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7/24/2019 Marine Money Mag
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MarineM O N E Y
The Ship Finance Publication of Record
INTERNATIONAL
Hamburg Singapore LONDON NEW YORK OSLO PIRAEUS
June/july 2012 VOLUME 28, NUMBER
Marine Moneys Rankings of PubliclyTraded Shipping Companies 2011
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KEVIN OATES
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www.marinemoney.com marine money
C o n t e n t s June/July 2012
The Painted Ponies Go Up and DownJim Lawrences annual tribute. page 2
Outwit, Outplay, Outlast Shippings Year of the SurvivorGeorge Weltman announces the winners. page 4
Total Return to Shareholders
Only One Way to Go!Jim Lawrence puts TRS performance in an historical perspective.
page 20
The Tip of the Iceberg
George Weltman looks underneath the surface at impairments. page 24
The Class of 2011Jim Lawrence presents the Freshman Class and updates the
performance of those that came before. page 26
The Rankings MethodologyAn explanation of the metrics behind our rankings for those
that like to look under the hood. page 30
The CompaniesAt-a-glance financial profiles of all 84 companies we ranked.
page 34
Making Money Up and Down the
Shipping CycleOur secretive author reports on the equity analysts performance
and their outlooks. page 71
The Final Word page 76
Alphabetical Index to the CompaniesAn easy way to find your company or a potential client. page 78
Cover art created by John M. Kulukundis
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companies actually delivered
for their shareholders (See the
story on Total Return to Share-
holders, this issue). Undoubt-
edly owners, financiers and
investors alike wish they had
gotten off the carousel and now
many cannot, as it continues its
mercilessly repetitive ride. Asone owner working through the
process mentioned, maybe next
time we will get it right.
For 21 years Marine Money
editors have been pouring over
the financial reports of the
international shipping
industrys best companies. The
saga of wealth created (and
lost), the stories those numberstell of energy delivered, food
carried, and consumer goods
transported is beyond enor-
mous. No one image could ever
convey the achievements of
even a single ship, and so too
the financial results this year fail
to really tell the whole story.
The Painted PoniesGo Up and Down
By Jim Lawrence
t was 1991, the second year
of Marine Moneys Annual
Ranking of publicly traded
shipping companies, when the
Chart for the Top Ten Achievers
was a list of just eight compa-
nies, because they alone met the
Editors test for reasonable
results. Headlines from MarineMoney that year screamed
about minimum value covenant
breaches and Ownership: A
bankers nightmare re-emerges.
The industrys Median Return
on Assets was a paltry 1%. Its
Return on Equity 3%.
We live with the industry
cycles, which means the current
market is hard work, but as theJoni Mitchell ballad goes:
And the seasons they go 'round
and 'round
And the painted ponies go up and
down
We're captive on the carousel of
time
We can't return we can only look
behind
From where we cameAnd go round and round and
round
In the circle game
So here we are again, marking
the financial achievements of an
industry, in another year where
truth be told only nine public
Well, they tell a great deal. It
was a brutal year, but tell me
something I do not know
already. Well here it is, while
supply issues buffet earnings,
and liquidity focuses the minds
of the industrys sharpest CEOs
and CFOs, their ships which
carry the goods and theseafarers who work those ships,
gave us all another year of
moving the worlds cargoes
safely around the world, largely
out of sight of consumers every-
where, consumers, who have
little idea just how dependent
upon these great ships and their
crews, they really are.
You do not see the faces of themen and women who sail in
those numbers. Nor do you see
the enormous amount of
thought and engineering work
going into the ships to meet the
next and the next generation of
environmental regulation. Nor
do we see in the numbers the
technology which increasingly
links ships and their crews to
home and office, and the invest-
ment that takes to keep good
men and women coming to sea
It was a tough year for sure. But
we have been there before and
this next time I am sure will bethe last time we are where we
are today. Those painted
ponies only have one way to go
for sure!
Finally, it is enormously impor-
tant to congratulate all the men
and women who work not only
at sea but ashore ensuring this
great industry continues
forward. Our hats off to thebest of the best and my thanks
to the Editor of Marine Money,
George Weltman, Cari
Koellmer who returns from
maternity leave to complete this
issue and our superb database
guru for their superior guidance
and leadership in the project.
I
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put in the context of the macro
events discussed earlier. But
demand was easily over-
whelmed by the nagging supply
issue, which saw total fleet
growth of 8.2%, the highest
level in more than 20 years.These two numbers equate to a
total fleet utilization of 84%,
but this was largely artificially
supported by a jump in the
LNG fleet utilization. To put
this number in context, it is
above the very depressed level
of 2009, but in line with the
levels of the early 1990s which
again were not a satisfactory
period for shipping.
For the first time since the
financial crisis, gravity, at last,
had an impact on asset values,
which declined finally catching
up to and reflecting earnings.
For perspective, second hand
values dropped across the board
with five year old vessels down
around 20% for tankers and
30% for bulk carriers. Alreadylow revenues combined with
the markdowns created signifi-
cant losses for shipping in
2011.
For each of the main sectors the
story was more or less the same.
As a result of this market stability,
a relatively small number of
distressed ship sales materialized.
During the same period equity
and debt markets recovered,
enabling many owners to refi-
nance and strengthen theirbalance sheets.
That was then; this is now. In
2011, the average time charter
rates referred to earlier fell by
50% from the previous 30-
month average of $35,000/day
to about $17,500/day. Reality
Bites.
It would be hard to recall amore volatile and challenging
year for shipping than 2011. It
was a year of financial, political
and natural turmoil including
the sovereign debt crisis, the
Arab Spring and two natural
disasters, an earthquake and
tsunami in Japan, and the
flood of the century in
Austral ia, both of which
directly impacted shipping. Butwhile the macro picture was
bleak, demand growth was not
bad. While global GDP growth
did slow to 3.8%, less than the
4.4% projected, it was not a
bad year historically when
compared to a strong 2010 and
Outwit, Outplay,Outlast Shippings
Year of the SurvivorBy George WeltmanThe tanker market experienced
the double whammy of
declining demand combined
with increasing supply which
brought average rates down to
the lowest level since 1994.
The miracle of the dry bulk
sector is that it did not collapse
Average freight rates fell by
more than 40%, led by a more
than 50% drop in Capesize
rates. The culprit again was fleet
capacity growth which topped
15%, a modern day record
despite ongoing delays, slippage
and cancellations. Weighing
against this growth was strong,albeit volatile, tonnage demand
which grew at 10%, driven by
Chinese re-stocking of coal and
iron ore in the second half of
the year.
In the container sector, the
math was much the same, but
the results not so bad. Demand
growth was 7.5%, half that of
the prior year, while fleetcapacity grew by 8%. Condi-
tions were strong in the first half
of the year but much weaker in
the second half. Here the chief
protagonist was the slowdown
in the US and European
economies in the second half of
1 The factual information which follows was gleaned from that report.
IntroductionAs we put pen to paper, it often
helps if we look back at what we
wrote in the prior years intro-
duction to the rankings. It was
not a pleasant sight, serving
only as a reminder that this isthe third year of the down cycle
driven by weak economic
growth, a moribund or at least
slowing China and more ships
on the water.
Nevertheless, we need to put
2011 in context, which is what
Peter Anker does best in the
introduction to The Platou
Report 20121.
After the financial crisis reared its
ugly head in the third quarter of
2008, the shipping markets held
up surprisingly well right through
to the end of 2010. This was
mainly due to a very quick and
forceful response to the crisis by
policymakers, in general, and by
China in particular.
Time charter rates for VLCCs,
Capesizes and a 4500 TEU
Containership held steady at an
average of $35,000/day from the
third quarter of 2008 through to
the final quarter of 2010.
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the year. Overall, average freight
rates rose, as the liners managed
capacity and pushed through
rate increases, but market
performance was uneven.
As has historically been the
case, disaster portends well forshipping. Already increasing
underlying demand for LNG
spiked as a result of Japans
earthquake and nuclear disaster.
LNG and coal were needed to
replace the lost nuclear power.
With limited availabili ty of
LNG in the Pacific, the fuel was
sourced from the Atlantic,
resulting in increased ton miles.
Against supply growth of 10%,estimated tonnage demand
grew by an estimated 20%.
With tightening market funda-
mentals, freight rate rose an
estimated 93% to $93,000/day
more than double that of the
prior year.
With this as the backdrop to
this years rankings, there is
little in the way to project thewinner of this years rankings of
public shipping companies. Its
been three years and the
outlook continues to be bleak
in all the main sectors, although
containers and LNG did show
some promise. Like the televi-
sion show, this years Survivor
will have successfully outwitted,
outplayed and outlasted the
competition. Who will have aleg up? Share prices have largely
collapsed as investors fled the
market; balance sheets have
been decimated by impair-
ments and earnings were largely
negligible if positive at all. Its
anyones game.
portfolio, PST would have to
fund such new vessels through a
combination of equity, debt
and/or internal cash resources.
Any potential acquisitions will be
benchmarked against PSTs
distribution yield to ensure thatthey are accretive to Unitholders.
This places a constraint on PSTs
ability to issue new Units since its
investment decision will be
compared against its distribution
yield, which is in turn a function
of the prevailing trading prices of
the Units. At the same time, the
amount of debt that PST can
take on for each acquisition is
limited by and subject to credit,debt service and prudence consid-
erations. Taken together, this has
constrained PSTs operationa
flexibility as a listed trust, and
inhibited its business expansion.
Accordingly, the Offeror takes the
view that delisting PST would
liberate PST from these
constraints and provide more
flexibility to respond to changingdynamics in the shipping market.
The Exit Offer would therefore
provide Unitholders with an
opportunity to realise their invest-
ment in PST at the Exit Offer
Price, whilst providing the
Offeror and PST, as a nonlisted
entity, greater operational flexi-
bility to pursue opportunities and
make investment decisionswithout being constrained by
market-based yield expectations,
market sentiment and price
volatility.
This was the year that Chapter
11 reared its ugly head and
effectively erased some historic
Deletions were far more
numerous as merger and acqui-
sition activity picked up.
