GRIN - Grindrod Shipping (GRIN) - Larger than Expected Stock Buy Back
Stock buy back of $8.5 million higher than expected due to recent price weakness. Over the past few weeks, ~592k shares were bought back at an average price of $14.38/share, or a total of $8.5 million. This number is ~3% of the shares outstanding and represents a significant jump from ~92k shares bought back at an average price of $14.87/share, or a total of $1.4 million, in 3Q2021.4Q2021 dividend estimate of $0.69/share now includes cash of $0.25/share and stock buy backs of $0.45/share. Based on our EPS estimate of $2.23/share and a minimum payout ratio of 30%, our 4Q2021 dividend estimate is $0.69/share. The stated policy nets out stock buy backs against cash, and our dividend estimate consists of cash of $0.25/share and stock buy backs of $0.45/share. While the total dividend of $0.69 is close to the 3Q2021 total dividend, the cash portion drops to $0.25/share from $0.72/share and the buy back portion increases to $0.45/share from $0.07/share. Given the solid financial position, it will be interesting if the dividend payout moves above the minimum of 30% to smooth the cash dividend.FY2022 dividend estimate is $1.69/share. Based on our EPS estimate of $5.40/share and a minimum payout ratio of 30%, our 2022 dividend estimate is $1.69/share. Please note that the dividend will be a combo of cash and stock buy backs.2021 moves enhanced competitive position and investor appeal. While GRIN entered the year as a pure play dry bulk company after consolidating joint ventures and selling non-core tanker assets, moves in 2021 further enhanced the competitive position and broadened investor appeal. Those moves included the acquisition of the remaining interest in IVS Bulk for $46.3 million, acquiring the 2019-built Phoenix Ultra for $23.5 million, and extending long-term charters at attractive fixed rates. In addition, a $25 million secondary equity offering increased the public market float by ~10%, buy backs of ~$10 million have been executed and an attractive variable dividend policy was instituted. Entering 2022 from a position of strength. With a larger owned fleet, a consistent cargo focused strategy and solid financial position, GRIN is well positioned to benefit from attractive dry bulk market fundamentals. In addition, there are built in growth opportunities from options to acquire five chartered-in vessels. Read More >>