Owners see past virus effects, other headwinds to better markets

New York, February 18, 2020 (Tradewinds)

Across operating sectors, management teams at Noble Capital event find silver linings as they pitch investors.

Hope springs eternal in the breasts of owners assembled for a shipping panel at the annual Noble Capital Markets investors conference, even through the coronavirus fallout, sanctions reversals, trade wars and flagging demand.

Six owners on a panel moderated by Noble equity analyst Poe Fratt were able to find reasons why the scare that has battered shipping shares so far in 2020 won’t govern the full year in their markets.

The shipping managers were vying for investor attention within a wider conference in Hollywoood, Florida that features industries like technology and health care. “We certainly hope the coronavirus effects are temporary — the question is how temporary,” said Jeffrey Pribor, chief financial officer of International Seaways. “Some investors asked me at the start of January what is the one thing that could interrupt your expected bull case in tankers and I said an unexpected demand shock.

“Well, we’ve got the demand shock now [in the coronavirus], but it’s temporary. We’ve hit the pause button. Once the virus stops, we’re still optimistic that we’re in the early stages of a two- or three-year uptrend in tankers.”

On the dry side, Eagle Bulk Shipping chief executive Gary Vogel noted that coronavirus is just the latest unanticipated hurdle to confront that sector after the Vale dam collapse in Brazil at the start of 2019 and swine flu that has killed more than 100m pigs in China.

“We’ve taken some demand shocks,” Vogel said. “Dry bulk has still done reasonably well because vessel supply has been muted.”

In containers, Euroseas chief financial officer Tasos Aslidis is looking for easing of the US-China trade standoff to be a boon to the sector.

“Resolution there does effect the container market more,” Aslidis said. “We should get a couple good years in that market.”

In clean products, Pyxis Tankers chief executive Eddie Valentis is touting the US-China trade agreement along with an orderbook in his favoured MR sector that is near historic lows at 5% of the fleet.

“Once the virus situation is over, the products sector has two or three good years ahead,” he said.

Capesize bulkers owner Seanergy Maritime is looking for the Chinese government to provide strong stimulus packages to overcome the effects of coronavirus, according to chief executive Stamatis Tsantanis.

“The negative effect of the virus is obviously really huge right now,” Tsantanis said.

Pribor made the case that shipping stocks have been dramatically oversold as investors recoil from the virus fallout. He said he’d made exactly that point to investors about not just International Seaways, but shipping more generally. “If you want to look at a sector that’s been hit overly hard, well, shipping is really worth a hard look,” Pribor said.

Seaways shares doubled last year but have recently lost $9 each. or $270m in market capitalisation, to the latest scares.

“That’s a full year of cash flow,” he said. “Are we going to lose a whole year of cash flow to the coronavirus — I certainly hope not.”

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