DryShips acquired its affiliate
OceanFreight as was the case in
the previously mentioned
acquisition of Crude Tankers by
Capital Product Partners. Lastlyin an interesting diversification
play, brown water specialist,
Kirby saw the possibilities of
the blue water business run by
K-Sea and acquired it.
Then there were public compa-
nies that went private. After its
acquisition of publicly traded
Eitzen Bulk in 2010, Ultragas
ApS made a compulsory offerfor the remaining shares as it
passed the 90% threshold. On a
less positive note, this year
Horizon Lines shares moved tothe pink sheets, as a result of the
restructuring of its balance
sheet. Frustrated and limited as
a public entity, Pacific Shipping
Trusts majority shareholder
Pacific International Lines
(Private) Limited took the
former private. Quoted below
from the offering memo-
randum, the rationale for this
decision provides an interestingperspective and a worthwhile
digression on the positives and
negatives of being public and
the nature of the trust structure:
For as long as PST remains a
listed business trust and seeks to
expand its business and vessel
Who s on first,What s onsecond, I Don tKnow is onthird...But before, we find out who
won, we need to update the
lineup. Yes, believe it or not,there was some consolidation,
but the larger trend of the year
was going private, either volun-
tarily or involuntarily. Despite
substantial changes, as compa-
nies entered or exited, our total
sample remained relatively
steady at 84 down slightly from
the 88 in last years sample.
Starting with the additions, webrought into our sample the
freshman class of 2010
consisting of Baltic Trading,
Scorpio Tankers, Costamareand Navios Acquisition, with
the latters inclusion based upon
the timing of its fleet acquisi-
tion rather than the IPO date of
this SPAC. The fifth member of
that class, Crude Tankers, never
made it, having been acquired
by its affiliate Capital Product
Partners during the year. The
SEC also provided a great
service by accelerating the filingdate for foreign filers to April
30th allowing us to recapture
many companies which histori-
cally missed our cut-off. These
included Stealthgas, Euroseas,
and Newlead among others.
...make investment decisions without beingconstrained by market-based yield expecta-tions, market sentiment and price volatility.
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entrants. Fallen by the wayside
were General Maritime, TBS
International, Omega Naviga-
tion, Trailer Bridge and Berlian
Laju Tankers. Utilizing the legal
system effectively, General
Maritime, TBS International
and Trailer Bridge all quicklyemerged as private entities with
new ownership. Omega and
BLT remain stalled in the
process.
We also took advantage of the
overhaul to make proactive
changes. We removed Aegean
Marine Petroleum Network
and Chemoil as we felt these
businesses were not a fit as theyare more service-related than
shipping. Renamed Jason Ship-
ping, Camillo Eitzen fell upon
hard times and is only left with
its shareholding of Eitzen
Chemical making it more or
less duplicative. Lastly, we
replaced Wilh. Wilhelmsen
up to Mr. Pynes preaching, as
this year Kirby finished in the
winners circle.
Kirby is the poster child for
long-term consistent perform-
ance, with strong results
produced in each categoryannually. For example, over the
seven year period for which we
have data, Kirbys profit margin,
ROE, ROA have averaged
respectively: 25.4%, 14.9% and
14.4% with little in the way of
variation as one would expect
To earn this years top place, the
company had top ten finishes in
TRS (2nd), ROE (8th), ROA
(1st) and price/book (4th)Particularly impressive was its
2nd place finish in TRS, which
came in at 49.5%, an amazing
result given investors indiffer-
ence to the sector in general, but
still well below that of category
winner, Golar LNG, at 204%.
shipping company. Then, too,
during periods such as these, it
is an opportune time for those
forgotten industrial shippers,
who just slog cargo to and fro,
to shine. Stable earnings with
no asset play are an unexciting
strategy but sometimes the starsalign. Lastly, it didnt hurt if
you were in a recent Freshman
Class or were from a Greek
shipping family.
Every year we announce the
winners and every year we are
criticized by Kirbys Joe Pyne
for our short-sighted view and
reminded that a single year is
not a measure of financialperformance. It is how you
perform over the long-run that
matters. And, in the long
distances, slow and steady wins
the race, according to the right-
eous. Despite top ten finishes in
three of the preceding 6 years,
the market has finally caught
Additions Deletions MIA
2011 Rankings Changes
New
Freshman Class of 2010
Baltic Trading
Scorpio Tankers
Costamare
Navios Maritime Acquisition
Returning after an Absence
StealthGas
Euroseas
NewLead
MISC
Substitution
Wilh. Wilhelmsen ASA for Wilh. Wilhelmsen
Holdings
M&A
Oceanfreight acquired by DRYS
Crude Tankers Acquired by CPLP
K-Sea acquired by Kirby
Delisted
PST
Ultrabulk
Horizon Lines
Chapter 11
General Maritime
TBS International
Omega Navigation
Trailer Bridge
Berlian Laju Tankers
Dropped
Camillo Eitzen (Jason Shipping)
Aegean Marine Petroleum Network
Chemoil
Malaysian Bulk Carriers
Sinotrans
Holdings with Wilh.
Wilhelmsen ASA, the latter
being a pure shipping and logis-
tics company, as opposed to a
passive holding company.
While both companies pay a
dividend, the shares of Wilh.
Wilhelmsen ASA are moreactively traded. Hence, we
pulled the switch.
The chart below summarizes
the changes to our ranked
companies.
The Year ofthe TortoiseSo who, in fact, were the
survivors of the competition? Inactuality, if one thinks about it,
the results should not come as a
surprise. Mitigation of market
risk, participating in an
untrodden sector and a healthy
balance sheet should seal
success even in an extended
poor market for a traditional
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Company TRS Turnover Profit ROE ROA Price/ 2011
Rank Rank Rank Rank Rank Book Overall
Rank Rank
Kirby Corporation 2 12 49 8 1 4 1
Costamare Inc 8 47 14 4 7 3 2
Navios Maritime Partners 20 42 5 10 5 10 3
Safe Bulkers Inc. 29 45 3 1 2 14 4
Algoma Central Corporation 5 13 51 6 4 28 5
Golar LNG Ltd. 1 68 13 21 16 1 6
AP Moller - Maersk Group 27 11 48 24 3 25 7
Teekay LNG Partners L.P. 12 81 6 17 24 6 8
Nippon Yusen Kaisha 15 8 65 12 14 33 9
U-Ming Marine Transport 26 51 27 16 17 11 10
DFDS A/S 16 9 62 14 13 35 11
Knightsbridge Tankers Limited 36 54 12 20 8 20 12
Alexander & Baldwin 7 15 61 38 28 9 13
Wilh. Wilhelmsen ASA 37 82 1 11 6 23 14
Kawasaki Kisen Kaisha, Ltd. 18 5 67 19 15 40 15
Mercator Lines Singapore 19 40 24 23 18 42 16
CMB 25 35 38 13 20 37 17
Stolt-Nielsen SA 10 16 58 28 25 34 18
Mitsui OSK Lines 30 10 60 25 11 36 19
MISC 6 33 56 22 52 8 20
Danaos Corporation 14 74 9 37 19 30 21
Teekay Offshore Partners LP 9 32 34 70 38 2 22
Precious Shipping 13 67 25 32 33 16 23
Diana Shipping Inc. 46 58 11 18 9 47 24
Rickmers Maritime 22 73 2 15 10 68 25
Capital Product Partners 32 71 18 5 34 31 26
Grindrod Limited 28 1 77 27 40 22 27
International Shipholding 24 25 55 9 31 53 28
Ship Finance International Limited 56 83 7 7 21 24 29
Seaspan Corporation 3 78 8 59 23 32 30
Seacor Holdings Inc. 17 18 66 42 43 18 31
D/S Norden A/S 35 3 71 34 27 48 32
Finnlines Plc 11 28 59 49 50 29 33
Exmar NV 4 36 52 61 61 13 34
COSCO Holdings 55 19 57 73 12 12 35
Golden Ocean Group 49 38 30 41 29 44 36
China Shipping Development 42 37 50 33 44 27 37
Navios Maritime Holdings Inc. 33 43 36 35 30 61 38
Orient Overseas International Limited 43 14 73 36 46 26 38
Odfjell ASA 38 24 68 2 60 49 40
IM Skaugen ASA 23 22 76 68 59 5 41
Concordia Maritime 40 59 32 31 39 59 42
Overall Performance Rankings
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Company TRS Turnover Profit ROE ROA Price/ 2011
Rank Rank Rank Rank Rank Book Overall
Rank Rank
Global Ship Lease, Inc. 69 57 10 39 22 63 42
Navios Maritime Acquisition Corp. 31 80 15 51 36 50 44
