Golden Ocean Group: Top Spec Fleet And Attractive Shareholder Returns

seekingalpha10-15

Golden Ocean net and operating results remained stable QoQ due to revenue and expense changes offsetting each other.GOGL's balance sheet is in shape. The company reported $99 million cash, $994 long-...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2475344235?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1412530303/image_1412530303.jpg","is_english":true,"pubTime":"2024-10-15 10:55","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2475344235","market":"us","top_or_hot":-1,"title":"Golden Ocean Group: Top Spec Fleet And Attractive Shareholder Returns","media":"seekingalpha","content":"<div>\n<p>Golden Ocean net and operating results remained stable QoQ due to revenue and expense changes offsetting each other.GOGL's balance sheet is in shape. The company reported $99 million cash, $994 long-...</p>\n\n<a href=\"https://seekingalpha.com/article/4726746-golden-ocean-group-top-spec-fleet-and-attractive-shareholder-returns\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Golden Ocean Group: Top Spec Fleet And Attractive Shareholder Returns</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGolden Ocean Group: Top Spec Fleet And Attractive Shareholder Returns\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-15 10:55 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4726746-golden-ocean-group-top-spec-fleet-and-attractive-shareholder-returns><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Golden Ocean net and operating results remained stable QoQ due to revenue and expense changes offsetting each other.GOGL's balance sheet is in shape. The company reported $99 million cash, $994 long-...</p>\n\n<a href=\"https://seekingalpha.com/article/4726746-golden-ocean-group-top-spec-fleet-and-attractive-shareholder-returns\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"GOGL","symbol_name":"金海洋集团","start_time":0,"source_url":"https://seekingalpha.com/article/4726746-golden-ocean-group-top-spec-fleet-and-attractive-shareholder-returns","article_id":"2475344235","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1412530303/image_1412530303.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2475344235","pubTimestamp":1728960937,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Golden Ocean net and operating results remained stable QoQ due to revenue and expense changes offsetting each other.GOGL's balance sheet is in shape. The company reported $99 million cash, $994 long-t","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"GOGL":"金海洋集团","BK4021":"海运"},"translate_title":"金洋集团：顶级规格船队和有吸引力的股东回报","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GOGL":0.9},"content_text":"Golden Ocean net and operating results remained stable QoQ due to revenue and expense changes offsetting each other.GOGL's balance sheet is in shape. The company reported $99 million cash, $994 long-term debt, and 73% Total Debt to Equity.Market tailwinds, such as robust tonne-mile demand and constrained vessel supply, further support the investment thesis.GOGL's strong financials, attractive fleet, and appealing dividends make it a compelling investment. I change GOGL's rating to a Strong Buy.   CloudVisualNote: I previously covered Golden Ocean Group Limited (NASDAQ:GOGL) in March. In my note, I discussed the company’s attractive fleet, healthy finances, and dividend policy. At that time, GOGL traded at 105% PNAV. I gave the company a Buy rating. Today, I reviewed the GOGL 2Q24 earnings report, the dry bulk market, and the company’s rating. Introduction GOGL is one of the large dry bulk shipowners. The company has 52 Capesize and Newcastlemax ships. As my note on Himalaya Shipping (HSHP) pointed out, these are the best dry bulk carrier subsegments. The company’s fleet age is below 10 years. In 2Q24, the company published, I would say, non-eventful report. Nevertheless, its financial position is strong. Another positive is the renewal of the share the buyback program, announced in October 2024. Share repurchases would complement attractive dividends. Fleet I like GOGL because it has 19 Newcastlemax and 33 Capesize ships. Besides that, it owns 25 Kamsarmax and 6 Panamax. The latter comes as a diversifier that dampens Capes/Nukes volatility. A 51% of GOGL's ships have scrubbers installed. GOGL contracted 39% of the ships under spot charters and 61% under voyage charters. GOGL has a new vessel under construction. During 3Q24, six dry docks (one Panamax and five Capes) are scheduled. 2Q24 operating figures are $23,535/day TCE, $6,120/day daily OPEX, and $13,800/day breakeven cash flow. I would say GOGL balances fleet quality and leverage well. Its daily OPEX is comparable to HSHP figures ($6,000/day). For reference, Himalaya’s ships are brand new. On the other hand, HSHP has the highest breakeven due to its leverage. Compared to Genco Shipping (GNK) and Seanergy (SHIP), GOGL has the lowest breakeven cost. In challenging markets, low breakeven is the distinction between survival and crisis. In June, GOGL agreed to sell one of Panamax's vessels for $20.8 million net consideration. The company realized a $4.3 million gains. The delivery will take place in 3Q24. Therefore, the gains will be reflected in the company’s statement in the next quarter's report. For 3Q24, the company reported that 83% of its Cape segment is contracted at $26,200/day TCE and 94% of its Panamax at $17,200/day. The former is lower than the 2Q24 figure ($28,805/day), while the latter is higher than the last quarter figure ($15,721/day). Large bulkers' day rates are more volatile because they are linked to very erratic global iron ore demand. On the other hand, the demand for smaller dry bulk carriers functions in the growth of the world economy. 