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Dec 6, 2021, 14 tweets

Finally had a chance to dig into $grin (Grindrod Shipping) financials for Q3.

If you are an investor and haven't read it yet, I highly recommend it. The format and info is different than Q2. Here's what I found interesting...
1/N

Starting out in the fleet table, there have been some updates QoQ. There's also lazy accounting as there are 7 LTCI (not 8 as stated).

What's New?
1. Charter-in Purchase Price and Daily Charter-in Rates
2. IVS Phoenix is now "owned"
2/N

IVS Phoenix falls into this unusual disclosure. 4 owned vessels had financing where they were "sold", and Grindrod has the right to acquire at a certain date.

These are owned as they have long term control, but important to note they are not on the balance sheet.
3/N

With that unusual disclosure in mind, we should be expecting an update soon on their 3 options expiring in 2021.

Martyn has stated Grindrod has an interest in selling non-eco, older handys at some point this cycle. I'd be curious if these 3 will be sold to generate cash.
4/N

Lots more info on charter-ins. In general, there are higher rates to extend annually, and these extensions vary from 2022 to 2026 depending on the vessel.

Note IVS Crimson Creek expires in Q2 '22 on a index-based contract. My guess is they buy this ship in Q1.
5/N

With charter-ins in mind, Q4's expected charter-in rate is $12,890/day, which is $32/day higher than Q3. I expect Q4 to be marginally higher (~$13.2k/day) based on their disclosures.
6/N

However, with all the focus on costs, they are being well managed.

Q3 was higher than Q1 and Q2, but expected with charter renewals and BSI-58 increases. And we now have better disclosures to project Q4+.
7/N

Here's where I get confused.

There's diluted earnings accounting for 863k shares. I've been looking through disclosures and haven't figured out where these come from. My guess is they are from the old FSP, but curious if anyone figured it out.
8/N

Looking at currently contracted Q4 TCE, Handys are 14% higher and Smax are 9% higher than Q3.

This is roughly 70% of Operating Days. The remaining 30% should be slightly lower based on how rates have moved, but I think we see Q4 ~10% higher than Q3.
9/N

At 10% higher than Q3, Q4 earnings would have profits at about $70m or $2.52/share with a dividend of ~$.76/share.

That would mean you'd be getting $4.81 EPS in Q3/Q4 from a stock trading at $13.70. Your yield would be $1.44 or roughly 11% for 2 quarters.
10/N

And for all the recent tourists in #drybulk predicting the end, here's a picture of current FFAs.

Braemar doesn't show BHSI, but you can see that rates are not "dead". Cal22 trades higher than YTD rates for Grindrod, which already have pushed the stock up ~200%.
11/N

So far in '21, $grin has advanced the most of the dry bulk stocks I follow. I suspect that'll happen again in '22.

They have pretty complex financials, and I wrote this thread to hopefully get some conversation started with #grintwit. Look forward to your insights!
12/N

Two last thoughts...

1. Q3 didn't include any drydocking updates😡Martyn please fix this for Q4!
2. Cash on hand is $78m for a company trading at $262m in a cyclical bull market. Come on people! Wake up - this is stupid cheap!
13/E

Wish I could edit. Should say *Q1 to be marginally higher.

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