Jinhui Shipping&Transportation 64 41 28 26 26 79 45
Samudera Shipping Line Ltd 47 4 72 29 42 72 46
Euroseas 34 44 35 47 49 60 47
Thoresen Thai 41 30 53 46 45 55 48
Goldenport Holdings 45 49 26 45 51 57 49
Pacific Basin Shipping Limited 44 20 63 44 58 46 50
First Ship Lease 39 70 4 55 55 52 50
Teekay Corp. 21 52 39 65 56 43 52
Globus Maritime 66 65 17 30 32 71 53
Scorpio Tankers 59 50 64 3 79 39 54
Neptune Orient Lines 53 2 80 71 69 19 54
China Shipping Container Lines 50 17 81 64 67 17 56
STX Pan Ocean Co., Ltd. 52 6 79 50 65 45 57
Ultrapetrol Bahamas Limited 62 29 54 58 41 58 58
Genco Shipping & Trading Ltd. 61 75 16 43 35 75 59
Yang Ming Marine Transport 60 7 82 74 74 15 60
Frontline LTD 80 34 46 82 66 7 61
StealthGas Inc. 58 55 41 40 57 67 62
Teekay Tankers 71 72 22 52 54 51 63
Baltic Trading Ltd 54 79 33 48 53 56 64
DryShips Inc. 70 69 20 53 47 66 65
Overseas Shipholding Group 72 39 43 66 37 74 66
d'Amico International Shipping 65 27 70 57 62 65 67
Hellenic Carriers 48 61 23 75 78 62 68
Regional Container Lines PCL 67 21 83 56 72 54 69
Eagle Bulk Shipping Inc. 78 56 37 54 48 80 69
Tsakos Energy Navigation (TEN) 51 63 47 62 64 70 71
DHT Holdings, Inc. 76 46 21 72 71 73 72
Nordic Tankers 73 23 75 78 73 41 73
Euronav 74 60 40 63 63 69 74
Courage Marine Group 63 48 84 76 80 21 75
Nordic American Tanker Shipping Ltd 57 84 69 60 68 38 76
Star Bulk 68 64 31 69 75 78 77
Paragon Shipping 77 66 19 79 83 77 78
Seanergy Maritime Holdings Corp. 81 53 29 83 81 76 79
Eitzen Chemical 84 31 74 80 76 64 80
Excel Maritime Carriers Ltd 75 76 44 67 70 81 81
D/S Torm 83 26 78 77 77 83 82
Freeseas 82 62 45 81 84 82 83
NewLead Holdings Ltd 79 77 42 84 82 84 84
Overall Performance Rankings continued
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Company Total Turnover Profit ROE ROA Price / EV/ Current Debt/ Debt
Returns to Rate Margin Book EBITDA Ratio Capitalization Coverage
Shareholders Ratio
Industry Mean (34.0%) 0.37 33.2% (12.1%) (0.4%) 0.79 10.43 1.65 46.9% (1.75)
Industry Median (36.8%) 0.21 31.2% 2.2% 2.3% 0.57 7.24 1.19 47.9% 1.45Industry Std. Dev. 38.3% 0.34 25.5% 61.4% 10.6% 0.80 27.98 1.50 20.4% 27.50
Coefficient of Variation (1.13) 0.91 0.77 (5.06) (26.80) 1.02 2.68 0.91 0.43 (15.68)
Alexander & Baldwin 5.1% 0.68 13.0% 3.0% 4.5% 1.52 9.81 0.99 31.1% 4.56
Algoma Central Corporation 11.0% 0.76 22.3% 15.7% 11.2% 0.85 3.79 2.98 32.6% 9.87
AP Moller - Maersk Group (22.4%) 0.83 24.5% 8.1% 12.9% 0.86 3.17 1.12 33.3% 12.05
Baltic Trading Ltd (49.1%) 0.11 43.2% (0.1%) 1.0% 0.38 10.68 5.90 26.5% 0.91
Capital Product Partners (27.0%) 0.13 55.6% 23.0% 3.6% 0.82 13.61 1.12 54.3% 1.10
China Shipping Container Lines (45.8%) 0.57 (2.8%) (9.9%) (4.5%) 1.09 (43.60) 1.05 32.8% (11.72)
China Shipping Development (36.7%) 0.26 22.9% 4.7% 2.3% 0.85 13.34 0.90 46.3% 2.50
CMB (20.7%) 0.29 33.6% 11.6% 5.5% 0.70 6.48 1.14 39.8% 4.17
Concordia Maritime (32.0%) 0.16 43.4% 4.9% 3.0% 0.35 9.45 2.01 50.3% 2.98
COSCO Holdings (49.1%) 0.55 16.2% (25.4%) 6.6% 1.38 4.11 1.31 61.5% 6.31
Costamare Inc 5.0% 0.20 63.9% 25.3% 8.3% 2.59 8.37 0.61 79.6% 7.43
Courage Marine Group (54.1%) 0.20 (32.3%) (30.8%) (22.0%) 0.89 (7.54) 1.28 0.0% (239.00)
D/S Norden A/S (29.6%) 0.99 8.2% 4.4% 4.5% 0.48 4.13 3.24 6.3% 17.97
D/S Torm (90.6%) 0.43 0.7% (51.5%) (11.1%) 0.07 (1.00) 0.18 4.4% (5.73)
d'Amico International Shipping (54.7%) 0.42 9.5% (6.5%) (1.3%) 0.27 11.43 1.70 47.2% (0.89)
Danaos Corporation (10.4%) 0.13 66.5% 3.2% 5.5% 0.83 10.70 0.40 87.2% 3.72
DFDS A/S (11.7%) 0.87 12.9% 11.0% 6.1% 0.76 4.97 1.23 30.6% 5.03
DHT Holdings, Inc. (77.0%) 0.20 52.7% (20.0%) (6.8%) 0.23 5.10 1.45 56.1% (4.57)
Diana Shipping Inc. (38.4%) 0.16 65.0% 9.2% 7.0% 0.50 3.24 9.00 22.2% 24.64
DryShips Inc. (63.6%) 0.14 52.8% (2.2%) 1.9% 0.27 7.75 0.78 54.8% 0.96
Eagle Bulk Shipping Inc. (81.1%) 0.17 33.7% (2.2%) 1.7% 0.09 10.70 0.81 61.9% 0.70
Eitzen Chemical (91.2%) 0.35 6.0% (99.5%) (9.3%) 0.29 35.62 1.57 90.1% (2.62)
Euronav (70.5%) 0.15 33.4% (9.3%) (1.4%) 0.25 9.46 1.17 54.8% (0.52)
Euroseas (29.0%) 0.21 36.1% 0.5% 1.6% 0.35 4.47 1.84 22.5% 2.31
Excel Maritime Carriers Ltd (74.2%) 0.12 30.0% (12.8%) (5.8%) 0.08 9.61 0.49 38.1% (6.71)
Exmar NV 11.5% 0.27 20.1% (9.1%) (0.7%) 1.29 13.11 1.42 72.3% (0.28)
Finnlines Plc (3.4%) 0.41 14.0% (0.6%) 1.4% 0.84 12.09 0.30 60.9% 0.77
First Ship Lease (31.6%) 0.13 77.0% (5.1%) 0.4% 0.44 6.42 0.62 57.4% 0.14
Freeseas (88.5%) 0.15 29.8% (111.4%) (42.7%) 0.08 0.28 0.53 0.0% (20.63)
Frontline LTD (82.2%) 0.29 27.8% (111.7%) (3.3%) 1.66 7.21 2.45 87.8% (0.65)
Genco Shipping & Trading Ltd. (53.1%) 0.12 63.4% 2.2% 3.6% 0.21 6.14 1.17 56.7% 1.30
Global Ship Lease, Inc. (63.4%) 0.16 65.9% 2.8% 5.1% 0.30 5.43 0.65 59.2% 2.39
Globus Maritime (56.4%) 0.15 57.9% 5.4% 3.9% 0.24 6.30 1.29 43.0% 3.64
Golar LNG Ltd. 203.7% 0.14 64.0% 8.6% 5.6% 5.26 24.02 0.41 62.0% 4.70
Golden Ocean Group (45.4%) 0.26 44.5% 2.6% 4.4% 0.55 5.19 2.00 52.3% 2.34
Goldenport Holdings (37.7%) 0.20 47.3% 0.9% 1.4% 0.37 5.99 0.98 48.5% 0.99
Grindrod Limited (23.8%) 2.09 2.4% 7.6% 2.9% 0.89 8.80 1.89 19.3% 2.24
Hellenic Carriers (42.0%) 0.15 52.5% (27.8%) (11.9%) 0.32 3.70 3.62 46.0% (5.17)
IM Skaugen ASA (19.2%) 0.45 5.2% (13.0%) 0.1% 1.93 27.20 0.84 50.0% 0.01
International Shipholding (20.5%) 0.44 19.1% 13.1% 4.1% 0.43 7.42 1.30 53.4% 2.39
Financial Results
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Company Total Turnover Profit ROE ROA Price / EV/ Current Debt/ Debt
Returns to Rate Margin Book EBITDA Ratio Capitalization Coverage
Shareholders Ratio
Jinhui Shipping&Transportation (54.1%) 0.21 46.5% 7.8% 4.6% 0.15 3.06 2.33 38.6% 9.03
Kawasaki Kisen Kaisha, Ltd. (12.6%) 0.95 10.5% 8.9% 5.6% 0.63 5.51 1.29 52.4% 6.84Kirby Corporation 49.5% 0.78 23.7% 14.1% 13.1% 2.54 10.08 1.48 34.6% 17.45
Knightsbridge Tankers Limited (29.6%) 0.18 64.6% 8.9% 7.2% 0.93 7.17 7.33 29.4% 7.64
Mercator Lines Singapore (12.7%) 0.23 47.8% 8.2% 5.6% 0.59 5.86 0.57 36.7% 5.29
MISC 5.3% 0.31 18.3% 8.2% 1.0% 1.57 18.21 1.34 31.4% 1.20
Mitsui OSK Lines (25.7%) 0.83 13.7% 7.8% 6.6% 0.75 5.08 0.92 42.2% 10.85
Navios Maritime Acquisition Corp. (26.3%) 0.11 63.9% (1.6%) 3.6% 0.46 12.09 1.02 78.5% 0.91
Navios Maritime Holdings Inc. (27.8%) 0.21 35.7% 3.9% 4.2% 0.35 6.42 1.47 56.6% 1.37
Navios Maritime Partners (15.3%) 0.21 76.0% 12.4% 8.9% 1.46 7.46 1.12 34.1% 8.45
Neptune Orient Lines (48.6%) 1.37 (1.0%) (16.4%) (5.8%) 0.95 (43.71) 0.83 42.6% (11.95)
NewLead Holdings Ltd (81.2%) 0.12 31.5% (500.3%) (37.0%) (0.02) (0.07) 0.06 0.0% (7.00)
Nippon Yusen Kaisha (10.6%) 0.89 11.5% 11.7% 5.6% 0.79 5.56 1.40 56.3% 7.27
Nordic American Tanker Shipping Ltd (49.5%) 0.09 10.2% (7.8%) (5.0%) 0.65 80.32 4.64 21.0% (25.82)
Nordic Tankers (69.1%) 0.45 5.9% (76.6%) (8.0%) 0.61 28.88 0.74 90.9% (2.47)
Odfjell ASA (31.5%) 0.45 10.3% 30.3% (0.1%) 0.47 11.90 1.27 52.7% (0.08)
Orient Overseas International Limited (36.9%) 0.72 6.9% 3.7% 2.0% 0.85 9.20 2.45 34.3% 6.47
Overseas Shipholding Group (64.8%) 0.25 30.9% (11.5%) 3.5% 0.21 7.19 2.44 56.9% 1.80
Pacific Basin Shipping Limited (37.2%) 0.54 12.0% 2.1% 0.2% 0.51 5.42 3.73 32.5% 0.16
Paragon Shipping (79.9%) 0.15 54.1% (79.7%) (41.5%) 0.18 3.88 0.93 43.3% (27.81)
Precious Shipping (7.6%) 0.14 47.6% 4.8% 3.8% 1.10 12.82 5.75 29.2% 5.03
Regional Container Lines PCL (56.6%) 0.53 (3.9%) (6.0%) (7.1%) 0.43 (12.39) 1.08 31.0% (5.30)
Rickmers Maritime (16.2%) 0.13 79.5% 10.9% 6.6% 0.25 5.63 0.90 61.8% 1.78
Safe Bulkers Inc. (25.6%) 0.20 77.0% 31.1% 12.9% 1.28 6.51 0.74 58.4% 20.55
Samudera Shipping Line Ltd (41.3%) 0.97 7.2% 5.5% 2.3% 0.23 6.23 1.50 43.8% 3.41
Scorpio Tankers (51.6%) 0.19 11.6% 30.0% (17.6%) 0.65 30.89 3.38 33.2% (15.12)
Seacor Holdings Inc. (12.0%) 0.56 11.5% 2.3% 2.3% 1.04 9.72 2.59 35.8% 2.17
Seanergy Maritime Holdings Corp. (84.3%) 0.18 45.3% (112.5%) (32.4%) 0.21 6.33 0.74 79.6% (14.93)
Seaspan Corporation 15.7% 0.11 67.3% (7.7%) 4.9% 0.80 8.90 2.74 71.1% 4.76
Ship Finance International Limited (49.4%) 0.10 69.2% 15.6% 5.3% 0.86 11.78 1.11 67.3% 1.49
Star Bulk (59.2%) 0.15 44.3% (15.1%) (9.1%) 0.16 6.07 0.60 34.8% (12.46)
