DryShips: A Hidden Gem by: Michael Bryant
December 06, 2010 | about: DRYS
Dryships (DRYS) 3rd quarter earnings:
Consensus: $0.25 a share on revenue of $216.92 million
3rd Quarter Profit was $49 million, or 0.18 a share, up
from $31.4 million, or 0.11 a share, a year ago. On an adjusted basis, the company earned 0.38 a share. Revenue was $225.5 million, up from $222.2 million.
Therefore, DRYS beat on earnings and revenue.
But more importantly, the deepwater drilling segment may have just started to pay off. On November 11th, it reported signing its second order. More may be on the way. As oil becomes less abundant on land, oil majors are turning to deepwater oil fields. Petrobras (PBR) found a massive deepwater oil field off the coast of Brazil a few years ago. To drill in deepwater takes special ships and equipment to do.
And the ships take a very long time to build. Therefore, Dryship’s deepwater drilling segment has an advantage. As demand grows, more contracts should come.
Dryships has proposed spinning off its drill unit for a long time. It has already proposed a $500 private offering. But when its public offering does happen, Dryships’ shareholders should get these spin-off shares on the cheap. At about $5.86 a share, how much is the drill unit worth? The first contract was $160 million. The second contract was $77 million. So that is $237 million there. From the private
offering last Friday, a 20% stake in the drill unit is estimated at $500 million. So 100% of the drill unit is supposedly worth $2.5 billion. That is well over the company’s market cap of $1.82 billion. From this, clearly the shares are undervalued.
But Dryships still has its main business, shipping everything from coal to grain to iron ore. As the global economy expands, shipping of dry bulk materials will become more in demand. One of the main reasons the stock fell from $150 a share to $1 a share was because the Baltic Dry Index plunged 96%. Though the stock has recovered some, it still has more to run. And most of the company’s ships are now on a
long term contract which makes the stock less vulnerable to fluctuations in the Baltic Dry Index. Thus, shipping rates are mainly fixed for the near future. The main business has to be worth more than $0. Just the ships have value.
A forward P/E of 5 and a price to book of 0.55 (according to Yahoo Finance) tells me that the shares are still cheap. Plus, the market cap is about one-third of the enterprise value. Thus, theoretically, the company is selling for one-third of its value.
6-12-2010 DryShips: A Hidden Gem -
seekingalpha.com/…/240185-dryships… 1/2
Disclosure: I am Long DRYS.
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DryShips is spotgoedkoop en biedt grote kansen naar boven; een echt contraire aandeel.
Interessante tip... hoe lang zou het duren voor er serieus beweging in het aandeel komt (en komen we ooit weer bij die 150 dollar)?
BeantwoordenVerwijderenBrun,
BeantwoordenVerwijderenje stelt 2 vragen die niet te beantwoorden zijn...!!
Ik heb ze gekocht rond de 5,25 en ik wacht rustig af tot er wat gebeurt (of niet!).
Goeie tip Precies.
BeantwoordenVerwijderenZowel shipping als deepwater drillships lijken een gouden toekomst tegemoet te gaan.
Als ik winst ga nemen in Xcite, nog niet voorlopig, lijken ze me een goeie ML/LT belegging.
Maar er zijn er zoveel.
EMGS, Elektromagnetic Geoscience, in Noorwegen bijv.
Ooit nog een andere tip van je die wel even tijd nodig had, maar dit jaar ruim 40% up. En groeipotentie.
EMGS is een heel mooi verhaal geworden: gekocht rond ca 3,50, gedeeltelijk winst genomen bij 7/8, weer teruggekocht rond de 5 en weer gedeeltelijk winst genomen rond de 10.
BeantwoordenVerwijderenIemand nog een mening over ATPG?
BeantwoordenVerwijderenGroeten,
Mark
Hmmm, volgens de commentaren onder dat artikel heeft DRYS een geschiedenis van share dilution en onbetrouwbaar management?
BeantwoordenVerwijderenhttp://seekingalpha.com/article/240185-dryships-a-hidden-gem?source=TheMotleyFool
Zie ook http://www.forbes.com/forbes/2008/0225/095.html
BeantwoordenVerwijderen-----
BeantwoordenVerwijderenResearch on DryShips Inc. and Genco Shipping & Trading Ltd. - Dry Bulk Shipping Beginning to Improve
Symbol Price Change
DRYS 6.33 0.00
December 13, 2010, 8:09 am EST
JOHANNESBURG, SOUTH AFRICA--(Marketwire - 12/13/10) -
The dry bulk shipping industry is starting to show signs of life again. The recession was exceptionally hard on the industry and left many companies heavily burdened with debt. Sharp, sustained drops in demand were the primary reasons for the industry's undoing. Many companies throughout the industry were forced to sell more shares to generate capital, diluting the value of existing shares. Visit www.stockcall.com/ to see how companies in this industry have grown over the past years and how they are expected to perform in the future.
