Hi all,
Thank you Yogi -- you were the first person to ever quote me on this board!
So here are my updated two cents:
As per prior postings, I liked (and was once invested in) RMT a lot. I have since divested. Based on the market value + charter value, I still think that the share price trades below the Trust's market value. Which means, if you could dissolve the Trust and sell the vessels at current depressed market prices (which I purchase from a shipping service, like Clarkson's), I think you would nearly double your money (after paying back the debt). This analysis is theoretical since it's a low probability event.
I do think that RMT's market equity value is largely determined by the debtholders. They have got the Trust on a tough repayment plan which leaves very little value for us. When the Company comes to refinance in June 2013, I am worried about a continued tough repayment schedule -- indeed it may take a few years to repay. As Nick pointed out, in ~2014 onwards, the Company needs to renew charters at potentially lower rates.
But my two biggest concerns are 1) the parent company RG has pledged their shares to their key bank; this puts the ownership of the Company at risk -- how much, its hard to say since RG is private; 2) the ~4,000 TEU vessel size is suffering from cascading as larger ships flee competition in the ultra-sized (13,000+ segment) and compete.
The game changer for me is:
1) A big writedown in book values would probably kill the shareprice; I would be a buyer
2) A debt restructuring that permits longer repayment
3) an equity issuance greater than US$20mn -- I would be a buyer on this news
Matt
(24-07-2012, 11:33 PM)yogi Wrote: [ -> ]Matt,
you are right that current valuation reported in balance sheet doesn't reflect the actual market value of ships in current environment.
What do you think about the current market value of ~4500 TEU 5 years old ships (RMT's average age is ~5 years)?
Yogi -
I paid for a valuation of RMT in February 2012. Because you were teh first to ever quote me -- hey man, I will share!
My results were as follows, and reflect only the vessel value. You would then need to add the value of the remaining charters:
Djibouti: US$37.9mn
ITAL vessels: US$29mn
ANL + CMA vessels: US$35.7mn
MOL vessels: US$37.1
Total market value of vessels: US$564mn
My estimate of charter value: US$225mn (DCF of cashflows at 15% disc. rate; bulk of value comes from MOL vessels
Less net deb: US$592m as of June 12 (include RG debt as unconverted)
Market value of equity: US$197mn
Current market cap of US$109mn
This is definitely not a reccomendation but just my analysis. I have since sold the shares!