StealthGas Inc. (51.4%) 0.17 32.7% 2.7% 0.3% 0.25 9.12 1.01 50.3% 0.28
Stolt-Nielsen SA 0.0% 0.62 15.8% 7.1% 4.6% 0.77 7.27 0.62 45.1% 4.51
STX Pan Ocean Co., Ltd. (46.2%) 0.91 0.3% (0.9%) (1.9%) 0.51 231.36 1.20 55.2% (1.42)
Teekay Corp. (15.4%) 0.19 33.6% (11.1%) 0.4% 0.56 10.34 1.07 63.1% 0.29
Teekay LNG Partners L.P. (6.1%) 0.11 69.8% 9.5% 4.9% 1.89 14.65 0.58 61.6% 3.48
Teekay Offshore Partners LP 3.0% 0.32 40.0% (16.0%) 3.4% 3.88 9.22 0.81 78.8% 2.73
Teekay Tankers (64.7%) 0.13 52.6% (2.0%) 0.8% 0.45 8.63 1.66 41.5% 1.69
Thoresen Thai (36.3%) 0.36 20.1% 0.5% 2.1% 0.40 4.85 1.81 29.5% 1.41
Tsakos Energy Navigation (TEN) (46.2%) 0.15 26.0% (9.2%) (1.6%) 0.24 13.28 1.03 59.0% (0.87)
Ultrapetrol Bahamas Limited (53.7%) 0.37 19.2% (7.2%) 2.3% 0.37 9.35 1.44 66.8% 0.55
U-Ming Marine Transport (21.5%) 0.19 47.1% 10.0% 5.6% 1.44 8.00 2.67 25.4% 9.75
Wilh. Wilhelmsen ASA (30.4%) 0.11 106.8% 12.4% 8.7% 0.87 6.11 1.44 50.9% 6.05
Yang Ming Marine Transport (52.7%) 0.90 (3.0%) (26.3%) (8.0%) 1.16 (25.29) 0.79 69.3% (6.43)
Financial Results continued
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Kirby is the nations largest
domestic tank barge operator,
transporting bulk liquid prod-
ucts throughout the Mississippi
river system, on the Gulf Intra-
coastal Waterway and, with the
acquisition of K-Sea along all
three U.S. coasts and in Alaskaand Hawaii. In addition, the
company owns a diesel engine
services business.
Overall, the company generated
net earnings of $183 million in
2011, an increase of 36% over
the prior years result despite
high water and flooding along
the Mississippi. This was largely
driven by top line growth asrevenues increased 67% year
over year to $1.85 billion.
Representing 65% of total
revenues, the Marine Trans-
portation segment grew
revenues by 31% and operating
income by 36% compared to
2010. This revenue growth is
attributed to the acquisition of
K-Sea as well as increased tank
barge demand and utilization asproduction volumes increased.
And most impressively, this
growth was achieved with
approximately 75% of these
revenues under term contracts
with only 25% spot. The diesel
engine services segment grew
exponentially largely as the
impact of the United acquisi-
tion was felt. Representing 35%
of total revenues, this segmentexperienced revenue and oper-
ating income growth of 237%
and 231% respectively
compared to the prior year
largely driven by the demand
for the manufacture and service
of hydraulic fracturing equip-
mare most closely followed Tor
Olav Troims dictum that a
strong balance sheet is a sign of
weak management.
The financial product for these
times must be the MLP. The
regular yield should lead tostability in share price and
accretive dropdowns to revenue
and earnings growth. Despite
the malaise of the dry bulk
sector, Navios Maritime Part-
ners finished 3rd in the rank-
ings with top ten finishes in
four categories, including profit
margin (5th), ROE (10th)
ROA (5th) and price/book
(10th). With the fleet timechartered, and a lean cost struc-
ture the profit margin was a
remarkable 76%. Unfortu-
nately, even with its stable yield,
the stock lost favor leading to a
TRS of -15.3%, which, in these
times, was strangely good
enough to place 20th in that
category. In terms of numbers,
revenues continued the
expected trend growing 31% to$187 million however higher
expenses due to the increased
fleet size limited the growth of
net income to $65 million or
approximately 8% year over
year. The company also had a
strong finish in the financial
strength rankings finishing in
17th place, reflecting low
gearing and strong coverage as
it amortizes its debt.
Its name says it all. Following
2009s 1st place finish and last
years 2nd place finish, Safe
Bulkers, based upon three top
five finishes in profit margin
(3rd), ROE (1st) and ROA
cash cows.
Without a doubt all shipping
companies have good relation-
ships with their charterers, but
Costamares appears to go
beyond the norm. This is best
exemplified by the recent vesselswap arrangements with MSC,
in which the latter agreed to re-
deliver older tonnage and
replace them with more
modern tonnage with new
extended time charters. In a
commercial sense, the two
companies are nearly symbiotic.
The company had a strong
performance in all categorieswith four top ten finishes in
TRS (8th), ROE (4th), ROA
(7th) and Price/Book (3rd).
The one major stumbling blockto a higher overall ranking was
the total asset turnover cate-
gory. Interestingly, the
companys financial measures
this year were nearly identical
with those of last years. In
terms of operating performance
voyage revenues grew 8.2% to
$382.2 million, while net
income grew 7.8% to $87.6
million.
In terms of financial strength
the company ranked 62nd
based upon its aggressive use of
leverage; nevertheless, interest
coverage remained substantial.
Of the top five finishers, Costa-
ment. Operating margin was
relatively stable.
In terms of financial strength,
Kirby fell one place in those
rankings this year to 8th place
(in a tie with Jinhui), which was
largely attributable to theacquisition of K-Sea, which
consumed liquidity and added
debt.
In its first regular appearance in
the rankings, Costamares
performance evidenced the
success of its corporate strategy
and its implementation by
taking the place or 2nd posi-
tion. Careful management offleet employment is critical to
the strategy. This involves the
careful choice of counterparties
with whom they enter intolong-term charters, generating
strong contracted cash flows.
These arrangements provide
stable earnings and downside
protection. But should the
market turn up the company
will not be left behind, as a vari-
able portion of the fleet is
employed on short-term char-
ters leaving the company able
to exploit the improving marketas the ships roll off charter. In
addition, with its focus on a
mixed age fleet, the company
differentiates itself somewhat
from its competitors. The older
vessels, with commensurately
lower capital costs are veritable
And, in the long distances,slow and steady wins the race,
according to the righteous.
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(2nd), took the 4th slot. Unfor-
tunately, a declining share price
took its toll hurting its standing
in both TRS and the price to
book categories. Safe Bulkers is
an old-line, Greek shipping
company with a twist. Unlike
its compatriots, which histori-cally focused on second hand
tonnage, the company invests
in high specification, fuel effi-
cient newbuildings in the low
point of the cycle. And while,
like its predecessors, it appreci-
ates the rewards of the spot
market, it also understands the
contribution of long-term char-
ters for cash flow visibility. To
that point, the company alsoopened our eyes to the concept
of forward fixing, a concept we
were unaware of but quickly
appreciated. In terms of finan-
cial strength, the company
finished in the 43rd position
largely based upon reduced
liquidity. Its debt to capitaliza-
tion ratio at 58% remains
reasonable and is adequately
covered by the 2nd highest debtcoverage ratio calculated at 21x.
While the top line grew 7.7%
to $172 million, net income
declined to $89.7 million from
$109.6 million as charter rates
declined 5.4% and operating
costs and days increased due to
the delivery of two new vessels.
Given the overall condition of
the dry bulk market this surelyranks as a stellar performance.
Since its founding, the
company has been a leader in
these rankings and we see no
reason why that should change.
And, last but not least, we note
leader. After all, why would you
change your views? A quick
glance at the top finishers shows
the usual cast of characters
including Diana Shipping, D/S
Norden, Knightsbridge, U-
Ming, Precious Shipping
OOIL, Kirby and Jinhui.
We will again close with our
annual mantra. There are no
winners or losers here just
placeholders. This year seven
companies left the top ten while
only three remained behind as
the poor market added new
victims.
