BALT was designed to be a pure play, based upon the day rates of the BDI. Within the BDI, there are numerous rates, depending on the size of the ship. The biggest ships are Capesizes; BALT owns two of them.
Do you know where day rates were for Capesizes when they reported earnings?
Answer: $5,000 per day.
Do you know where they are now?
$41,000
If you combine all of their ships together and figure out what they make on a daily basis, based on today’s rates, that number is $15,000 per day. If you take that 15k times 11 ships by 90 (days in the qt.), they stand to do $13.5 million in revenue.
Do you know what they did last quarter?
Answer: $6.5 million.
Their net income break even number is $13,000 per day, meaning, at current levels, the company is operating in the black and will most likely return earnings back to shareholders, as it is company policy to do so. They currently pay a 1 cent divvy, despite operating in the red.
There isn’t a risk of dilution, because the company just raised $60 million. Instead, they will take said cash to buy more ships, investing in their business at a time when it makes sense. Not too many shippers can do this, since they are burdened with crushing debt loads.
Talking with management and people in the industry, I can tell you that demand for iron ore out of China is real. They aren’t restocking either, since inventories are low. They’re probably using it to build tanks to fight us in a world war. On the supply side, fleet growth is stymied at a paltry 3-5% this year, at least 10% off historical averages, due to scrapping and the inability for many shippers to finance new builds.
Throw all of the valuation numbers out the window. This company isn’t trading 5x sales, but 2. Analysts aren’t even updating their numbers–because they missed the move. No one is calling the company!
Like it or not, analysts will need to bring their guidance into line with reality, which will shock and surprise many, who will find out for the first time that these companies are growing at 100% clips on a quarter to quarter basis.
There isn’t a better growth story.
http://www.youtube.com/watch?v=gAjwV0ll03Y
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