2014 | 2015 | ||||||
Price: | 3.50 | EPS | $0.00 | $0.00 | |||
Shares Out. (in M): | 160 | P/E | 0.0x | 0.0x | |||
Market Cap (in $M): | 560 | P/FCF | 0.0x | 0.0x | |||
Net Debt (in $M): | 1,150 | EBIT | 0 | 0 | |||
TEV (in $M): | 1,710 | TEV/EBIT | 0.0x | 0.0x |
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Investment Thesis & Valuation:
Navios Maritime Acquisition Corp. (NNA) currently trades at distressed valuations with substantial upside optionality to improving crude and product tanker rates. The company is well-positioned to generate at least $0.75 per share in 2016 (see “2016-E FCF Downside”) once the fleet expansion is complete, assuming no improvement in shipping rates from today’s levels. Assuming a modest improvement in rates and new vessels deliver on schedule, FCF should be $0.85 (see “2016-E FCF”), and applying an 8x multiple = a $6.80 stock price plus $0.20 of cash dividends over the next 12 months. Note that every $1,000 improvement in spot rates at 50% sharing (similar to current contracts) is approximately 7M incremental FCF ($0.04 per share). The current yield is 5.7%, so you’re paid to wait. This opportunity exists because investors typically seek either a pure-play shipping segment (for example: VLCC crude tanker upside, dry bulk Capesize leverage to seaborne iron ore, or US Jones Act shipping) or spot market exposure for exponential earnings growth. In addition, LTM Net Debt / EBITDA 8.8x seems high, but this is the nature of the shipping industry’s high upfront capital spending that de-levers over the vessels life. A potential catalyst to unlock value is a spin-off of the crude tankers and investors could better evaluate their preferred investment vehicles, namely crude tanker rate volatility/optionality versus product tanker stability, which could result in a better multiple for both tankers.
Key Considerations:
NNA Valuation & Capitalization: |
|
|
Stock Price |
$3.50 |
|
Shares Outstanding |
160.0 |
|
Market Cap |
560.0 |
|
|
|
|
+ total debt, 3/31/14 |
1,257 |
|
+ due related parties, 3/31/14 |
11 |
|
- cash, 3/31/14 |
(118) |
|
|
|
|
Enterprise Value |
1,710 |
|
|
|
|
LTM EBITDA |
|
131.0 |
Net Debt / EBITDA |
8.8x |
|
EV / EBITDA |
|
13.1x |
A detailed revenue build by vessel is too cumbersome to include here however it can be constructed from the rate and maturity information in the public filings (including the investor presentation available here: http://ir.navios-acquisition.com/phoenix.zhtml?c=222706&p=irol-presentations ) and we have included our rate assumptions. If there are more questions, we can get into more detail in the Q&A.
2016-E Revenue & Costs: |
|
2016-E |
|||||
Revenue Build: |
|
||||||
Crude Tankers |
127.7 |
||||||
LR1 Product Tankers |
47.9 |
||||||
MR2 Product Tankers - ON WATER |
90.1 |
||||||
MR2 Product Tankers - TO DELIVER |
44.7 |
||||||
Chemical |
23.3 |
||||||
Total NNA Revenue by Vessel |
333.6 |
||||||
|
|
Avg 1Y Time-charter |
|||||
Implied Per Day Avg: |
Avg Rate |
5Y Low |
5Y High |
||||
Crude Tankers |
$34,904 |
$19,800 |
$39,600 |
Includes 2 LT @55K + 2 at 44K |
|||
LR1 Product Tankers |
$16,355 |
$13,000 |
$19,300 |
||||
MR2 Product Tankers - ON WATER |
$17,574 |
$13,200 |
$15,200 |
New Eco-type ~20% Premium |
|||
MR2 Product Tankers - TO DELIVER |
$17,428 |
$13,200 |
$15,200 |
New Eco-type ~20% Premium |
|||
Chemical |
$15,884 |
- |
- |
||||
Total NNA Revenue by Vessel |
$21,196 |
||||||
|
|
||||||
- cash Operating Costs (Mgmt Fees) |
(120.0) |
17,738 days x $7,616 WA cost / day = 120M |
|||||
- cash G&A, Other Misc |
(12.0) |
||||||
- amort of def dry dock |
10.0 |
||||||
|
|
||||||
2016-E EBITDA |
|
211.6 |
|||||
2016-E FCF: |
|
2016-E |
|||||
2016-E EBITDA |
211.6 |
||||||
interest |
(65.0) |
||||||
dry dock |
(10.0) |
||||||
FCF |
136.6 |
||||||
per share |
|
$0.85 |
|||||
2016-E FCF: Downside |
|
2016-E |
|||||
2016-E EBITDA, base case |
211.6 |
||||||
Assume $5,000 per day downside on spot |
(15.0) |
7,400 days x $4,000 x 50% sharing = 15M |
|||||
interest |
(65.0) |
||||||
dry dock |
(10.0) |
||||||
FCF |
121.6 |
||||||
per share |
|
$0.76 |
|||||
NNA Total Days: Sensitivity |
|
2016-E |
Rate |
Total |
% Share |
to NNA |
|
Crude Tankers |
3,660 |
$1,000 |
3.7 |
50.0% |
1.8 |
||
LR1 Product Tankers |
2,928 |
$1,000 |
2.9 |
50.0% |
1.5 |
||
MR2 Product Tankers - ON WATER |
5,124 |
$1,000 |
5.1 |
50.0% |
2.6 |
||
MR2 Product Tankers - TO DELIVER |
2,562 |
$1,000 |
2.6 |
50.0% |
1.3 |
||
Chemical |
1,464 |
$1,000 |
1.5 |
50.0% |
0.7 |
||
NNA Total Days, EBITDA & FCF |
15,738 |
15.7 |
7.9 |
||||
per share |
|
|
|
|
|
$0.05 |
|
NNA "Open" Days: Sensitivity |
|
2016-E |
Rate |
Total |
% Share |
to NNA |
|
Crude Tankers |
1,098 |
$1,000 |
1.1 |
50.0% |
0.5 |
||
LR1 Product Tankers |
1,010 |
$1,000 |
1.0 |
50.0% |
0.5 |
||
MR2 Product Tankers - ON WATER |
3,112 |
$1,000 |
3.1 |
50.0% |
1.6 |
||
MR2 Product Tankers - TO DELIVER |
1,464 |
$1,000 |
1.5 |
50.0% |
0.7 |
||
Chemical |
732 |
$1,000 |
0.7 |
50.0% |
0.4 |
||
NNA Total "Open" Days, EBITDA & FCF |
7,416 |
7.4 |
3.7 |
||||
per share |
|
|
|
|
|
$0.02 |
Disclosure
We make no claims, promises or guarantees about the accuracy, completeness or adequacy of the contents of this document and expressly disclaim liability for errors and omissions in the document. We have no obligation to update this document. We may change our position at any time without posting an update. The views expressed here are merely the opinion of the author. Readers should do their own research.
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