10/21
The last time I commented on Torm Plc (TRMD) was in mid-Nov 2023. Or slightly less than a year ago. The major difference is last year I commented on Torm after their Q3 2023 results, and this year (2024), I am commenting prior to Q3 2024 results. My general comment, 2023 was busier and messier in Q3 and Q4 than how I expect 2024 to play out in Q3 and Q4. That’s because 2023 had a lot of fleet related activity towards the end of the year.
For 2024, at this time, the only fleet events were both announced in July 2024.
- Primary event involves the addition of 8 MR2 tankers.
- Secondary event involves the disposal of an older MR2 tanker in Sept 2024 (now complete)
(Both events referenced here
https://www.torm.com/news/company-announcements/company-announcements-details/2024/TORM-purchases-eight-and-sells-one-second-hand-MR-vessel-increasing-the-fleet-size-to-96-vessels/default.aspx )
In early October 2024, Torm announced the delivery of the 4th of the 8 vessels related to the latest acquisition. As noted in the Press release, the acquisition is financed via a combination of cash and shares. I am amenable to this structure as the company is buying second-hand assets that contribute to the company’s top & bottom lines upon vessel delivery.
Per prior comments, in the annual cycle, tanker market Q3 is typically the weakest quarter (maintenance & weather being major factors), and Q4 generally stronger. Obviously, fewer tankers (clean or dirty) utilizing the Red Sea will have an impact on vessel availability. Dangote (Nigeria) refinery increasing its output has the potential to relieve some of the European and/or African refined fuel demand. But, the refinery products are still primarily being moved by ships.
Torm (TRMD) currently trades @ $30-ish/sh
Torm’s NAV is probably ~ $35-ish/sh Edit 10/24 lower, but need to parse fleet again]
Torm’s H1 2024 net margins > 40%
Torm div in 2024 (3 payouts) - $1.36, $1.50 & $1.80 = $4.66/sh YTD
Oaktree Capital have been involved with Torm for many years (over a decade). While Oaktree have sold some of its Torm common shares in the last year, I think they are quite happy with the IRR on the investment. Oaktree own a powerful C share, plus a sizable stake (40% - 45%) of the common (A) shares.
Torm shares have traded between $30 and $40 in 2024. The $40 price breached in late Jul 2024, and the share price has returned to its lower end. But, that hefty dividend payout helps to offset the price behavior.
Added to Torm position various times in 2024.