And, as we approach the halfway mark of this year, we see a
far tougher environment with
success again determined by
access to capital, liquidity and
cost management. An already
weak economy is being battered
by the continuing European
financial crisis. The Chinese
economy is slowing and recent
news depicts a weakening in
Indias economy as well. At themicro level, the over-supply of
tonnage remains a major factor
even as tonnage continues to be
absorbed. Similarly, the banks
and capital markets are open
but a natural selection process
has its favorites here too.
Uncertainty still reigns and
with that opportunity. In the
third year of the crisis, the
motto of the TV show Survivorresonates: Outwit, Outplay
Outlast. Are you ready?
Congratulations to all on a job
well done.
Wheat Board. Naturally, this
led to the refinancing of its
credit facilities in order to fund
the above.
With the switchover to IFRS
from Canadian GAAP, year
over year comparisons are diffi-cult. On a re-stated basis
revenues grew from $393.4
million to $582.7 million
which generated net earnings of
$68.8 million versus $18.6
million for the prior year. The
results for the year were driven
largely by higher utilization of
the domestic dry bulk and
tanker fleets, improved expense
ratios and the accretive impactof the ULG transaction. We
would be surprised if this is the
last time weve heard from this
company, which staged a trulyremarkable turnaround.
Rounding out the top ten
finishers are Golar LNG in 6th
place, A.P. Moeller-Maersk in
7th, TK LNG Partners in 8th,
NYK in 9th and U-Ming in
10th. This small group empha-
sizes the importance of being in
the current hot sector, diversi-
fied or simply well-managed.
Lastly, given our credit bent, we
would be remiss if we did not
point you to the financial
strength rankings that follow.
Generally, the rule of thumb
here is once a leader always a
the remarkable performance of
Algoma Central Corporation,
which finished in 5th place in
the financial performance rank-
ings and 6th in the financial
strength rankings. After middle
of the pack rankings for seven
years, this was the proverbialperfect storm. The company
had top ten finishes in TRS
(5th), helped somewhat by its
somewhat illiquid shares, ROE
(6th) and ROA (4th).
The companys president called
the year an outstanding and
game changing 2011. At the
beginning, they announced the
start of the domestic dry bulkrenewal program with an initial
order of one gearless bulk
carrier and three self-unloaders.
This was followed by the acqui-sition of Upper Lakes Groups
interest in the joint domestic
shipping operation which
included ULGs interest in
Seaway Marine Transport along
with eleven 100% owned
vessels, its interest in four
jointly owned vessels as well as
an unloader and gearless bulk
carrier on order in China for
total consideration of $88.4million. The company then
increased its domestic order to
eight new design Great Lakes
class self-unloading bulk
carriers of which six will be
wholly owned and two
managed for the Canadian
Uncertainty still reigns and with thatopportunity. In the third year of the crisis,
the motto of the TV show Survivor resonates:Outwit, Outplay, Outlast.
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Financial Strength Rankings
Company Current Result Debt/Capitalization Coverage 2011 Credit
Rank Rank Rank Rank
Diana Shipping Inc. 1 8 1 1
D/S Norden A/S 9 5 3 2
Knightsbridge Tankers Limited 2 13 11 3
U-Ming Marine Transport 12 10 8 4
Precious Shipping 4 12 20 5
Algoma Central Corporation 10 20 7 6
Orient Overseas International Limited 15 25 15 7
Kirby Corporation 27 26 4 8
Jinhui Shipping&Transportation 17 31 9 8
Grindrod Limited 20 6 37 10
Baltic Trading Ltd 3 11 50 11
Euroseas 21 9 36 12
AP Moller - Maersk Group 47 23 5 13DFDS A/S 41 15 19 13
Seacor Holdings Inc. 13 28 38 15
Thoresen Thai 22 14 43 15
Navios Maritime Partners 46 24 10 17
Pacific Basin Shipping Limited 6 19 57 18
Samudera Shipping Line Ltd 26 38 29 19
Nordic American Tanker Shipping Ltd 5 7 82 20
Wilh. Wilhelmsen ASA 30 47 17 20
Concordia Maritime 18 46 30 20
Alexander & Baldwin 56 17 23 23
MISC 34 18 46 24
Teekay Tankers 24 33 41 24
Mitsui OSK Lines 59 34 6 26
Kawasaki Kisen Kaisha, Ltd. 37 49 14 27
Globus Maritime 38 36 27 28
CMB 45 32 25 29
Golden Ocean Group 19 48 35 29
Nippon Yusen Kaisha 33 57 13 31
Seaspan Corporation 11 75 21 32
Scorpio Tankers 8 22 80 33
Overseas Shipholding Group 16 60 39 34COSCO Holdings 35 66 16 35
Hellenic Carriers 7 40 70 35
International Shipholding 36 51 33 37
Courage Marine Group 39 1 84 38
Mercator Lines Singapore 77 29 18 38
Navios Maritime Holdings Inc. 28 58 44 40
d'Amico International Shipping 23 42 65 40
China Shipping Development 60 41 32 42
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Financial Strength Rankings continued
Company Current Result Debt/Capitalization Coverage 2011 Credit
Rank Rank Rank Rank
Safe Bulkers Inc. 70 62 2 43
Stolt-Nielsen SA 72 39 24 44
Regional Container Lines PCL 50 16 71 45
Capital Product Partners 48 52 47 46
Genco Shipping & Trading Ltd. 44 59 45 47
Goldenport Holdings 57 43 48 47
China Shipping Container Lines 52 21 76 49
Odfjell ASA 40 50 60 50
DHT Holdings, Inc. 29 56 69 51
StealthGas Inc. 55 45 56 52
Ultrapetrol Bahamas Limited 31 72 54 53
Euronav 43 54 62 54
Frontline LTD 14 82 63 54D/S Torm 83 4 72 54
Freeseas 78 1 81 57
NewLead Holdings Ltd 84 1 75 57
STX Pan Ocean Co., Ltd. 42 55 66 59
Ship Finance International Limited 49 73 42 60
IM Skaugen ASA 62 44 59 61
Costamare Inc 74 80 12 62
DryShips Inc. 67 53 49 63
Rickmers Maritime 61 68 40 63
Global Ship Lease, Inc. 71 64 34 63
Exmar NV 32 76 61 63
Teekay LNG Partners L.P. 76 67 28 67
Golar LNG Ltd. 80 70 22 68
Teekay Offshore Partners LP 64 78 31 69
Neptune Orient Lines 63 35 77 70
Eitzen Chemical 25 83 68 71
Teekay Corp. 51 71 55 72
Paragon Shipping 58 37 83 73
Tsakos Energy Navigation (TEN) 53 63 64 74
Star Bulk 75 27 78 74
Navios Maritime Acquisition Corp. 54 77 51 76Excel Maritime Carriers Ltd 79 30 74 77
Eagle Bulk Shipping Inc. 65 69 53 78
Danaos Corporation 81 81 26 79
First Ship Lease 73 61 58 80
Finnlines Plc 82 65 52 81
Yang Ming Marine Transport 66 74 73 82
Nordic Tankers 68 84 67 83
Seanergy Maritime Holdings Corp. 69 79 79 84
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Global Maritime Industry by Equity Market Capitalization
Company Market Cap Market Cap Sector Domicile$US MM Rank
AP Moller - Maersk Group $29,087 1 Multi-Sector Denmark
MISC $10,850 2 Multi-Sector Malaysia
COSCO Holdings $7,571 3 Multi-sector PRCMitsui OSK Lines $7,518 4 Multi-Sector Japan
Nippon Yusen Kaisha $7,058 5 Multi-Sector Japan
China Shipping Container Lines $4,486 6 Container PRC
Kirby Corporation $3,670 7 Barge USA
Orient Overseas International Limited $3,655 8 Liner Bermuda
Golar LNG Ltd. $3,567 9 Tanker Bermuda
China Shipping Development $3,179 10 Multi-Sector PRC
Kawasaki Kisen Kaisha, Ltd. $3,051 11 Multi-Sector Japan
Neptune Orient Lines $2,466 12 Liner Singapore
Teekay LNG Partners L.P. $2,151 13 Gas Marhall Islands
Teekay Offshore Partners LP $1,879 14 Offshore Marsahll IslandsSeacor Holdings Inc. $1,862 15 Multi-Sector USA
Teekay Corp. $1,837 16 Tanker Marshall Islands
Alexander & Baldwin $1,702 17 Multi-Sector USA
U-Ming Marine Transport $1,281 18 Bulk Taiwan
Stolt-Nielsen SA $1,151 19 Multi-Sector Luxembourg
Yang Ming Marine Transport $1,135 20 Liner Taiwan
STX Pan Ocean Co., Ltd. $1,080 21 Multi-Sector Korea
Wilh. Wilhelmsen ASA $1,055 22 Liner Norway
Grindrod Limited $1,027 23 Multi-Sector South Africa
D/S Norden A/S $966 24 Multi-sector Denmark
Seaspan Corporation $947 25 Container Marshall Islands
DFDS A/S $920 26 Liner Denmark
Costamare Inc $854 27 Container Marshall Islands
DryShips Inc. $850 28 Bulk Marshall Islands
Navios Maritime Partners $818 29 Bulk Marshall Islands
CMB $759 30 Bulker Belgium
Pacific Basin Shipping Limited $758 31 Multi-Sector Bermuda
Ship Finance International Limited $739 32 Multi-Sector Bermuda
Diana Shipping Inc. $610 33 Bulker Marshall Islands
Nordic American Tanker Shipping Ltd $567 34 Tanker Bermuda
Precious Shipping $543 35 Bulker Thailand
Odfjell ASA $474 36 Tanker Norway
Finnlines Plc $467 37 Liner Finland
Exmar NV $444 38 Gas Belgium
Capital Product Partners $425 39 Tanker Marshall Islands
Safe Bulkers Inc. $425 40 Bulk Marshall Islands
Algoma Central Corporation $389 41 Multi-Sector Canada
Danaos Corporation $367 42 Container Marshall Islands
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Global Maritime Industry by Equity Market Capitalization continued
Company Market Cap Market Cap Sector Domicile$US MM Rank
Navios Maritime Holdings Inc. $366 43 Bulker Marshall Islands
Frontline LTD $334 44 Tanker Bermuda
Knightsbridge Tankers Limited $334 45 Tanker Bermuda Overseas Shipholding Group $332 46 Tanker USA
Thoresen Thai $329 47 Multi-Sector Thailand
Golden Ocean Group $289 48 Bulker Bermuda
Genco Shipping & Trading Ltd. $245 49 Bulker Marshall Islands
Euronav $242 50 Tanker Belgium
Mercator Lines Singapore $228 51 Bulk Singapore
Tsakos Energy Navigation (TEN) $221 52 Tanker Bermuda
Teekay Tankers $218 53 Tanker Marshall Islands
Scorpio Tankers $188 54 Tanker Marshall Islands
Regional Container Lines PCL $177 55 Liner Thailand
First Ship Lease $141 56 Multi-Sector SingaporeIM Skaugen ASA $135 57 Multi-Sector Norway
Excel Maritime Carriers Ltd $129 58 Bulker Liberia
Jinhui Shipping&Transportation $126 59 Bulker Bermuda
Navios Maritime Acquisition Corp. $109 60 Tanker Marshall Islands
Baltic Trading Ltd $108 61 Bulk Marshall Islands
International Shipholding $107 62 Multi-Sector USA
Global Ship Lease, Inc. $99 63 Container Marshall Islands
Rickmers Maritime $98 64 Container Singapore
Goldenport Holdings $96 65 Multi-sector Marshall Islands
Concordia Maritime $90 66 Tanker Bermuda
Ultrapetrol Bahamas Limited $89 67 Multi-sector Bahamas
d'Amico International Shipping $86 68 Tanker Luxembourg
StealthGas Inc. $79 69 Gas Marshall Islands
Euroseas $73 70 Multi-Sector Marshall Islands
Star Bulk $72 71 Bulk Marshall Islands
Courage Marine Group $69 72 Bulk Bermuda
Eagle Bulk Shipping Inc. $59 73 Bulker Marshall Islands
Samudera Shipping Line Ltd $54 74 Multi-Sector Singapore
DHT Holdings, Inc. $48 75 Tanker Marshall Islands
D/S Torm $47 76 Multi-Sector Denmark
Paragon Shipping $39 77 Bulk Marshall Islands
Globus Maritime $33 78 Bulk Jersey
Eitzen Chemical $30 79 Tanker Norway
Hellenic Carriers $29 80 Bulk Jersey
Seanergy Maritime Holdings Corp. $16 81 Bulk Marshall Islands
Nordic Tankers $15 82 Tanker Denmark
NewLead Holdings Ltd $4 83 Multi-Sector Bermuda
Freeseas $3 84 Bulker Marshall Islands
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Total Return toShareholders
Only One Way to Go!By Jim Lawrenceempting as it may be to
focus on the absolutely
dismal general Total Return to
Shareholders figures for 2011
and wonder just who bought
shares in shipping last year and,worse, pity those who held on,
a different and more construc-
tive approach might be to
remind ourselves that what goes
down in a cyclical industry
must eventually go up!
