The maritime sector is one of the most closely watched sectors as it reflects the supply and demand for commodities, which implies growth or lack thereof. Investment in this sector is subject to swings in value due to global growth, changes in charter/dayrates and newbuild/scrapping activities. Investing in this sector involves diversification amongst vessel types, commodity diversity and an understanding of the risks and value drivers of the various companies. One investment strategy is to analyze the various sector participants and determine what part of the capital structure has the best risk/return profile or the most stable income generation ability.
Ship Finance International Limited (SFL) is a major vessel owning company which has an operating fleet of 62 vessels and rigs, and has contracted to acquire seven additional newbuildings. The Company has a substantial portfolio of long term fixed charters with an average tenor of approximately 11 years. As at April 17, 2012, the company's assets consist of 27 oil tankers, five OBOs (ore, bulk, oil) currently configured to carry drybulk cargo, ten drybulk carriers, eleven container vessels (including two chartered-in 13,800 TEU vessels), one jack-up drilling rig, three ultra-deepwater drilling units, six offshore supply vessels and two chemical tankers. Two of the oil tankers are non-double hull vessels which have been agreed to be sold, with delivery to their new owners expected later in 2012 and 2013.
Ship Finance's primary objective is to profitably grow their business and increase long-term distributable cash flow per share by pursuing the following strategies:
- Expand their asset base. Ship Finance has increased the size of their asset base through selective acquisitions of additional assets that should be accretive to long-term distributable cash flow per share. The company intends to expand their asset base through placing newbuilding orders, acquiring new and modern second-hand vessels and entering into medium or long-term charter arrangements. Ship Finance believes that by acquiring newer assets they can drive value by providing for long-term growth of assets and continuing to decrease the average age of their fleet.
