Kapitan wrote: First Ship Lease Trust has risen in price, likely because of the positive tone of the 3Q results statement. I took a look at some parts of the story and wonder :
1. Operating cashflow has increased but to what extent can FSLT pay dividends out of its cash holding when it has a big debt to service?
2. Isn't FSLT a dividend play? If the dividend yield is strong, the stock price will rise accordingly & vice versa.
FSLT has not paid a dividend since FY2011 but the trust is likely to be able to resume paying for FY14 or at least FY15.
The key question is how much? For FY14, to be declared in a few weeks' time, the payout is lkely to be tiny.
It's the payout for FY15 that is what we should direct our attention to. If FSLT can pay 1-c, the yield would 7.4% (FSLT price currently is 13.6 c) which I consider to be the minimum required for this trust considering its many business challenges/problems.
If it's 1-c, don't forget the trust has historically paid dividends over 4 quarters, so each payout is 0.25 cent. It's not massive and would be of interest mainly to investors investing for income.
What do you think?
Kopitan,
There are various positive developments in FSL and also Hoe Leong, both of which operate a fleet of oil/product tankers. Day rates have been rising due to low oil price and increasing demand for tankers. Let's wait for last qtr's result announcement.
I am still learning about FSLT. It has only 1 crude oil tanker in the spot market, so FSLT will not really enjoy a significant increase in revenue from rising charter rates.
Next > FSLT has a total of 5 vessels in a "Chemical Tanker Pool" + in a "Containership Pool". I am not sure if these are exposed to spot rates.
The rest of the FSLT fleet = 17 vessels. These are on bareboat charter & time charter. All are fixed-rate, which I believe means the rates have been fixed at the start of the lease (multi-year leases). Thus, no exposure to spot rates.