Not to be patronizing, but
shareholder returns do reflect,
to great extent, investor interest
or lack thereof for the sectorrather more than management
skill. And, we tip our hats to
those in the Investor Relations
side of the business.
Despite an industry wide
collapse and investor apathy, it is
therefore even more appropriate
to acknowledge the ten members
of the Marine Money Rankings
who achieved positive Returns toShareholders, well actually nine
as number ten, Stolt-Nielsen had
a zero return (see the table on the
pages that follow).
The LNG sector, conservative
leverage, recurring and stable
business contracts and diversifi-
cation away from pure shipping
assets marked the superior
returns of the Top Ten. Golar
LNG which returned 204% to
its shareholders should feel
remarkably proud of itsachievement. But then so
should each company and their
management and staff. It was
after all the third year of
horrendous shipping markets.
Kirby is a regular superior
performer and this years stellar
returns helped propel the
company to the top spot in the
Rankings. Algoma has had itsups and downs, though more
ups than downs! Seaspan has
been rewardingly and positively
consistent. In 2011, Exmar
returns to the positive as does
MISC, though both companies
are historic steady performers.
Alexander and Baldwin too is a
consistent value for share-
holders though it suffered a
difficult 2006. NewcomerCostamares total return
performance helped the
companys 2nd place finish in
the overall Rankings.
It is abundantly clear that while
asset cycles are an unavoidable
reality when investing in ship-
Mean Total Return to Shareholders
2006 19%
2007 52%
2008 -55%
2009 33%
2010 10%
2011 -34%
T ping, management and manage-ments strategies can have a
materially positive impact, and,
unless one is a day trader, a look
back over a decade of Marine
Money Rankings might make agood place to begin any invest-
ment investigation.
But Look at theBright Side
While 75 of our 84 public
companies delivered negative
Returns to Shareholders, with
an industry median of -34%, it
was only a few short years ago,
in 2007, that the industryaverage was +52%. As the chart
below indicates shippings
Mean Return to Shareholder
performance has been a roller
coaster. When good it has been
very good. Whether driven by
fear and sentiment as in 2008,
when freight remained surpris-
ingly strong following Lehmans
collapse, yet shares fell precipi-
tously or 2011 when fear, senti-
ment and the freight rate facts
pounded actual performance
one must watch market senti-
ment closely when it comes to
shareholder returns.
2006 and 2007:The TippingPointIt is recent history but it
deserves mention again that the
two years 2006 and 2007 saw a
whopping 34 IPOs which it can
be argued forever shifted the
return landscape. As a small
example of how things havechanged of 2006s top two Total
Return to Shareholder winners
one is in bankruptcy and the
other was taken private
following its own collapse. But
the net gain in listed companies
should give start to dreams of
even the smallest investor that
they too, when the market
turns, can be a magnate.
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Total Return to Shareholders
2011 2006
Industry Mean -34.00% Industry Mean 19.32%
Industry Median -36.80% Industry Median 14.14%
Industry Std. Dev. 38.30% Industry Std Dev 31.44%Coefficient of Variation -1.13 Coefficient of Variation 1.63
Golar LNG Ltd. 203.70% Horizon Lines, Inc. 119.90%
Kirby Corporation 49.50% American Commercial Lines Inc. 116.06%
Seaspan Corporation 15.70% Orient Overseas International Limited 110.36%
Exmar NV 11.50% DFDS A/S 79.48%
Algoma Central Corporation 11.00% Precious Shipping 75.49%
MISC 5.30% Jinhui Shipping&Transportation 75.14%
Alexander & Baldwin 5.10% Genco Shipping & Trading Ltd. 74.57%
Costamare Inc 5.00% D/S Norden A/S 70.60%
Teekay Offshore Partners LP 3.00% PT Berlian Laju Tanker 69.37%
Stolt-Nielsen SA 0.00% James Fisher & Sons, plc 61.20%Finnlines Plc -3.40% DryShips Inc. 53.93%
Teekay LNG Partners L.P. -6.10% Pacific Basin Shipping Limited 47.92%
Precious Shipping -7.60% Ship Finance International Limited 47.03%
Danaos Corporation -10.40% Trico Marine Services, Inc. 46.78%
Nippon Yusen Kaisha -10.60% Algoma Central Corporation 44.42%
DFDS A/S -11.70% Seacor Holdings Inc. 42.75%
Seacor Holdings Inc. -12.00% Solstad Offshore ASA 40.43%
Kawasaki Kisen Kaisha, Ltd. -12.60% Exmar NV 38.89%
Mercator Lines Singapore -12.70% D/S Torm 38.06%
Navios Maritime Partners -15.30% Global Oceanic Carriers 36.46%
Teekay Corp. -15.40% Nordic American Tanker Shipping Ltd 34.68%
Rickmers Maritime -16.20% Double Hull Tankers 34.31%IM Skaugen ASA -19.20% Concordia Maritime 34.29%
International Shipholding -20.50% Belships ASA 33.33%
CMB -20.70% Diana Shipping Inc. 32.24%
U-Ming Marine Transport -21.50% Kirby Corporation 30.82%
AP Moller - Maersk Group -22.40% Tsakos Energy Navigation 29.22%
Grindrod Limited -23.80% Navios Maritime Holdings Inc. 28.18%
Safe Bulkers Inc. -25.60% STX Pan Ocean Co., Ltd. 25.60%
Mitsui OSK Lines -25.70% Excel Maritime Carriers Ltd 25.19%
Navios Maritime Acquisition Corp. -26.30% Grindrod Limited 25.08%
Capital Product Partners -27.00% CMB 24.43%
Navios Maritime Holdings Inc. -27.80% Seaspan Corporation 23.37%
Euroseas -29.00% Finnlines Plc 21.95%
D/S Norden A/S -29.60% Eagle Bulk Shipping Inc. 21.68%
Knightsbridge Tankers Limited -29.60% TBS International Limited 20.05%
Wilh. Wilhelmsen ASA -30.40% Teekay LNG Partners L.P. 19.75%
Odfjell ASA -31.50% Gulfmark Offshore, Inc. 19.37%
First Ship Lease -31.60% OMI Corporation 19.20%
Thoresen Thai -36.30% Mitsui OSK Lines 16.95%
Concordia Maritime -32.00% Bourbon Offshore 17.24%
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2011 2006
China Shipping Development -36.70% Quintana Maritime Limited 16.75%
Orient Overseas International Limited -36.90% Teekay Shipping Corp. 14.20%
Pacific Basin Shipping Limited -37.20% Nippon Yusen Kaisha 14.09%Goldenport Holdings -37.70% Arlington Tankers Ltd. 12.59%
Diana Shipping Inc. -38.40% Star Reefers ASA 12.14%
Samudera Shipping Line Ltd -41.30% Overseas Shipholding Group 8.75%
Hellenic Carriers -42.00% General Maritime Corp 5.38%
Golden Ocean Group -45.40% Thoresen Thai 4.95%
China Shipping Container Lines -45.80% Yang Ming Marine Transport 4.93%
STX Pan Ocean Co., Ltd. -46.20% Knightsbridge Tankers Limited 4.21%
Tsakos Energy Navigation -46.20% Tidewater, Inc. 3.88%
Neptune Orient Lines -48.60% Courage Marine Group 3.75%
Baltic Trading Ltd -49.10% Frontline LTD 2.45%
COSCO Holdings -49.10% Regional Container Lines PCL 1.88%
Ship Finance International Limited -49.40% Hornbeck Offshore Services Inc 1.74%Nordic American Tanker Shipping Ltd -49.50% Farstad Shipping ASA 1.09%
StealthGas Inc. -51.40% K-SEA Transportation Partners LP -0.23%
Scorpio Tankers -51.60% Brostrom -0.32%
Yang Ming Marine Transport -52.70% Euronav -1.54%
Genco Shipping & Trading Ltd. -53.10% Top Tankers Inc. -2.75%
Ultrapetrol Bahamas Limited -53.70% Premuda SPA -2.91%
Courage Marine Group -54.10% Camillo Eitzen & Co ASA -3.11%
Jinhui Shipping&Transportation -54.10% Kawasaki Kisen Kaisha, Ltd. -3.91%
d'Amico International Shipping -54.70% Star Cruises Ltd -4.58%
Globus Maritime -56.40% Golar LNG Ltd. -4.76%
Regional Container Lines PCL -56.60% Odfjell ASA -5.14%
Star Bulk -59.20% BW Gas -5.20%Global Ship Lease, Inc. -63.40% Wilh. Wilhelmsen ASA -5.38%
DryShips Inc. -63.60% MISC -5.71%
Teekay Tankers -64.70% Royal Caribbean Cruises Ltd -6.63%
Overseas Shipholding Group -64.80% Trailer Bridge Inc -6.83%
Nordic Tankers -69.10% StealthGas Inc. -7.43%
Euronav -70.50% Stolt-Nielsen SA -7.49%
Excel Maritime Carriers Ltd -74.20% AP Moller - Maersk Group -7.91%
DHT Holdings, Inc. -77.00% U.S. Shipping Partners L.P. -8.67%
Paragon Shipping -79.90% Carnival Corporation -9.82%
Eagle Bulk Shipping Inc. -81.10% Neptune Orient Lines -13.46%
NewLead Holdings Ltd -81.20% Noble Group -13.62%
Frontline LTD -82.20% Sinotrans Ltd -14.49%
Seanergy Maritime Holdings Corp. -84.30% Alexander & Baldwin -16.07%
Freeseas -88.50% B+H Ocean Carriers -20.59%
D/S Torm -90.60% IM Skaugen ASA -22.13%
Eitzen Chemical -91.20% Aries Maritime Transport -22.73%
Samudera Shipping Line Ltd -23.28%
MC Shipping, Inc. -30.15%
Total Return to Shareholders continued
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The Tip of the Iceberg?By George Weltman
s we input data into the
rankings model this year,we noticed a disturbing trend.
