GRIN - Grindrod Shipping (GRIN) - Results Out This Week - On Track for Strong 2022
2021 Results out this week — AMC on Wednesday February 16th. Management will host a 8:00am EST call on Thursday, February 17th. The number is 877-553-9962 and the code is Grindrod. 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 2022. In addition, options to acquire five chartered-in vessels represent built in growth opportunities.Expect strong finish to year. No change to 4Q2021 and 2021 EBITDA estimates. Looking for 4Q2021 EBITDA of $67.3 million based on TCE rates of $30.3k/day for Supras/Ultras and $27.3k/day for Handys. The 4Q2021 forward cover of ~70% looked good with 1,579 Supra/Ultra operating days booked at $33.1k/day and 1,205 Handy days booked at $30.3k/day. Less days booked than 3Q2021, but at higher rates. Full year 2021 EBITDA estimate is $198.8 million based on TCE rates of $23.6k/day on Supra/Ultras and $21.1k/day for Handys.Higher-than-expected stock buy backs lower cash portion of 4Q2021 dividend estimate. Due to continued high stock buy back activity (highlighted in December notes), our 4Q2021 dividend estimate of $0.69/share based on estimated EPS of $2.23/share now includes cash of $0.16/share and stock buy backs of $0.53/share.No change in 2022 EBITDA and dividend estimates. Entering 2022 from a position of strength. 2022 EBITDA estimate remains $192.9 million based on TCE rates of $25.5k/day for Supras/Ultras and $20.5k/day for Handys. Based on our EPS estimate of $5.44/share and a minimum payout ratio of 30%, our 2022 dividend estimate is $1.70/share. Our estimate builds in a return of typical seasonal patterns, but operating leverage is high and each $1.0k/day change in TCE rates has a $11.0 million impact on EBITDA/cash flow.Maintain Outperform rating and price target of $31.00/share. A high quality asset base, consistent TCE rate outperformance and simplified corporate structure are positives, in addition to the positive intermediate term outlook for the dry bulk market. In addition, the sale of largest shareholder at a solid premium closed. Trading at an enterprise value multiple of 2.1x estimated 2022 EBITDA, we believe that there is substantial upside potential. Read More >>