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http://finance.yahoo.com/news/Research-on-DryShips-Inc-and-iw-1982159143.html?x=0&.v=1
DryShips Receives $495 Million Contracts for Two Rigs
BeantwoordenVerwijderenBy Moming Zhou- an 4, 2011 4:55 PM GMT+0100
DryShips Inc., a Greek owner of deep- water drilling rigs and vessels that haul iron ore and coal, said it received two contracts worth a combined $495 million for two new rigs that will be delivered this year.
DryShips subsidiary Ocean Rig entered into a contract with Petrobras Tanzania for Ocean Rig Poseidon for a period of 600 days for $353 million, the company said in a statement.
Another new rig, the Ocean Rig Corcovado, has been contracted out to Edinburgh-based Cairn Energy Plc for a period of six months, the company said in a separate statement. The value of the contract is $142 million.
DryShips signed a deal in October with subsidiaries of Houston-based Vanco Overseas Energy Ltd. for the new rig Olympia. A fourth new rig, the Mykonos, is waiting for contracts.
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BeantwoordenVerwijderenLeasing costs for capesizes, 1,000-foot-long ships hauling iron ore and coal, will drop 34 percent to average $22,000 a day this year, according to the median in a Bloomberg survey of eight fund managers and analysts. The last time that happened, China’s economy, the biggest consumer of the minerals used in steel and power, was 75 percent smaller and the benchmark Standard & Poor’s GSCI commodity index 67 percent lower.
While Clarkson Plc, the world’s biggest shipbroker, expects seaborne trade in the two cargoes to exceed 2 billion metric tons for the first time this year, the 7 percent increase won’t be enough to eliminate a glut.
About 200 capesizes, spanning some 35 miles end-to-end, will leave shipyards this year, expanding the fleet by 18 percent, the Bloomberg survey showed.
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commentaar: De BDI (Baltic Dry Index) doet het niet goed, dat komt echter niet omdat de conjunctuur tegenzit, maar omdat er veel te veel nieuwe schepen op de markt komen, die waarschijnlijk zo rond 2007-2008 besteld zijn.
10 januari 2011 16:39
- verplaatst van Prikbord
DryShips: Solid Arbitrage Opportunity
BeantwoordenVerwijderenOctober 9, 2011 | about: DRYS, includes: ORIG
After reading an article by new Seeking Alpha contributor Bryce Istvan (titled “The DryShips Disconnect"), I was compelled to do some additional research on a company that I own and have previously covered. Bryce correctly identified a “disconnect”; however, he did little beyond comparing market caps. The next step is dissecting the balance sheets of DryShips (DRYS) and Ocean Rig (ORIG) to provide a closer look at the arbitrage opportunity.
I previously argued that DryShips was priced below liquidation value at $3.75 on July 29th; however, ORIG had not yet begun regular trading and DRYS carried almost double the market cap.
Current Valuation of DryShips
At the October 7 close of $2.24, and with 408.4M shares outstanding as of September 21, 2011, DryShips (DRYS) carries a market valuation of $914.8M. DRYS owns 36 dry bulk vessels (including 4 new buildings) and 13 tankers (including 9 newbuildings). These vessels are carried at an asset book value of $2.1B, which is likely far more than they are worth in today’s brutal secondary market. The debt that backs these vessels is approximately $1.47B. This is pretty scary considering that the stock holder will be left with nil if the vessels sell for less than 70% of their stated book value in a liquidation. However, this is forgetting one key fact: DRYS owns 75% of ORIG.
The Hidden Value of Ocean Rig on the Balance Sheet
Because DryShips (DRYS) is a majority holder and voting controller (75%) of Ocean Rig (ORIG), DRYS must carry ORIG’s balance sheets as its own. Although DRYS provided a separate breakdown balance sheet of ORIG in its 2Q-11 report, it did not provide a separate breakdown of DRYS sans ORIG. This DRYS-only breakdown is possible with a few simple overlay calculations. With a recent report that DryShips is open to selling ORIG, this new balance sheet could become a reality.
Total cash of $193M: ($480M total - $287M for ORIG)
Total debt of $1.47B: ($3.59B - $2.12B for ORIG)
Total assets of $2.55B ($7.87B - $5.32B for ORIG)
Total liabilities of $1.61B ($4.03B - $2.42B for ORIG)
Total equity of $940M ($3.84B - $2.9B for ORIG)
Book value per share of DRYS sans ORIG: $2.30 / Book value per share of ORIG: $21.50
The ORIG Sale
ORIG is currently trading at $16, which is a P/B ratio of .74, rather low considering how strong the market currently is; however, let us assume that investors stay wary and the $16 price of ORIG stays put. If DRYS sells its 75% stake in ORIG, it will instantly transform its balance sheet to the aforementioned numbers while gaining over $1.57B in cash ($16*98.56M shares of ORIG). If DRYS sells ORIG for a P/B of 1, which I believe is possible considering ORIG’s relatively low (34.5%) net debt to assets and contract revenue backlog of over $2B, than DRYS will receive roughly $2.12B in cash.
