It has been a positive earnings season for bulker owners, but few have trumped analysts’ expectations so decisively as Belships. The ultramax specialist’s $22.5m net result trounced the consensus estimate of $10.5m for the second quarter. Belships also made good on its promise to distribute at least half of that net profit in dividends, with a payout of NOK 0.40 per share for the second quarter. The reinstated quarterly dividend is part of Belships’ growth strategy, chief executive Lars Christian Skarsgard told TradeWinds. “It leaves the other 50% for either increasing the dividend or deleveraging or pursuing growth opportunities, so it returns capital to shareholders while keeping the door open for further growth and other opportunities to chase return on equity,” he said.

“Paying a dividend itself, I think, is really important because you’ve had a decade now with ups and downs in shipping markets — and mostly downs for dry bulk. I think now that there’s a strong market, if you want to have an investor base and you want to have a competitively priced share, you have to pay a dividend.” Belships recorded net profit of $22.5m for the second quarter, equivalent to earnings per share of $0.09, up from a loss of $14.6m in the same period in 2020.

Much of the net result was generated by Lighthouse, Belships’ in-house commercial platform that handles cargo trading. Lighthouse contributed $14.5m of Belships’ second quarter Ebitda of $36m. The Oslo-listed company will pay out NOK 0.40 ($0.045) per share, equal to half of its net result for the three-month period. The last time it paid a dividend to shareholders was in April 2018. “Otherwise, I think there’s way too many companies that either lost money, or they made money, kept it, and reinvested it in ships until they lost the money. So, a lot of investors are kind of impatient with seeing the actual return of capital and not only a prospective return and hoping our share price appreciates, but an actual cash payment.” Skarsgard thinks Belships’ new dividend policy should ultimately increase the firm’s share price relative to net asset value and will create more value for investors. “If you look across the listed dry-bulk companies today, it’s interesting to note that over the last couple of years the companies that have, on average, been priced the highest compared to net asset value, two factors stand out: one is corporate governance and transparency, and the other is dividend policy,” he said.

Analysts have reacted to Belships’ progress with enthusiasm, adjusting their target figures upwards. Norne Securities this week adjusted its target price for Belships to NOK 17 per share, up from NOK 16 previously. Pareto Securities has gone even further and raised its target to NOK 19 per share and Fearnley Securities has said it is working on revising its figures. The stock was trading at around NOK 14.10 on Thursday. Attracting more investors will, in turn, help fund the next stage of Belships’ growth. Belships has acquired 17 bulkers and sold six of its oldest ships over the past couple of years, leveraging Skarsgard’s experience as a sale-and-purchase broker.

During the second quarter, the firm entered into agreements to acquire five new ultramaxes, which the company thinks are especially undervalued right now relative to the current freight market. Belships said in May that average five-year-old ultramaxes were undervalued by as much as 30%, at that time pricing between $20m to $23m, when they should have been at $30m relative to one-year period rates. “Where we find ourselves today is that the market has actually gone from strength to strength, and these five-year-old ultramaxes are now worth $30m,” Skarsgard told TradeWinds. “But the period contracts have increased even further so, right now, I would say that we have a new yardstick to aim for because if this market continues, they should be 15% to 20% higher already. We should pass actually $35m later this fall or before Christmas, if you have the same period market.”

Will the company continue to buy? “If we can continue as we’ve done so far, I certainly hope so,” Skarsgard said. “But we’re concerned about our cash break-even and the balance sheet solidity, so we’re not going to keep piling on ships if it inflates our cash break-even. It has to blend in with the existing ships and not just inflate the cost just because the market is high.” Belships’ cash break-even has remained relatively unchanged throughout all the acquisitions the firm has made over the past two or three years “and it’s actually fallen if you adjust for the fleet quality,” Skarsgard said. Any further acquisitions would have to make sense financially, but he added that Belships is “actively looking at the next move”.