GLBS - Globus Maritime Limited

[kab60]

I'd rather pick (and think I will when I get cash) Jinhui Shipping. It also trades at PB less than 0,2 but is CF positive and not threatened by too much det.

[TwoCitiesCapital]

Hey all:

 

ANybody else notice that the Baltic Dry Index has been moving up strongly in the past month?

 

So strong, it has gone from about 650 to 874.

 

Still at low levels, but an interesting move.

 

Meanwhile, GLBS continues to go down and is flirting with a 52 week low.

 

Anybody else tempted to pick some up here?

 

I've been noticing. 2015 was really the first year I was hoping to see the Drybulk market not have to deal with the specter of massive over-supply; however, the slowdown in China has a lot of people doubting if prices can be sustained at higher levels. We're at really low utilization rates and near record lows with slow steaming etc. There's still a lot of slack to be pulled out of the system. I'd love to add to by dry bulk holdings at these levels, but have already invested so much capital over the last 12 months at each new 52 week low that I'm hesitant to put any more at risk since. Especially since the sustainability of the recovery is still in question, significant slack still exists, and significant dilution continues to occur across companies.

 

I recently saw an interesting article on the history of oil posted by a member here in one of the threads. It talked about how oil companies have an incentive to continue to drill even as prices collapse and each barrel has to be sold at a loss and that J.D. Rockefeller moved his company's reach upstream and started buying every barrel of oil that he could simply to hold to add some rational pricing to the market. It made me think that dry bulk is similar; each company has an incentive to keep buying ships to maintain market share for when the market turns...but that act will prevent the market from turning. There is no incentive to be the guy who sits out and doesn't buy more ships. It would seem every time we get the smallest pick-up that appears to be the start of a long-term rally, it will likely be squashed by the companies themselves as they pile on more ships to benefit from it.

 

The industry needs some form of consolidation whether through acquisition or bankruptcy. The latter being my hoped for method as it would likely lead to higher scrap rates and a longer term foundation for recovery. Until that happens, or something steps in to grow/replace China's demand, I'm hesitant to think that any sustainable recovery will happen in the near future. :/

 

That being said, I still have some serious positions in SB and SBLK waiting this out.

 

[DTEJD1997]

Hey all:

 

ANybody else notice that the Baltic Dry Index has been moving up strongly in the past month?

 

So strong, it has gone from about 650 to 874.

 

Still at low levels, but an interesting move.

 

Meanwhile, GLBS continues to go down and is flirting with a 52 week low.

 

Anybody else tempted to pick some up here?

 

Hey all:

 

At the risk of sounding like a broken record, has anyone else noticed that the Baltic Dry Index is up substantially?  It is now at about 1,086, compared to 874 in my last posting?

 

I still have not added any to my position, but probably will ahead of the next earnings report.

 

Any thoughts/ideas?

[yadayada]

I think next earnings report will be bad as well. Probably still low because market thinks it is not sustainable? Allthough you have to wonder, the guys with lowest costs here are basically losing cash at a bdi of 600. So that is certainly not sustainable.

 

I do agree with the comment that there is still too much oversupply which will take time to be removed from the market. Hard to see how the stock should be worth less then this though. With equity at 60m.

[DTEJD1997]

Hey all:

 

Anybody still following this?

 

I exited before earnings and took a HUGE loss.  Looks like I made the right move.

 

It is shocking how much revenue is down from a year ago period.

 

The BDI is still solidly below 1,000. 

 

If GLBS can't make money, I don't see how anyone else will...

 

Problem is that there is not enough demand with China slowing down, and capacity is still too big.  Not enough ships are being scrapped.

 

I will keep an eye on this one, perhaps re-enter later at an even lower point.

 

Any thoughts?

[TwoCitiesCapital]

Hey all:

 

Anybody still following this?

 

I exited before earnings and took a HUGE loss.  Looks like I made the right move.

 

It is shocking how much revenue is down from a year ago period.

