to our more stable systems.

We have ordered a very significant amount of additional containers. We have invested on this around $1.5 billion in [ 20 month ] in new containers which is of course helping. But the additional containers are quickly being eaten up by the inefficiency of the logistic chain.

We have hired additional workforce IT capacity, digital solutions in customer satisfaction and quality. I mean you can imagine with these times, the quantities of calls we receive on our call center is just huge. So we have -- we needed to invest significant money on technology, on the customer service, but also in people, in terms of people. Rotation has increased a lot because clients are calling not very happy. And that doesn't help, of course, to keep the employees at the job position.

So -- but in general we're doing whatever we can in order to fulfill our contracts and really try to resolve this situation as soon as [indiscernible]. But honestly, there is so much we can do only.

Then when you see the rates, you see in general a very significant growth on the rates, rates that we haven't seen in the past actually. We see a bit of moderation, I would say, in the last 2 months in terms of the rate increases. Rates are being more or less stable at the moment, the spot rates I'm talking. In some trades, you see they are dropping. I'm -- I mean I'm of the opinion that there is a lot of hidden demand at the moment that you don't see. Because for many clients, small clients that needs to ship their cargo or import goods from somewhere, as they do not have contracts, they are not just able to get space or confirm their bookings not for today, not for a week, not for a month, not for 3 months. So they just gave up on trying to book their cargo. But I'm of the impression that when the logistics chain will recover their productivity, we will see a lot of this hidden demand coming back into the market, thus creating a long-lasting, I would say, full-utilized network, which is good news for our industry, of course.

Maybe the next? Yes. In here, we can see a little bit indicators which are talking about the moving cost. When you look at the red line above -- sorry, with the gray area above. We're talking about the charter rate index. so this is the price, at the one we are hiring the vessels. And this has gone up as the rates, so our cost also going up in these terms. Luckily for us, we own 60% of our fleet and charter only 40% of the fleet. There are others which are owning only 65, 30%, 35% of the fleet. For them, of course, the impact of these rates going up will be, in their cost structure, significantly bigger. But for all the industry will be a bit of a long-lasting cost increase because now, of course, as the ship owners have the benefit of extreme strong demand, they are trying to increase the rates but also to increase the duration of these contracts.

And most of the lines have been accepting these longer, more expensive contracts. And this will also change in a structural base for the next 3, 4, 5 years the cost structure of the industry. And that's why I can anticipate that the logistic cost will grow after COVID when you compare to pre-COVID. So this situation we see today will vanish at some point in time, will disappear, these extremely high spot rates. But when the rates will go down, they won't go down, in my opinion, to levels as they were before COVID. Because now the cost structure has increased, and this will stay for quite a while.

Below, you can see the bunker price. When you see the bunker, we didn't have much of an effect during the first quarter. Actually, the price, the average price was actually lower in the first quarter of '21 compared to the last quarter of last year -- sorry, the first quarter of last year because we have a January last year when the price was very high. Now we see on the third quarter and we will see even more in the fourth quarter a negative effect on the cost of the bunk, which will impact our cost, of course.

Well then when you look at the order book, we consider this 23% a healthy order book. We -- the lowest moment in time was 8.4%. This was just October 2020. This was an unhealthy order book because we knew that with that kind of order book, we will be missing vessels in 2023, 2024. That was a fact.

Well with the good times, the industry has come back to the yards and invested quite a big amount of money in a new fleet, which will help to reduce emissions but also to scrap older vessels and to absorb the growth that we see coming towards us. When you see how the demand and supply can move in the next few years, you can see the graph on the left there below where you see basically that there is not a significant gap between supply and demand. We need to also assume that scrapping will be higher. We have had a very significant drop in scrapping, almost none, obviously because the vessels are worth a lot of money at this point in time. So even if your vessel is inefficient, old and you need to invest a few million dollars to make it one, and even if it is spending a lot of fuel because of old-fashioned technology, still worthwhile running it, because at the current rates, almost any floating device can make money.

But as the rates start to come back to normal and this new order book starts to be released, particularly in 2013 -- sorry, 2023, we expect the scrapping to start moving slowly up and probably to move significantly up beyond 2025 when we will see a lot of the vessels already fulfilling more than 25 years, and eventually some incentives for the scrapping coming from CO2 tax and other things that will make very uneconomical old vessels to continue to be ramped.

[María Elena Palma, executive]

So now we will move on to Hapag-Lloyd's results. And here we see a bridge of comparing the EBIT 9 months for last year compared to this year. We see that most of the increase in the EBIT is explained by the freight rates, which went up 66%. And another smaller portion is due to 3% up in volume. This increase in revenues was partly offset by higher cost. That was a little bit of what Oscar was explaining. Higher bunker prices, higher vessel and voyage prices mainly by hiring third-party slots in third-party vessels. The most relevant increase is in the handling and haulage line, which is mainly the movement of these, of the containers within the port and in and out of the port. But generally all costs are coming up 15% compared to as of last year, and that means an extra additional cost per TEU of $161 million.