2Q24 Results  GOGL reported figures that were not impressive in 2Q24. The table below from the 2Q24 presentation shows financial highlights for the last quarter. GOGL 2Q24 presentation  Operating revenue in 2Q24 was $250.1 million, compared to $246.7 million in 1Q24. This was driven by higher composite TCE. In 1Q24, GOGL reported $22,628/day TCE vs $23,535/day in 2Q24. QoQ voyage and operating expenses increased by 5.3% and 5.9%. Four ships were drydocked in 2Q24 compared to two in 1Q24, resulting in higher OPEX and declining on-hire days QoQ. In summary, GOGL net and operating results remained stable QoQ due to revenue and expense changes offsetting each other. GOGL's balance sheet is in shape. The company reported $99 million cash, $994 long-term debt, and $291 million long-term leases. Its capital ratios are 73% Total Debt/Equity and 44% Total Assets/Total Liabilities. The company’s ability to service its debts is well covered by its operating figures. For 2Q24, GOGL realized $85.9 million in operating income and $76.9 million in operating cash flow. Over the same period, gross interest expenses were $22.6 million. GOGL reported that it drew down a $180 million credit facility in April to refinance six Newcastlemax vessels. The facility matures in five years and comes with a SOFR + 1.6% interest rate, with an additional 5 bps depending on emissions reduction performance. Golden Ocean pays attractive dividends with an 8.14% trailing LTM yield. For 2Q24, the company announced a cash dividend of $0.30/share. On October 02, GOGL announced its share buyback program renewal. It extends the current one by 12 months. Below are buyback program terms quoted in the press release:  Maximum USD 100 million to purchase up to an aggregate of 10,000,000 of the Company’s common shares, with 1,507,328 shares repurchased for USD 11,629,758 as of the date hereof. A period from and including 5 October 2024 to and including 4 October 2025. The share buy-backs will be carried out through repurchases in the market, both on the Oslo Stock Exchange and on Nasdaq.  Ten million shares represent 5% of the total outstanding shares. I would be happy to see GOGL repurchasing all those shares. It would simultaneously boost dividend yields and capital gains. Valuation To estimate GOGL’s standing, I compare it to Star Bulk (SBLK) and Genco Shipping (GNK). The former owns the largest dry bulk fleet of 159 ships, with an average age of 11.4 years. Genco owns 15 Capes, 15 Ultramax, and 11 Supramax ships with an average age of 11.7 years. Star Bulk has installed scrubbers on 97% of its vessels, while Genco on 37%. That being said, let’s look at Mr Market’s opinion: Koyfin  All figures are NTM. GOGL trades at 5.0 EV/Sales and 7.6 EV/EBITDA. Apparently, Mr. Market highly regards GOGL’s newer fleet. Now, let’s see how GOGL trades based on PNAV. Inputs for the NAV equation are:  Fleet replacement value: $4,050 million Advances for new buildings: $31 million Right of use assets: $70 million Current assets: $284 million Total Liabilities: $1,530 million Total Debt: $1,420 million  GOGL's market capitalization is $2,460 million, while its NAV is $2,904 million, resulting in 85% PNAV and 34% gross LTV. SBLK's valuation is comparable at 82%. However, Genco trades at a higher discount to NAV. In conclusion, I like all three contenders at that valuation. The recent share price pullback provided an excellent opportunity to acquire more shares in quality dry bulk shipowners. Risks GOGL’s prime risk is weaker tonne-mile demand. Iron and bauxite trade is the most critical factor. The number one driver behind it is the Global South in the face of India and China as consumers and Brazil and Guinea as producers. If the Chinese economy is strong, this would result in robust tonne-mile demand. Iron ore trade is tied to steel production, where China is the driving gear. According to GOGL's last report, global steel production increased by 3.0% 2Q24 compared to 1Q24. China's production grew by 5.5%. India is the other decisive factor in the steel market. Its production declined by 2.8% QoQ. Meanwhile, it grew YoY by 4.6%. Those figures support the demand for iron ore transportation. In 2025 and 2026, large iron ore projects will start operating: Vargem, Capanema, and SD11 in Brazil and Simandou in Guinea. These projects will accelerate further tonne-mile demand. The image below from the GOGL 2Q24 presentation shows Guinean bauxite export growth for the next four years. GOGL 2Q24 presentation  The most interesting variable is the first row in the table (down right), named Additional Volumes. Look at the YoY growth. It implies that many new Capes/Nukes will be needed to cover the rising iron ore production. Dry bulk carriers supply fundamentals support my thesis. The percentage of ships approaching 20Y exceeds the present order book. Current order book is 9.8%, while the average for the last 25 years is 24%. Capesize's order book grew slightly QoQ up to 7.3%. 25Y average for Capes is 29%. An aging fleet and lack of new orders combined with robust tonne-mile demand is a recipe for vessel deficits. That being said, the risk of weak day rates is relatively low. As can be seen, GOGL has sufficient liquidity to service its debt obligations. The company’s balance sheet is also reasonably unleveraged, with Total Debt/Equity below 100%. The other company-specific risks derives from fleet age. GOGL’s fleet has an average age of 7.7 years. At that age, the frequency of scheduled maintenance and breakdowns is comparably low. This means less erratic utilization rate and operating expenses. Final thoughts GOGL is another exciting income idea for dry bulk investors. The company has attractive fleet specs, sound financials, and an appealing shareholder returns policy. Macro tailwinds are supporting further tonne mine demand growth while the supply of vessels remains constrained.  In addition, the company trades at a 15% discount to its NAV. That said, I changed GOGL rating from a Buy to a Strong Buy.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2475344235"}