Torm PLC (NASDAQ: TRMD) stock surged 18.93% on June 12th, 2019 but corrected over 2.9% on 12th June, 2019 (As of 10:24 am GMT-4; Source: Google finance). Recently the company has agreed to buy four 2011-built MR vessels for a total consideration of USD 83m and the expected delivery is between August and December 2019. The vessels are built at the Korean yard Hyundai Mipo. TORM already has ten vessels in the fleet from Hyundai Mipo and has good technical and commercial experience with these vessels. TORM has capex commitments of approx. USD 346m covering the remaining CAPEX on TORM’s two LR1 newbuildings with expected delivery in 2019, six MR newbuildings with expected delivery in 2019 and the first quarter of 2020, the four 2011-built second-hand MR vessels and scrubber installations on newbuildings and retrofit vessels. TORM’s undrawn credit facilities and cash today amount to approx. USD 407m. In addition, TORM has agreed a conditional term sheet of USD 66m with an international financial institution on financing of the four MR vessels.
In the first quarter of 2019, TORM had achieved TCE rates of USD/day 17,949 (2018, same period: USD/day 14,225). The product tanker freight rates started the first quarter of 2019 at strong levels last seen in 2016 before softening throughout the quarter as spring refinery maintenance gained pace. EBITDA for the first quarter of 2019 was USD 61.5m (2018, same period: USD 37.3m). The profit before tax amounted to USD 23.5m (2018, same period: USD 1.1m). Cash flow from operating activities was positive at USD 55.4m in the first quarter of 2019 (2018, same period: USD 18.0m), and earnings per share was 31 cents (2018, same period: 1 cent). Return on Invested Capital (RoIC) was 8.8% (2018, same period: 2.4%).
Moreover, as of 31 March 2019, TORM’s liquidity was USD 438m, that consist of USD 155m in cash, USD 237m in undrawn credit facilities and USD 46m in undrawn credit facilities. As of 31 March 2019, net interest-bearing debt was USD 584m and TORM’s net loan-to-value (LTV) ratio was 52%. Based on broker valuations as of 31 March 2019, TORM’s Net Asset Value (NAV) excluding charter commitments was projected to be USD 829m. This corresponds to a NAV/share of USD 11.2 or DKK 74.5. TORM’s book equity amounted to USD 867m as of 31 March 2019 compared to a book equity/share of USD 11.7 or DKK 77.9 in the corresponding period.
Based on broker valuations, TORM’s fleet including new buildings had a market value of USD 1,599m as of 31 March 2019. Compared to broker valuations as of 31 December 2018, the market value of the fleet decreased by USD 62m (~4%) when adjusted for sold vessels.