Now if we see the financial results of the 9 months compared to last year, we see a net profit considerably higher, 1,000% increase in profit. And so now the big question is basically how long will this last? And to give you some light on that, I would like to focus on basically the average freight rate over here that we see it has gone up compared to last year. And in that sense, we have to say that as Oscar mentioned, we are at the worst moment of the congestions since the pandemic started. But also, we need to highlight that even if we start seeing kind of a normalization in the system, spot rates will probably come down to a more long-term rate. But on the other hand, we will see that contract rates are also increasing. And in the case of Hapag-Lloyd, that contract volume is about 35% to 40% of overall volume. So even if we see a stabilization in the industry, it will not impact us quickly this result as we can expect on other companies, for example, that are more exposed to the spot rate.

Now if we see Hapag's transported volume, we see that all trades are coming up except for 2, which is mainly the intra-Asia trade where Hapag has been moving some fleet to position those vessels in more profitable trades. And also, the transpacific trade has come up slightly, 1% -- has come down, sorry, slightly 1%. That's mainly associated with the congestions and lower rotation of the containers.

Now if we see the freight rate, all trades have shown an increase in the freight rates, especially in the Far East, intra-Asia, transpacific and Middle East trades, rate has come up 66%. But the 2 main takeaways of this slide is probably that we see a very diversified portfolio globally. The company has a very diversified trade view on the long run. And also, the Hapag Lloyd has been taking action to have a more flexible capacity management in order to, on one hand, take advantage of the momentum of some trades; but also on the other hand, being able to fulfill properly its commitments and contracts.

Now this is a benchmark of Hapag-Lloyd and other players in the container shipping industry. We see that Hapag-Lloyd in terms of volumes, it's the fourth largest company in the industry. And it's interesting to see that most of the Asian companies such as COSCO 1, Evergreen, Hyundai, Yang Ming has had a huge jump in terms of freight, in terms of EBITDA and in terms of EBIT during this year. That's mostly associated with their exposure they have on the spot market, which in the case of Hapag, it's lower than their position. So they have been able to take to -- being able to take a better -- to have better results during this year, especially on those most profitable trade, especially in the transpacific. But if we look at and we see the long run and the long-term profit, their profits are the ones that are going to be coming down quicker than ours.

And then it's also important to highlight that even though Hapag is having a huge EBIT margin and EBITDA margin right now and -- but it's a little bit smaller compared to the other Asian companies we were discussing, we need to remember that before the pandemic, Hapag had the best EBITDA margin of the industry for 8 quarters in a row.

So now if we see Hapag has updated its outlook for the year, we see the EBIT coming up to something in the range between $10.3 billion and $11.3 billion. That's -- it's a little bit over 25% additional EBIT for the year. And so this is part of the shortage that we've seen in the industry as a whole and how thus that has impacted the freight rates.

Now I will turn to Roberto, who will speak more of the CSAV financial results.

[Roberto Saenz, executive]

Okay...

[Oscar Eduardo Hasbún Martínez, executive]

Roberto, [Foreign Language]

[María Elena Palma, executive]

[Foreign Language]

[Roberto Saenz, executive]

Our net income for the -- for this period on 9 months of 2021 was almost 2 billion. This is the rightful profit of the company, 2 billion. And this is explained mainly with the participation of the result of Hapag-Lloyd and you can see in this table.

The next slide, please. This is the bridge of the results. As you can see in the first 9 months of 2020, we have a result of 120 million. And the main variation of the -- of this year is an increase in the result of Hapag-Lloyd of 1.8 billion and an increase of 51 million of the deferred taxes. This is because in 2020, the -- of euro -- appreciation of the euro against the dollar. And in this year was the opposite, a depreciation of the euro and the dollar. Then this produced this earning for us. These are the 2 main variations, and they increased the 120 million to almost 2 billion in the first 9 months of the year.

The next please. This is our cash flow. And you can see the only income, what we have is the dividend that we received from the Hapag-Lloyd of 220 million. And our outcome this year was the payment of [indiscernible] of 9.6 million, the reduction of debt of the $80 million; and the dividend -- a payment of a dividend of 170 million in May and June of this year.

With that, at the end of the period, our cash is 35 million. And this amount is enough for -- to cover all our [ ESG ] until the next dividend, what we receive in 2012 -- 2022 from Hapag-Lloyd.

The next please. Regarding our balance sheet, you can see for the assets side, we have an increase of 1.7 billion due to the recording of the Hapag-Lloyd result. This is the main [ explanation ].

