GRIN - Grindrod Shipping (GRIN) - Strong Results Drive Positive Dividend Surprise
Quarterly Call today. Management will host a 8:00am EST call today. 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.Very strong finish to year. 4Q2021 EBITDA of $72.7 million was higher than our estimate of $67.3 million mainly due to robust TCE rates of $30.8k/day for Supras/Ultras and $28.8k/day for Handys, which were higher than our estimates of $30.3k/day for Supras/Ultras and $27.3k/day for Handys.Positive dividend surprise. Cash dividend maintained at $0.72/share despite higher-than-expected stock buy backs. We expected the cash dividend to drop to $0.16/share due to higher stock buy back activity, but were pleasantly surprised that incremental cash was allocated to the cash dividend. The cash dividend of $0.72/share combines with stock buy backs of $0.55/share so total 4Q2021 dividend equates to $1.27/share.Positive bias to 2022 EBITDA and dividend estimates. Due to strong 4Q2021 results, we are moving our 2022 EBITDA to $197.7 million (up from $192.9 million) based on TCE rates of $25.5k/day for Supras/Ultras and $21.4k/day for Handys. Based on our EPS estimate of $5.77/share and a minimum payout ratio of 30%, our 2022 dividend estimate is $1.80/share. 1Q2022 is off to good start with forward cover of 1,474 Supra/Ultra operating days booked at $24.4k/day and 1,103 Handy days booked at $21.9k/day.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 2.3x estimated 2022 EBITDA, we believe that there is substantial upside potential. Read More >>