2)
BeantwoordenVerwijderenDRYS Sans ORIG Post-Sale
If DRYS sells ORIG for $16 per share, it will have net cash of $293M (72 cents per share). Based on DRYS trading at $2.24, this assumes a valuation of $621M for the entire fleet debt-free. This is an assumption that the combined vessels are only worth 29% of stated book and that DRYS will do nothing accretive with its newfound cash position.
If DRYS sells ORIG for $21.50 (book value), it will have net cash of $843M ($2.06 per share). This assumes a valuation of $73.5M for 36 dry bulk vessels and 13 tankers - roughly 3.5% of stated book value. I realize that we are in a bad market, but DRYS at $2.24 is absolute insanity.
What is DRYS Worth?
To put it bluntly, the CEO, George Economou, does not seem to care much about his shareholders. Thus the assumption that DRYS will do little to nothing accretive with its newfound cash position is probably not too far off. He has a penchant for dilution, so DRYS is not a place for a long-term investor. However, the absolute worse case scenario for an investor is a bankruptcy and forced liquidation. If DRYS were to shut down today, how much is the fleet worth on the secondary market? This takes even more detailed research, but based on the current industry average, it’s around 40-50% of book ($840M-$1.05B). This considers two combined bets:
What is the true secondary value of the vessels?
What will DRYS be able to sell ORIG for on a per-share basis?
Lower projection (40% / $16) on both gives DRYS a fair value of $2.77 (24% upside)
Higher projection (50% / $21.50) on both gives DRYS a fair value of $4.12 (84% upside)
Trading Approach
As an investor, you should only use my models as an aid to your own in-depth research; however, I personally believe that DRYS should trade at a minimum of $4. I will be long until this target is surpassed or until the fundamentals dramatically shift. The market is rough right now, so this is by no means a risk-free trade, but as Warren Buffett once said, “…invest when others are fearful!”
Disclosure: I am long DRYS.
by J Mintzmyer »
09:37 - 06 december 2011 door Kim Evenepoel
BeantwoordenVerwijderenFrontline hertekent zichzelf
Frontline, 's werelds grootste olietankerrederij, gaat fors herstructureren. Een nieuw bedrijf, Frontline 2012, neemt een deel van de vloot over, en krijgt nieuwe middelen in handen om als overnemer te gaan optreden op de zwaar geteisterde rederijmarkt. De ingreep moet Frontline de nodige middelen geven om aan zijn financiële verplichtingen te voldoen.
De ingrepen komen niet echt als een verrassing. Vorige maand trok voorzitter John Fredriksen nog maar eens hard aan de alarmbel. De olietankertarieven zijn zo laag dat het bedrijf al maanden aan een stuk verlieslatend is. Daardoor is de bankrekening van het bedrijf aan het leeglopen. 'Running out of cash', klonk het.
Om te overleven, moet Frederiksen de nodige financiële spitstechnologie bovenhalen, en diep in de eigen zakken tasten. Heel wat garanties komen namelijk van zijn familieholding Hemen.
Concreet wordt er een nieuwe onderneming opgestart. Frontline 2012 zal een vloot van 6 VLCCs en 4 Suezmax-tankers overnemen van zijn broer Frontline. Daarnaast neemt de nieuwe rederij 5 VLCCs in aanbouw over. De totale waarde van die transactie bedraagt 1,12 miljard dollar. Intussen heeft Frontline met al zijn schuldeisers en andere tegenpartijen de nodige compenserende maatregelen vastgelegd. Fredriksen heeft voor die ingrepen, via Hemen, garanties ter waarde van 505,5 miljoen dollar voorzien.
Frontline wordt daarmee eigenlijk zelf het eerste slachtoffer van de zware crisis waarover Fredriksen het al een poosje heeft. De rederij was extra kwetsbaar voor de lage tarieven, aangezien het zijn tankers vooral op de spotmarkt aanbiedt. Sectorgenoten zoals Euronav hebben iets meer ademruimte dankzij langetermijncontracten aan betere voorwaarden.
Frederiksen creëert met Frontline 2012 ook een vehikel waarmee hij in de markt op zoek kan gaan naar fel verzwakte concurrenten, met de bedoeling van ze over te nemen. De middelen voor die overnames zullen onder meer komen van een kapitaalverhoging van 250 miljoen dollar. Broer Frontline zal 10 procent van dat bedrag onderschrijven. Frederiksens holding Hemen onderschrijft de rest van het bedrag, en wil aan de bestaande aandeelhouders van Frontline voorrang geven om in te tekenen op de kapitaalverhoging van Frontline 2012.