The number of companies
taking impairment charges had
grown as had the sizes of these
charges. Of the 84 companies
in our sample, 30, or 36%, had
taken impairment charges
totaling $3.1 billion (see
below). Ranging from AP
Moller Maersks high of $551
million to Golar LNGs $0.5million, the average impair-
ment charge was $104 million.
Clearly, given the size of our
sample and a lack of proclivity
by many to face the reality,
there is a suggestion that there
is more under the surface. The
number, in this instance, is
large but the sample is small.
And while there have been
similar charges over the pastthree years, it is only this year
that values caught up with the
reality of freight rates. Lastly,
there are also the accountants
who have been shaken rather
than stirred to ensure compli-
ance with the accounting rules.
Why should we care? One
might even say much ado
about nothing. There is nocash flow impact from this
charge, which simply flows
through the profit and loss
statement. The banks ignore
book value in their covenants
choosing to focus on market
values for the denominator in
the LTV calculation, although
some have wisely expanded
underwater. And there is a
frightening thought. For threeyears the banks have avoided
this issue but the day of reck-
oning is fast approaching unless
the market stages an earlier
than anticipated recovery. The
ramifications are horrendous
and extend far beyond ship-
ping. Time will tell. The
creativity of bankers and the
fortitude of the central bankers
will be tested.
ants, who, at least for these
purposes, insist on the historicbasis.
The real issue of impairments
lies in the repercussions. If the
owners acknowledge the
reduced valuation, what of the
bankers whose loans are secured
by these same assets. The
domino theory would suggest
that at some point the banks
have to recognize their loans are
their covenants to include
leverage as well as minimumequity. These would in fact be
triggered as equity is consumed
by losses, whether operational
or accounting.
In accounting theory, an
acquired asset is entered into
the balance sheet at its purchase
price and then is depreciated
over its economic life to a
residual. Gains or losses wouldbe recognized only upon a sale.
Impairments are different.
These are paper losses,
reflecting changes in market
value, which raise the question
of when is a loss a loss? This is
the unresolved question which
banks, among others, have
hung their hats on to avoid or
defer write-downs, declaring
paper losses irrelevant since theassets will be held to maturity.
With the impairment, the
recorded value of the asset is
reduced from its historic basis.
Depreciation expense is like-
wise reduced going forward
leading to overstated earnings
from an historical perspective.
Similarly, the tax shelter benefit
from depreciation expensedeclines, but in an industry
which pays no taxes this is
hardly relevant. Lastly, if you
are going to ignore the historic
basis of accounting, shouldnt
assets be written up as well as
down? This takes you into fair
value accounting a subject that
is an anathema to the account-
AP Moller-Maersk $551.1
Paragon Shipping $277.3
Newlead Holdings $203.7
Seanergy Maritime Holdings $201.9
D/S TORM $200.0
Teekay $187.7
MISC $182.0
Excel Maritime Carriers $146.7
DryShips $144.7
Mitsui OSK Lines $133.0
Frontline $121.4
Teekay Offshore Partners $91.1
Golden Ocean Group $86.6
Pacific Basin $80.0
Freeseas $70.0
Scorpio Tankers Inc. $66.6
Eitzen Chemical $62.5
Star Bulk Carriers $62.0
DHT Holdings Inc. $56.0
Tsakos Energy Navigation $39.4
Hellenic Carriers $29.3
Jinhui Shipping $25.4
Dockwise $24.8
First Ship Lease $18.3
Global Ship Lease $13.6
Teekay Tankers Ltd $13.3
Nordic Tankers $13.2
StealthGas $9.9
Stolt-Nielsen $8.5
Golar LNG $0.5
$3,120.6
Impairment Charges - 2011
A
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The Class of 2011By Jim Lawrence
he Class this year is inter-esting, and frankly given
the challenges 2011 posed for
shipping and the public
markets, whether New York or
Oslo, that a Class exists at all is
a testament to its principals,
bankers and investors who
could see the opportunity.
Perhaps, the LNG story was not
so difficult to sell. But the Box
for owners and investmentopportunity for retail and insti-
tutional buyers. Despite the
fact that in 2009, there was not
a single IPO, there was plenty of
follow on activity that year.
While it is tempting to gener-
alize and say the industrys expe-
rience with the public markets
and vice a versa has been all
good, the fact is some have
Ships and Diana Container-
ships stories were fine examples
of public vehicles, able to
execute despite the markets
general sentiment.
The arrival of shipping six years
ago in a big way to the public
markets seemed to promise a
future book of business for
investment banks, optionality
Company 2007 Rank 2008 Rank 2009 Rank 2010 Rank 2011 Rank
IPOs: 2006
Aegean Marine Petroleum Network Inc 21 32 11 58 -
Chemoil Energy Limited 60 65 25 60 -
Danaos Corporation 41 56 69 70 21
Eitzen Chemical ASA 97 95 100 77 80
Goldenport Holdings Inc. 13 42 80 - 57
Omega Navigation 80 63 - - -Pacific Shipping Trust 82 68 22 18 -
Teekay Offshore Partners LP 51 55 7 11 22
Ultrapetrol Bahamas Limited 55 76 75 53 58
IPOs: 2007
Capital Product Partners - 34 13 17 26
D'Amico International Shipping - 15 87 78 67
Dockwise - 91 28 - -
First Ship Lease Trust - 71 56 74 50
Gulf Navigation - 74 89 - -
Globus Maritime - 52 81 42 53
Hellenic Carriers - 44 16 21 68
Mercator Lines - 53 29 18 16Navios Maritime Partners - 13 2 3 3
Nordic Tankers - 88 97 88 73
OceanFreight - - 98 75 -
OSG Americas - 92 - - -
Paragon Shipping - 49 32 67 78
Rickmers Maritime - 75 58 81 25
Sinotrans Shipping - 62 44 - -
Star Bulk - 43 95 68 77
Teekay Tankers - 5 65 28 63
Recent IPOs
performed admirably whileothers have been horrendous.
The past two years have
brought 10 quality offerings to
the market. While we do not
integrate the Class of 2011 into
the full Ranking list, the Class
of 2010 has performed well
Costamare most notably was
one of just nine companies in
T
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Company 2007 Rank 2008 Rank 2009 Rank 2010 Rank 2011 Rank
IPOs: 2008
Brittania Bulk*
Safe Bulkers - - 1 2 4
IPOs: 2009
None
IPOs: 2010
Baltic Trading 64
Costamare 2
Crude Carriers -
Navios Maritime Acquisition 44
Scorpio Tankers 54
IPOs: 2011
Box Ships -
Diana Containerships -
Golar LNG Partners -
Hoegh LNG Holdings -SinOceanic Shipping -
*Filed for bankruptcy
our Rankings universe which
delivered a positive Total
Return to Shareholders last
year. Navios Maritime Acquisi-
tion Corp and Scorpio have
been active. Crude brought
public in 2010 and taken over
in 2010, probably holds the
title for being an independent
public company for the shortest
period of time.
The Class of 2011, is made up
of public company veterans.
Golar LNG Partners, Box,
Diana Containerships have astheir principals some of the
strongest and most experienced
public company management
professionals in the business as
each of these new vehicles
expands managements public
portfolio. SinOceanic is a small
The current market environ-
ment has meant the past two
years of offerings have faced
challenges. We acknowledge
their achievements and look
forward to benchmarking their
future development.
