Pakistan National Shipping Corporation (PNSC) held its corporate briefing today to discuss its FY24 financial results and future outlook.
The following are the key highlights reported by AKD Research:
· Company posted topline of PkR46bn in FY24 compared to PkR55bn in FY23. The company posted a topline of PkR46 bn in FY24 compared to PkR55 bn in FY23. The revenue decline was primarily attributed to a reduction in volumes handled in the dry bulk segment, given that no cargoes for Trading Corporation of Pakistan were handled in FY24. Moreover, lower freight charges in the international market further impacted the business.
· Subsequently, the company’s earnings clocked in at PkR20bn (EPS: PkR152.8) in FY24 compared to PkR30bn (EPS: PkR227.1) in FY23 due to the aforementioned reasons and a one-off gain recorded last year on the sale of the MT-Karachi vessel.
· The company operates 12 ships, including seven tankers and five dry bulk carriers.
· Management plans to replace four Aframax Tankers due to changes in maritime regulations to promote de-carbonization. Management stated that it’s in talks with bidders from the UK and China for the procurement of four new Aframax tankers.
· Additionally, management informed that negotiations with a Chinese company are in advanced stages; however, no contracts have been finalized as of yet.
· PNSC is restricted from procuring second-hand vessels. However, under the SOE Act ’23, management is able to formulate its own procurement policy in accordance with the international shipping industry. Currently, the procurement policy is under review and will be submitted for the approval of the Federal Government.
· Management plans to acquire new vessels by placing an order, currently priced ~US$73.25mn, compared to the resale price of US$85mn. Resale vessels can be available in 3-4 months, whereas new vessel orders require a longer wait; the significant price differential influences the decision.
· Acquiring these tankers would help meet the maritime regulations set for 2030 and improve fuel efficiency, reducing consumption to approximately 28-30k tons/day, compared to 35-40k tons/day with older vessels.
· The financing for these vessels would be structured with approximately 80% debt and 20% equity.
· Management plans to acquire the first vessel by 2027, with additional vessels to follow.
· The current resale price of an older Aframax tanker is approximately US$12.5-13mn, significantly lower than the sale price of the MT-Karachi. This is due to shifts in the international market dynamics driven by geopolitical tensions and the fact that these tankers are over 21 years old.
· Time Charter Equivalent for Afframax is ~US$30-35k/day, US$10-11k/day for LR-1 tankers and ~US$11K/day for bulk carrier.
· The average age of Aframaxes is approximately 18.5-19.0 years, while LR-1 tankers are around 12 years old. Dry bulk carriers have an average age of 16-17 years. Overall, the average age of the current fleet is about 16 -17 years.
· The management is currently in discussions with a Chinese company that had previously obtained the mining license for Reko-Diq.
· The script is not in our formal coverage.
Courtesy – AKD Research