In the liabilities side, as indicated below, we reduced the 80 million of debt, and recorded the mandatory dividend to be paid next year by CSAV. In Chile it is set at 30% of the net profit. And the equity has an increase of 1.3 billion, and this is the -- our -- this [indiscernible] the proportion of our results of the first 3 quarters.

And about some indicators, the -- our net debt is 115 million. We have the financial debt of 150 million, the cash I indicated before of 35 million; and then our net financial debt is 115 million. We are showing 3 another indicators. These trade shows is we have for our bonds. And you can see all of them are complied loosely with that is in all of them. The next one.

[María Elena Palma, executive]

Thank you, Roberto. That was the last slide.

And now we can move on to the Q&A session. And please feel free to ask your questions in Spanish or English.

[Oscar Eduardo Hasbún Martínez, executive]

I -- Yes. I would -- okay, let's go ahead.

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

Okay. I'll translate your question briefly, and I will answer in both English and Spanish, okay?

The question is basically whether the current situation on the rates might be prolonged, and for how long? And what about the strategy of Hapag-Lloyd, by assuming more contracts going on a longer duration, vis-a-vis the current structure of contracts that we saw in the last 10 years?

Well, to your point, our view is still very much the same. I think that today and when you look at the November, we've seen the highest congestion during the pandemia, right? So if the congestion does not release itself, the problem will not be resolved. I expect, right, that slowly people might go back to work normally, that drivers will go back to their trucks. And that might start to release a little bit of capacity throughout the next year. But that capacity being released, you still need to move, in our estimates, about a month of inventory of goods, right?

So let's assume the following. If you free, you recover completely the productivity of the land-based logistics chain, let's say, that might free about 10% of the fleet, which is today stuck in a traffic jam. If you release 10% of the capacity and you need to bring 1 month of stock of goods worldwide, you would need 10 months just to move that stock in that 10% [ freed ] space, right?

So my assumption is that even if you would recover the productivity, the network will be still quite full for quite a long period of time. Which doesn't mean that the spot rates might not drop, because the spot rates may still drop. But the utilization of the fleet will be significantly high, and this is good for our business, right?

In terms of the contracts, yes indeed, what we've been trying to do is to sign contracts which are longer. And the contracts which will be renewed now by this contracting season, will be significantly higher in terms of prices than what they were during 2021. Therefore, if spot rates remain the same throughout the first half of the year, right, and the contracted rates are higher, and they will be higher, then you will see first quarter and second quarter probably a very solid result also. But that, we cannot anticipate at the moment because maybe the spot rates start to drop a bit in a bang. So -- but we will create a significant cushion in terms of these new contracted rates.

[Foreign Language]

[Unknown Analyst]

Okay. [Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

Sorry. For the English-speaking part of the presentation, the question is basically the level of CapEx of the industry, the -- how the rates of Hapag-Lloyd will be composed in the near future.

And the answers are basically that in terms of rates, we are contracting, we hold around 10% to 12% of our total volumes in 3 years contract, which are being signed during this month and the next 2, 3 months. Then another 30% of our volumes will be probably contracts, as usual in the industry, for 1 year.

All these contracts will be signed at higher rates broadly than last year, which will provide Hapag-Lloyd a cushion in the event that the spot rates will start dropping next year, so that this will provide definitely a cushion.

And for the rest, the 60% of the remaining part of the volume, We have all kind of flavors of short-term contracts, 6 months, 9 months, 3 months, or actually total spot. So for a significant portion of our volumes, the spot which will continue to be, of course, relevant.

In terms of CapEx, what the answer is, is that I personally consider the 23%, 24% of order book in line with what the industry needs to replace the 4% depreciation we have every year. That we should have a scrapping of 3.5%, 4% every year, and we don't because the fleet is a problem, and we don't have enough vessels to scrap them today, particularly because of the congestion. So you -- half of the order book you see today is basically to replace depreciation.

And the other half is basically growth, which is another 3.5%, 4% per year. So 23%, 24% seems to be healthy for the industry. Lower than that, I think we enter in the danger of lack of capacity, which is not good. And significantly more than that, you run the risk of overcapacity, which again is not good for the industry.

Sorry for the extension. I don't know they are...

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

Sorry, I'll try to answer in English. The question was whether what kind of dividend we can expect actually, and whether the first and second quarter of next year might be better than this one, given the fact that we will contract rates at a higher level than what they were during 2021.

Well, for the second question, honestly I have no answer because that will depend pretty much on what the spot rate will be on the first and second quarter, and that's very difficult to estimate at this point in time. But yes, if the spot rates will be let's say, equal to those of the last 2 quarters, the first 2 quarters could be better because of the contracted rates being higher. But this is something that I'm not in a position to estimate properly at this point in time.

