NEW YORK, Jan. 30, 2023 (GLOBE NEWSWIRE) -- Capital Link hosted a presentation by the senior management of Safe Bulkers (NYSE: SB) on Tuesday, January 17, 2023. During the 40-minute session, Dr. Loukas Barmparis, President, Konstantinos Adamopoulos, CFO, and Thanasis Antonakis, Assistant CFO & CCO, stressed the importance of environmental upgrades in remaining competitive, outlined the status of the dry bulk market, and discussed the status of the company’s fleet as part of Capital Link’s Company Presentation Series.
Replay of the full session
A replay of the full session of the presentation and the extensive Q&A can be accessed at:
https://www.youtube.com/watch?v=pL7enca_AVQ
Highlights from Safe Bulkers session at the Capital Link Presentation Series include the following:
Safe Bulkers has been providing marine-dry bulk transportation services across the globe. The company’s fleet consists of 44 dry bulk vessels—12 Panamax, 7 Kamsarmax, 17 Post-Panamax, and 8 Capesize vessels—with an average age of just over 10 years and a total carrying capacity of 4.5 million DWT.
Market Update
Dr. Barmparis, President, stated that global demand for commodities is weaker than expected at the beginning of 2023 due to various geopolitical and economic factors, including embargos on Russian energy and oil products, decreased GDPs, and increased inflation internationally. He also noted that the weak Cape and Panamax dry bulk market is likely tied to a sharp seasonal decrease in activity due to the Chinese New Year. Additionally, the reopening of China as a result of the easing of Covid restrictions and the country’s push to revitalize its economy and real estate sector are “good news” for the dry bulk sector, Thanasis Antonakis, Assistant CFO, stressed. Dr. Barmparis also said that both demand and ton miles are expected to grow though marginally during this year.
In terms of supply, “the medium sized vessels…are aging” Dr. Barmparis stated, and noted that, although a substantial proportion of the global fleet will soon age out, the “orderbook is generally quite low due to historic numbers.” Additionally, only around 30% of the current global dry bulk fleet is expected to comply with EEXI regulations without requiring modifications and upgrades. Dr. Barmparis also stressed the economic and environmental benefits of scrubber technology, which allows ships to use cheaper fuel than ships without scrubbers.
Investment Highlights
Safe Bulkers’ liquidity amounts to $266 million; $122 million of cash, cash equivalents, bank time deposits, and restricted cash, and the remaining $144 million consists of undrawn borrowing capacity available under revolving credit facilities. At current share price levels - $3.18 as of January 26th, the company’s annualized dividend yield is about 6.3%. In addition, Safe Bulkers has an active share buyback program under which has repurchased 2.8 million common shares or 56% of the program.
Based on the latest publicly released figures for Q3 2022, Safe Bulkers’ secured contracted revenues were over $300 million from non-cancellable time charter contracts excluding the scrubber benefit. The company’s Loan to Value ratio was 35%, “which is very comfortable for any expansion opportunities that may arise,” Dr. Barmparis said. The company expanded its presence into the Cape market with the purchase of a number of Capesize vessels, “most of which are already chartered at a $22.7 daily average time charter rate for two to three years, so the company is enjoying revenue from these Capes without being affected by the low Cape market,” Dr. Barmparis noted.
Investing in Environmental Technology Key to Fleet Competitiveness
Dr. Barmparis stressed the company’s commitment to ESG and highlighted that Safe Bulkers has invested more than $120 million in environmental technology. Safe Bulkers has already taken delivery of 3 IMO GHG Phase 3 - NOx Tier III newbuilds, and is expecting the delivery of 8 more IMO GHG Phase 3 - NOx Tier III newbuild dry bulk vessels from Q2 of 2023 until Q1 of 2025, all of which will comply with the upcoming environmental regulations regarding emissions. Of the company’s 44 vessels, 80% were built in Japanese shipyards, and 19 are scrubber-fitted. By the end of 2023, that figure will increase to 23. All Safe Bulkers’ ships have been fitted with Ballast Water Treatment technology.
Aware of the importance of keeping up with environmental regulations to maintain competitiveness, Safe Bulkers also carried out environmental upgrades on 6 of its vessels in 2022 and will have completed upgrades on a total of 20 by the end of this year. “A two-tier market will be developed,” Dr. Barmparis stated when asked about the rate of the global fleet that is in compliance with environmental regulations. This market will “boost companies that have invested in environmental technologies,” he continued, and will prevent companies that have not invested in such technologies from remaining competitive.
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