 

The BDI is still solidly below 1,000. 

 

If GLBS can't make money, I don't see how anyone else will...

 

Problem is that there is not enough demand with China slowing down, and capacity is still too big.  Not enough ships are being scrapped.

 

I will keep an eye on this one, perhaps re-enter later at an even lower point.

 

Any thoughts?

 

I never held GLBS, but I'm still holding onto my drybulk positions in SB and SBLK, but haven't been adding at lower levels. A slowdown in China will affect end-user demand, but lower commodity prices are also forcing the shuttering of a lot of unprofitable mines/commodity operations domestically which means they're importing more. Just look at iron ore - record imports of iron ore this year as Chinese producers have been shuttered. This is in the face of an uncertain forward looking demand. If we see more dynamics like that in other commodities, where higher cost production is shuttered in favor of lower cost production that needs to be shipped/shipped further, we could see some support for rates regardless of the lowered expectations for growth.

 

The high scrapping levels of 2015 and the low orderbook are both great and are putting in a solid base to jump from, but realistically I think we'd need that to persist for another year or so to get to a really solid base for sustainably higher rates - especially in an environment where forward looking demand is uncertain. Just bet on companies that have enough cash/cash flow to subsist at lower rates while waiting for the turn.

[60North Investments]

GLBS will most likely be de-listed from Nasdaq Global Market, and they consider listing in Nasdaq Capital Market instead.

 

It's currently trading for $6m market cap, $85m EV. Book value of ships is $125m. If they default on their debts I guess equity would be wiped as they certainly wouldn't get $125m for the ships. 75% needed to get $80 to pay of the net debt. Doesn't look good, another mistake on my part when I went into this +1 year ago and held most of the position despite things not turning for better in the market.

 

http://www.globusmaritime.gr/press/globuspr102615.pdf

[TwoCitiesCapital]

Anybody have statistics from 2014/2015 about what percentage of dry bulk volumes is in which commodities and what are the lead destinations for bulk outside of China. I want to say that I had this information at one point, but that is from 2011/2012 so the numbers are probably somewhat dated.

 

Thanks!

[DTEJD1997]

Hey all:

 

I took a huge loss on this stock.

 

Now I look pretty smart taking it at a bit above $1/share.  Hard to believe it has been halved since when I sold it.

 

If the stock gets delisted...it will probably tank further as funds may be forced to liquidate it.

 

Might be worth taking a flyer on it at a silly price.

 

Who would ever have thought that the BDI would have gotten this low AND STAYED THIS LOW?

 

Got to wonder if they will be able to cut costs further and if they will even be able to wring out some cash flow.  Things are going to get difficult for the dry bulk industry real fast...

[TwoCitiesCapital]

Things are going to get difficult for the dry bulk industry real fast...

 

It seems like every time there was a shoot up in shipping prices, firms would issue equity/debt to buy more ships and 2 years later the increase in supply dwarfed expected growth in demand killing their own recovery. At this point, we've gotten to the point where demolitions have largely been used up - the fleet that is 20+ years has dwindled in size and the majority of the fleet is less than 15 years old. We can no longer really rely on scrapping to get right size the supply/demand function and we need a moratorium on new orders for a year or two until growing demand catches up with current supply.

 

The problem is that there are too many independent actors who want to maximize their exposure to the upside when rates turn that no one has really been willing to stop ordering ships - and they've haven't worked together to collectively do it. Access to debt and equity markets has allowed them to continue to hold on, to continue to buy new ships, and to continue to run unprofitable routes while they wait. It's hard to see it from equity price performance, but drybulk isn't hated enough to have put in a solid base for a multi-year recovery.

 

We need investors to be scarred to stop providing companies with capital OR a consolidation of the industry under a handful of intelligent operators OR we have to hope for a growing economy. It's a tough slog going forward - it's hard for me to sell at these prices because I want to be that smart individual who held when everyone else was selling too, but I'm certainly not considering buying any more until one of those 3 things happen.