DryShips Is Sinking Into the Abyss
BeantwoordenVerwijderenBy Rich Duprey |
November 27, 2012 |
There are one-hit wonders, and then there are those stocks that get hit only to come back for bigger and better gains in the future.
Determining who will fall takes more than just looking at a stock's price, so the fact that dry bulk shipper DryShips (Nasdaq: DRYS ) plunged 17% after releasing its earnings, and has lost a quarter of its value over the past month, means that we need to dig a little deeper to see whether there's reason to hope for a recovery.
DryShips snapshot
Market Cap
$743 million
Revenues (TTM)
$1.1 billion
1-Year Stock Return
(24.2%)
Return on Investment
(3.0%)
Estimated 5-Year EPS Growth
10.0%
Dividend and Yield
N/A
Recent Price
$1.75
CAPS Rating
***
Source: FinViz.com. N/A = not applicable; DryShips doesn't pay a dividend
A mighty temblor
The shipping industry, both dry bulk and tanker, is caught between the Scylla and Charybdis of global economic malaise and capacity glut, which are decimating dayrates and causing individual shippers to founder on their shoals. General Maritime, Deiulemar, Omega Navigation, Stephenson Clark, and Sanko have all filed for bankruptcy protection this year. Two weeks ago, Overseas Shipholding Group became just the latest to join the group and it certainly looks like DryShips will be joining it in Davey Jones' locker.
DryShips reported a net loss of $51 million in the third quarter, or $0.13 per share, compared to a profit of $25 million a year ago, or $0.07 per share, as spot charter rates sank below breakeven levels. Worse, they've hit this nadir just as the shipper's long-term contracts are expiring.
Another wave of doubt washing over the decks of the industry is the strict European banking regulations that caused a number of lenders to exit the market. As capital dries up, shipping defaults pressure those lenders that remain such that they are having difficulties meeting their capex requirements.
Drilling down
Fortunately DryShips has a backup plan. It previously diversified into drilling rigs and its Ocean Rig (Nasdaq: ORIG ) subsidiary has given it some financial flexibility. Where the dry bulk goods segment sank 48% in the quarter to $41 million as time charter equivalent rates were cut in half, DryShips' drilling business surged 26% with revenues hitting $286 million as time charter equivalent rates actually rose 17% (tanker revenues nearly tripled, but at just $9 million it's a negligible contribution).
Ocean Rig is one of the purest plays on ultra-deepwater drilling, a method that has gained attention from Transocean (NYSE: RIG ) , Noble (NYSE: NE ) , and Seadrill (NYSE: SDRL ) . Earlier this year it seemed DryShips was slowly exiting the drilling market as it sold off shares of the subsidiary, but that may no longer be desirable as it's all that stands between the company staying afloat and sitting on the bottom of the ocean.
Since it still owns a 50% stake in the driller, it could be a source of additional funds should the need arise. Safe Bulkers (NYSE: SB ) , for example, has proven to be a not-so-safe haven for income investors as it recently had to slash its dividend to conserve cash. Still, it's a relatively financially sound shipper, as is Diana Shipping (NYSE: DSX ) . When the industry once again emerges from the depths like Leviathan breaching the surface, expect DryShips, Diana, and Safe Bulkers to still be floating.
2)
BeantwoordenVerwijderenAvast, ye scallywags!
Yet it's hard to recommend shares of DryShips at the moment, and its CEO George Economou has shown a penchant for destroying shareholder value rather than creating it, though the value of being among the last men standing should mean something.
I rated DryShips to underperform the broad market indexes on Motley Fool CAPS, the 180,000-member-driven, investor community that translates informed opinion into stock ratings of one to five stars. The stock has fallen 55% since I weighed in on it back in February compared to a nearly 3% gain in the S&P 500 and I don't see any catalyst at the moment that changes my opinion. But let me know in the comments section below if you think DryShips will sail on calmer seas in the near future.
Shake, rattle, and roll
If you're an energy investor looking for other opportunities, then you should look into one of the more exciting plays in the space: Seadrill. To learn more about the strengths and weaknesses of this company, as well as what to expect from Seadrill going forward, be sure to check out this brand-new premium report put together by one of our top Stock Advisor analysts. Click here to get started.
BeantwoordenVerwijderenProfit Off Of Continual Strength In Offshore Drilling Market
November 28, 2012 | includes: ESV, PACD, RDC, RIG, SDRL
http://seekingalpha.com/article/1032151-profit-off-of-continual-strength-in-offshore-drilling-market?source=yahoo