First Ship Lease - Stunning Cash Generative Business

impairment provisions on vessels and a loss on the disposal of two vessels -- these are accounting loss, without impact on cashflow. And they are one-off. The saving grace is the CONTINUED positive operating cashflow

Absolutely right. FSL can now focus on its loan refinancing task, that will be top priority.

The past 5 months have been disappointing for its shareholders.

I reviewed again the investing merits of FSL and I am convinced that this stock is a steal at current price and a classic contrarian play.
- Based on reported distribution up to 9 months, yield is now over 20%
- Operating Cash Flow remains positive (confirmed in latest announcement)
- Asset write-downs (expected in a cyclical shipping business) has no impact on cash flow
- New management team in place
- New CEO was formerly CCO of FSL (an old hand in the industry with over 30 years experience)
- Newly appointed CFO is an experienced financé man ( his profile is in the company’s website)

The corporate governance issues were serious and I believe they are now under control with the latest resignation of the CEO.

In my view there is a clear lesson to be learnt. The position of the CFO was vacant since October 2014. This likely led to certain lapses of “check and balance” functions. Some members of the current Board were appointed prior to October 2014 and they should take some blame for this matter.

The following should be the order of priority now :-
- conduct special audit on its financial functions and ensure that the weaknesses are identified and addressed
- engage with its shareholders and be candid on the results of the special audit findings
- keep shareholders fully informed on the progress of the loan refinancing proposal

In short, the Board should earnestly re-build and regain the trust of its shareholders.

For the present time, I am keeping my faith with FSL.

Despite the recent profit warning, the overall performance for FY16 was better than expected :-

- Surplus Funds from Operations (FFO) at usd 66.9m
- FFO yield > 100%
- Income available for distribution usd 14.87m (i.e. sgd 3.26c)
- Dividend yield c 24% (distribution is currently suspended)

Capital structure and financial position remain stable, despite asset write-downs of usd44m.

- NAV sgd 54.6c, Price/Nav at 0.25
- Quarterly loan repayment at usd 10.7m (usd 42.8 pa)
- FFO per annum over last 5 FYs averaged at usd 65m
- Loan outstanding/FFO at 3.4 years.
- Cash reserve provides cover for 4 QTR loan repayments

Catalysts for stock price is the refinancing of existing loan (maturing end 2017) and, more importantly for its suffering shareholders, resumption of dividend payments.

Business model has stabilised and is cash generative. The management team can now re-focus its energy to build up the business.

A classic contrarian stock, offering high yield and deep value.

Please do your own due diligence. Am vested.

FSL announced prepayment of loan by usd 20m 9from internal source) and pledging of FSL Osaka to lenders.

This news is likely to mean resumption of distributions to shareholders for FY17. Last FY, it reported distributable income at sgd 3.25 cents (based on usd/sgd at 0.14).

Does the repayment and pledge of ship lead to refinancing of the outstanding loan later? If yes, FSLT should say so. As it is, the announcement is so bare, how are people to understand the significance of it? And if this paves the way for a resumption of dividends, FSLT should also say so.