Capital Link hosted a presentation by the senior management of Star
Bulk Carriers (NASDAQ: SBLK) on Tuesday, January 10, 2023. During
the 45-minute session, Hamish Norton, President, Christos Begleris,
co-CFO, Simos Spyrou, co-CFO, Charis Plakantonakis, Chief Strategy
Officer, Nicos Rescos, Chief Operating Officer, Constantinos
Nanopoulos, Deputy CFO, and Constantinos Simantiras, Deputy Chief
Investment Officer & Head of Market Research, gave a slide
presentation and responded to viewers’ questions regarding the
company’s fleet, ESG efforts, and outlook for the dry bulk industry
as part of Capital Link’s Company Presentation Series.
REPLAY OF THE FULL SESSIONA replay of the full
session of the presentation and the extensive Q&A can be
accessed at: https://youtu.be/yDnqijY8jcE
Highlights from Star Bulk’s session at the Capital Link
Presentation Series include the following:
Star Bulk Carriers FleetWith a fleet numbering
128 ships, Star Bulk Carriers is the largest publicly traded dry
bulk shipping company. While the fleet, which has an average age of
10.4 years, is diversified in terms of size and cargoes, a little
over 50% of Star Bulk’s vessels are the larger Newcastlemax and
Capesize ships.
As President Hamish Norton noted, since 2018, the company has
doubled its fleet size through several M&A transactions, where
shipowners got shares for their fleets and several of them joined
the Board of Directors. Notably, Star Bulk’s Board of Directors is
made up of institutional investors, shipping experts, and
shipowners. “We act like shareholders, we think like shareholders,
in part because we are shareholders,” Hamish stated. “And as the
result of this strong governance, management is incentivized to
focus on shareholders returns.”
Continued Improvement of Balance Sheet As of
November 15, 2022, the company’s total liquidity has reached $417
million, while its total gross debt totals to $1.36 billion,
Christos Begleris, Co-CFO, said.
The company has been focusing on refinancing older facilities,
with the goal of reducing debt interest costs. In the last two
years, Star Bulk’s strategy involving refinancing of about $800
million has saved the company around $15 million in interest costs
per year.
Star Bulk’s adjusted net debt has been reduced by 43% since
September 2019 to $946 million by November 15, 2022, while its cash
and liquidity has increased by 256% to $417 million in the same
period.
Focus on Dividend Policy Hamish Norton,
President, highlighted Star Bulk’s focus on its dividend policy.
Quarterly, after accumulating a minimum of $2.1 million cash per
vessel on the balance sheet, the company distributes the excess as
a dividend.
He stated that during the last twelve months, adjusted EBITDA
was $1.03 billion, adjusted net income was $819 million and the
company distributed dividends of $6.50 per share or $669 million in
total. Scrubber Investment Fully Repaid –
Benefits the Bottom LineStar Bulk’s fleet is almost
entirely scrubber fitted—with 120 of 128 vessels equipped with this
technology.
As of June 2022, the company has repaid the entire cost of its
scrubber investment.
The Hi5 bunker spreads hovers currently at around $200 per ton
and Star Bulk captures more than 95% of it. Nicos Rescos, COO,
stated that he expects the spread to remain elevated throughout
2023 and provided a sensitivity analysis for the scrubber benefit.
Indicatively, at the current spread of $200, this could translate
into an annualized scrubber benefit of $140 million.
Vessel Operating Expenses Among the Lowest in Industry –
Top Safety RankingsStar Bulk has one of the lowest average
OPEX costs in the dry bulk industry, with costs averaging $4,769
per vessel per day in Q3.
Also, the company has one of the lowest overheads per ship per
day in the industry, with net cash G&A at $950 per day for Q3
2022.
Additionally, the company consistently has been among the top 5
dry bulk operators in the Rightship Ratings and achieved the top
rating in September 2022.
Commitment to ESG EffortsThe company is
“committed to reporting transparently” on its ESG efforts, Charis
Plakantonakis, Chief Strategy Officer, stated. She noted that, to
this end, Star Bulk has published its comprehensive ESG report
annually for the last four years.
Its milestones in terms of its ESG efforts in the past year
include the use of advanced vessel performance systems, as well as
the wide implementation of technologies that improve the energy
efficiency of their vessels.
Star Bulk also participates in the Carbon Disclosure Project,
which aids companies in actively decreasing their environmental
impact by both identifying areas for improvement as well as
heralding positive steps the company is taking for the planet.
The company received a B rating in 2022, an improvement from the
B- score it obtained the previous year.
Its employee wellbeing program, which includes flexible working
schemes, mental health support, and employee engagement activities,
is an essential part of the company’s ESG efforts, Plakantonakis
stressed.
Supramax Segment “Very Weak” But Expected to Recover
After Chinese New YearConstantinos Simantiras, Deputy
Chief Investment Officer & Head of Market Research, said that
in the next two years, he expects the “relaxation of strict
zero-Covid policy and the reopening of the Chinese economy to have
a very positive effect for dry bulk ton miles. It should benefit
larger sizes.”
Simantiras noted that the Supramax segment “… is definitely the
weakest sector in dry bulk industry right now and especially in the
Pacific. In the Atlantic the market is slightly better,” he
continued. “We do believe that there will be a recovery after the
Chinese New Year,” he asserted.
Simantiras stated that “Especially on the smaller sizes, such as
Supramaxes, the demand starts to go through its seasonal downturn,
which begins around November and bottoms out by February.” He
expects demand to increase after the Chinese New Year, which occurs
in late January, and the Latin American grain season, which takes
place in Spring.
Capesize Segment to Experience GrowthIn terms
of Capesize vessels, Simantiras stated that the sector is expected
to experience a boost this year due to China’s announcement of a
stimulus and support for the real estate market in the country.
This, along with China’s decision to postpone plan to reduce
emissions from the steel industry, “should provide a significant
upside over the next years and a very strong demand case for the
dry bulk industry,” he said.
“It’s worth noting, though, that since November Chinese imports
have experienced a major rebound and we are definitely at the early
stages of the demand recovery,” Simantiras continued.
“Not the Right Time” for Fleet RenewalWhen
asked how the Company plans to renew its fleet in the coming years,
Norton stated that the company does not believe that it is “the
right time” to renew its fleet, citing the expense of newbuilds as
well as the lack of adequate technology regarding
decarbonization.
Norton stated that, when the time comes to renew the fleet, the
company may do so through ordering or corporate acquisitions. Star
Bulk would likely finance that strategy with “equity and some
debt,” he said. Norton stressed, however, that the company would
only do only at the right pricing level and if decarbonization
technologies were advanced.
CAPITAL LINK – DISCLAIMERCapital Link is
hosting a series of online Corporate Presentations, whereby the
Senior Management teams of leading listed maritime companies
present their business development, strategy, growth prospects, and
overall sector outlook. The presentations are approximately 45
minutes and consist of a company presentation followed by live
Q&A between company management and webinar participants. All
presentations in the series can be accessed
at https://webinars.capitallink.com/2023/company_presentation/.
The webinars, including the ones mentioned above, are strictly
for informational and educational purposes and should not be relied
upon. They do not constitute an offer to buy or sell securities or
investment advice or advice of any kind. The views expressed are
not those of Capital Link which bears no responsibility for
them.
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provides Investor & Public Relations and Media services to
several listed and private companies, including companies featured
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