To be filed under woulda,
coulda, shoulda, we can disclose
that 2011 freshman, Golar LNG
Partners, in its truncated year
would have outperformed the
entire rankings universe and
finished in 1st place. It was a very
good year. Unfortunatelyfreshmen dont qualify. Lets see
what happens next year, when
the company makes its first
formal appearance.
Welcome Class of 2011.
Partners LP and Hoegh LNG
Holdings, both produced
strong positive returns for their
shareholders (23% and 24%
respectively).
Bermuda with two and the
Marshall Islands with two
grabbed top domicile spots
with Bermuda breaking the
Marshall Islands monopoly on
recent public issuances.
The momentum years of 2007
and 2006, brought many
companies to the market, butwith the shipping cycle clearly
spiking the sale was compara-
tively simple. 2008s Class of
two gave us one perennial
winner, Safe Bulkers, and one,
Brittania Bulk, bankrupt before
the end of its first year.
Oslo extension of an existing
Chinese public company.
Perhaps most intriguing is
Hoegh LNG Holdings, which
marks a return to the public
markets by the venerable
Hoegh family, who were orig-
inal shipping and public
markets pioneers in the late 80s
with Leif Hoegh & Co ASA in
Oslo and the early 90s with
Bona Shipholding. While the
former was privatized in 2003
and the latter sold in the late
90s, the family knows its wayaround the public markets and
the LNG space in particular.
While not included in the
larger Rankings universe this
year, it is a singular achievement
that two of the five, Golar LNG
Recent IPOs continued
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Class of 2011 Overall Performance Rankings
Class of 2011 Global Maritime Industry by Equity Market Capitalization
Class of 2011 Financial Results
Class of 2011 Financial Strength Rankings
Company TRS Turnover Profit ROE ROA Price/ 2011
Rank Rank Rank Rank Rank Book Overall
Rank Rank
Golar LNG Partners LP 2 2 1 1 1 1 1
Box Ships Inc. 3 1 2 2 2 4 2
Diana Containerships Inc. 4 3 3 3 3 3 3
Hoegh LNG Holdings Ltd. 1 4 4 5 4 2 4
SinOceanic Shipping ASA 5 5 5 4 5 5 5
Company Total Turnover Profit ROE ROA Price / EV/ Current Debt/ Debt
Returns to Rate Margin Book EBITDA Ratio Capitalization Coverage
Shareholders Ratio
Industry Mean (21.8%) 0.16 46.5% 9.5% 4.9% 9.73 15.40 3.60 50.7% 4.08Industry Median (19.8%) 0.17 40.7% 2.5% 3.2% 0.61 12.82 0.73 47.5% 5.30
Industry Std. Dev. 46.1% 0.04 26.2% 32.2% 5.2% 19.41 8.81 5.91 37.8% 3.86
Coefficient of Variation (2.12) 0.23 0.56 3.39 1.06 2.00 0.57 1.64 0.75 0.95
Box Ships Inc. (19.8%) 0.19 65.5% 6.5% 8.7% 0.34 12.61 0.73 32.5% 5.30
Diana Containerships Inc. (63.2%) 0.17 40.7% 2.5% 3.2% 0.61 7.63 14.06 0.0% 8.50
Golar LNG Partners LP 23.4% 0.18 81.1% 64.6% 11.7% 44.38 12.82 0.60 97.3% 6.51
Hoegh LNG Holdings Ltd. 24.1% 0.15 24.8% (17.1%) 0.9% 3.07 30.61 2.45 76.2% 0.26
SinOceanic Shipping ASA (73.3%) 0.10 20.4% (9.0%) (0.3%) 0.23 13.30 0.16 47.5% (0.19)
Company Current Result Debt/Capitalization Coverage 2011 Credit
Rank Rank Rank Rank
Diana Containerships Inc. 1 1 1 1
Box Ships Inc. 3 2 3 2
Hoegh LNG Holdings Ltd. 2 4 4 3
Golar LNG Partners LP 4 5 2 4
SinOceanic Shipping ASA 5 3 5 5
Company Market Cap Market Cap Sector Domicile$US MM Rank
Golar LNG Partners LP $1,198 1 Tanker Bermuda
Hoegh LNG Holdings Ltd. $409 2 Tanker Bermuda
Box Ships Inc. $137 3 Container Marshall Islands
Diana Containerships Inc. $125 4 Container Marshall Islands
SinOceanic Shipping ASA $7 5 Container Norway
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The RankingsMethodology
e keep our methodology asconsistent as possible from
year to year so that it is possible
to create a time series of data, or
to just compare one years
winner to another. Even with
this in mind, though, it is
important to update the
methodologies and improve
them over time. We constantly
examine our financial ratios in
order to better measure compa-nies performance. The measures
developed for the 2004 Rank-
ings remain unchanged and are
likely to remain so, giving us
now six years of completely
consistent comparison.
As a review, we define financial
performance as companies
ability to improve operating
efficiency and to create share-holder value. Based on this
understanding, we distinguish
between performance ratios and
financial strength ratios. The
performance ratios focus on
evaluating the operating effi-
ciency and the ability to create
value; while the financial
strength ratios emphasize
companies financial safety and
health. While we do not believethat financial strength neces-
sarily has direct impact on or is
a direct indicator of companies
performance levels, it provides a
good benchmark from a cred-
itors standpoint and ensures
the sustainability of company
operations, and we therefore
believe it is a metric very worth
calculating and considering,but also one that should be
separated from overall financial
performance.
For our rankings methodology,
we have chosen six perform-
ance ratios, namely Total
Return to Shareholders (TRS),
ROE, ROA, Profit Margin,
Price to Book and Asset
Turnover. To evaluate financial
each companys performancefor each indicator and then
compute average rank scores
based on the unweighted
average of those indicator
ranks. The overall rank is deter-
mined according to the average
rank scores, with smaller being
better, a rank of one, of course,
being the best.
Equations for the financial
strength, we look at CurrentRatio, Debt to Capitalization,
and Interest Coverage Ratio.
From a valuation point of view,
we leave the EV/EBITDA ratio
as a straightforward, standalone
benchmark.
This year again, we have ranked
and present performance and
financial strength separately. In
each of these divisions, we rank
PERFORMANCE
Change in share price + DividendTotal Return to Shareholders =
Share price at beginning of period
SalesAsset Turnover =
Total assets
EBITDAProfit Margin =
Sales
Net incomeROE = Average shareholders' equity
EBITROA =
Average total assets
Market value of equityP/B =
Book value of equity
FINANCIAL STRENGTH
Current assetsCurrent ratio =
Current liabilities
Total debtDebt to capitalization =
Debt + Equity
EBITInterest (Debt) coverage ratio =
Interest payments
VALUATION
Enterprise valueEV/EBITDA =
EBITDA
W
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leverage, profit margin and
asset turnover.
Return on Assets
In our 2004 Rankings, we
changed our definition of the
return part of ROA from net
income to EBIT. That decisionstands today. The rationale
behind this adjustment was that
EBIT provides a more consis-
tent comparison between the
returns and the asset inputs. For
ROA, we want to evaluate how
efficient the firm is based on its
ability to create value using
total assets, consisting approxi-
mately of debt and equity. If we
calculate ROA using netincome, we would neglect the
difference brought about by
different levels of leverage.
When two firms show the same
level of net income over assets, a
highly levered firm creates more
EBIT with the same total assets
than a low-levered firm. In
other words, to compare apples
to apples, we use EBIT over
average total assets in calcu-lating ROA.
Although subject to much
debate, we have chosen to treat
the impact of asset sales as a
below the line item ensuring
comparable comparisons based
upon earnings from operations
rather than distortions created
by more active asset traders.
This treatment is consistentwith an on-going concern
rather than that of a trader.
Profit Margin
Regarding profit margin, we
use EBITDA over sales instead
of net income over sales,
because we believe EBITDA is
a less manipulated metric that
not consider TRS a sufficient
metric to measure public
company performance. This
year we have fine-tuned the
calculation by using the local
currency for share prices and
dividends, thereby eliminating
dollar exchange rate aberra-tions.
Price to Book Ratio
Price to book ratio naturally
makes up the deficiency of TRS
by measuring an absolute level
of performance. We believe the
P/B ratio demonstrates how
efficiently companies utilize
invested equity capital to create
value. A higher P/B ratio in thesame industry reflects a market
view of better future perform-
ance with the same amount of
equity invested, because better
performance will lead to greater
discounted cash flows and
better current valuation. Note
that the P/B ratio is often used
as a valuation multiple, and a
P/B value below the industry
average may mean the companyis undervalued. In our ranking
method, higher P/B ratios lead
to a better performance ranking
but of course it is very impor-
tant to remember that it all
depends at what value ships are
put in the book.
Return on Equity
ROE is an all-time favorite to
provide a shortcut performanceevaluation metric for equity
investors. Return on equity tells
us the percent returned for each
dollar (or other monetary unit)
invested by shareholders. It not
only directly measures the earn-
ings returned to equity holders,
but also factors in multiple
performance metrics like
ratios we use for Marine Money
Rankings are listed in Figure 1,
and in the following paragraphs
we provide detailed descrip-
tions of each metric, as well as
justifications for inclusion.
PerformanceRatiosTotal Returns to
Shareholders (TRS):
There are some who would
argue that TRS is all that
matters for public companies.
TRS measures investors total
returns, amounting to gains
from stock appreciation and
dividend income, during the
holding period. In MarineMoneys ranking system, we
measure TRS for the period of
the complete fiscal year. Not all
companies, however, report on
a calendar year, but are
included with the appropriate
fiscal year end. TRS essentially
measures how companies
actual performance beat market
expectations, based on the
belief that capital markets haveefficiently factored in compa-
nies future performance and
created value at the associated
risk levels. In our rankings, the
higher the TRS, the better the
rank.
On the other hand, TRS
demonstrates a high perform-
ance level relative to market
expectations rather than anabsolute high performance
level. For example, a fair
performance in a laggard
company will result in a good
jump of stock price. But in such
a scenario, this would not mean
the company is performing well
according to an absolute stan-
dard the reason that we do
better reflects a companys
performance outcomes. Net
income is easier to manipulate
or distort by using different
accounting and taxation poli-