The second question was regarding dividends. And what we can say about that is that we have a shareholders' agreement at the level of Hapag-Lloyd, which assumes minimum dividend of 50% of the profits. And at the level of CSAV, what we've said in an essential information given to the market a long time ago is that we will make the effort to distribute 100% of the free cash flow coming from Hapag-Lloyd. So to the dividend we will receive from there, I expect to deduct expenses and to keep security cash position until May 2023, which will be the next date when we will receive the dividend. And all the rest should be distributed.

So if you put yourself in the middle point of the results of Hapag-Lloyd, which is in the range of 10.4 billion, right, in the minimum or in the middle range, then you can estimate that the dividend -- that we will receive an amount of money between 1.5 billion or 1.6 billion altogether. And so we should distribute very much the same to our shareholders. This is an assumption that Hapag-Lloyd will pay 50% payout ratio, which is less than what we paid last year. But this number needs to be yet discussed at the level of Hapag-Lloyd Supervisory Board and with the other shareholders. Because as in Chile, the dividend is something which is approved on the shareholders' meeting, which will take place by the end of May in Germany.

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

The question -- just allow me to translate a bit the answer. The question was, what do we expect from the price of the share? Why it is still not ramping up?

Well, and I have -- I don't have a good answer, to be honest. I think that we've been doing and we are doing and we will continue to do everything, what is at our level, feasible to transmit to the market that we believe that the company is stable, that we have a very good result, that we will have a very significant dividend yield, and that we have a very good agreement at the level of Hapag-Lloyd in order to keep continuing distributing dividends. And we will distribute dividends here also as our free cash flow allow us. So we are not looking for projects which are outside the perimeter of Hapag-Lloyd. We're not a holding. So I expect that with the time, the price should correct, hopefully. I mean If it doesn't correct, you will get paid basically a significant portion of your investment in the dividends of the -- this year and the next one. That would be my impression. So my -- so for me, it seems like a good opportunity.

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

I would not -- well, the question was whether I thought that the political disruptions in Chile might be damaging the results of the company. And my answer to that is basically for our underlying assets, Hapag-Lloyd, the volumes that Chile represents are really minor. They are not relevant for our business in general. But of course, as CSAV is a Chilean stock entity, whatever risk that the political environment might bring can affect, of course, the value of our share. Because if there will -- I mean if somebody wants to impose significant tax on capital gains or in dividends or increase corporate tax for the companies, all of this, of course, might affect the prices of the Chilean stocks. But we are trading at, I don't know, at a 65% discount of what the underlying assets. So I would guess that most of those risks are already absorbed in the current value of the share. That will be at least my take.

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Roberto Saenz, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

The question was our tax structure basically. Not structure, but the company has tax loss carryforward. And we have a structure also where the German entity, which is holding the Hapag-Lloyd shares, has a debt towards the quarter here in Chile. So the dividends are that Hapag-Lloyd is paying in Germany are coming back into Chile as capital repayments of this debt. So until we start paying real dividends from Germany to here, we will not be paying taxes in Chile. But probably that total credit might be very much reduced with the dividends we will be paying this year. And then we will start using the tax loss carryforward in Chile, which might cover another $800 million of profits -- of dividends. And then we will need to pay normally the corporate tax in Chile, which is 27%. And all the payments we will do from Germany, we'll pay withholding tax, but that will be used as a credit in Chile. So the total tax -- taxation will be on the range of 27% still, after we have distributed around $2.4 billion, $2.5 billion of cash from Hapag-Lloyd to our shareholders.

[Foreign Language]

[María Elena Palma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

Now the question was whether we give long-term forecasting of our EBITDA, and the answer is we don't. I mean there is a very significant part of our business which is connected to the spot rate, which is extremely volatile. And therefore that makes it very difficult to give meaningful forecasting to the investors that can drive a decent calculation of what will happen.

But what I'm actually eager to say is that, at least in our view, is that we will be without any problem, I would say, within the next 10 years. Able to recover our cost of capital, so we will be making profits. That's our impression.

[Foreign Language]

[María Elena Palma, executive]

[ Juan Cuevas ]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

Yes. Okay, yes. [Foreign Language]

[María Elena Palma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Roberto Saenz, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Roberto Saenz, executive]

[Foreign Language]

[María Elena Palma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Oscar Eduardo Hasbún Martínez, executive]

[Foreign Language]

In the meantime for our foreign investors, sorry for a little bit of confusion between English and Spanish. We're very happy to have you on our call. And we are finishing now the call, and I will probably stay only with a few investors in Spanish. And thank you for joining today's call. Hope it was clear.

Whatever needs you may have, you can contact directly our Investor Relations. And we will continue doing road shows for the next quarter. So thank you for joining today's call.

[Foreign Language]