EHang Holdings Limited

Hello everyone, a warm welcome to BWLPG's Q2 2025 earnings presentation. My name is Aline Endlicher and I'm the Head of Corporate Communications at BWLPG. Today's presentation will be given by our CEO Christian Sorensen and our CFO Samantha Xu. After the presentation, we will have a Q&A session. The questions can be put into the Q&A chat during the presentation, or you can raise your hand and ask your question directly once we move to the Q&A part. Before we begin, I would like to highlight the legal disclaimers displayed on the current slide. Please also note that today's call is being recorded. And without further ado, I would now like to hand over to our CEO, Christian.

Thank you, Aline. And hello, everyone. And thank you for taking the time to be with us today as we review our second quarter financial results and recent developments. So let's turn to slide four, please. The second quarter was marked by extraordinary geopolitical and market events, which substantially increased the market volatility, both for shipping and trading. For the quarter, we reported a TC income of $38,800 per available day and $37,300 per calendar day, above our guidance of $35,000 per day. In a quarter with spot rates fluctuating between $10,000 and $70,000 per day, the time-sharded portfolio played a vital role in protecting our downside. After minority interests, the Q2 profit was $35 million, equivalent to an EPS of $0.23. And the board of directors has declared dividends of 22 cents per share, consisting of 75% of our shipping empath, topped up with retained dividends from product services 2024 results. Moving on to our trading operations, product services achieved a gross profit of $15 million and a profit after tax of $6 million. Samantha will take you through the details later in the presentation. And it's important to keep in mind that it is the realized result which generates product services dividend capacity. As of 30th June, the aggregated realized result for the first half of 2025 is $39 million. Further on our shipping activities, 2025 is a busy dry docking year for us. In the second quarter, we had 139 days related to vessels dry docking. In the second half of the year, we expect 143 and 135 days respectively for Q3 and Q4. These numbers should be noted since they impact our revenue generating potential on top of the dry docking cost itself. For the third quarter, we're guiding on about $53,000 per day, fixed for 90% of our available days. These are solid levels above our all-in cashback given of $24,800 per day. On the asset side, BWC was added to our own fleet in June after we declared a very lucrative purchase option earlier this year. On financing, we finalized a $380 million term loan and revolving credit facility to finance the advanced gas fleet and secured a $215 million term loan facility for BW LPG India fleet. Our $250 million shareholder loan from BW Group was terminated earlier due to ample liquidity. But now that Q2 is over, the focus is on the second half of 2025, which has started off on a strong note. So let's turn to the next slide, please. The current VLGC market is characterized by solid fundamentals with robust growth in export volumes from the US, supported by high domestic LPG production and ongoing terminal expansions. The Middle East volumes are also slightly up, backed by a reversal of the OPEC cuts. The extraordinary factor is how inefficiencies in the LPG trade pattern have absorbed substantial shipping capacity in recent months. The first such inefficiency emerged after China imposed retaliatory tariffs on US-sourced LPG, which led to a significant reshuffling of US export volumes away from China and into other parts of Asia. The sudden shift of US volumes toward India and Southeast Asia, combined with the redirection of Middle East volumes to China rather than India, absorbed considerable capacity from the VLDC fleet and pushed rates up. The short but intense Israel-Iran conflict also fueled spot rates for ships loading around that period in the Middle East. Now, trade patterns are slowly returning to pre-trade workflows, but the Panama Canal has once again become a bottleneck, as growing traffic from container ships, ethane carriers, and other prioritized or high-paying segments strains capacity. The consequence has been more VGCs routing around South Africa, which significantly impacts the ton mile for the global VGC fleets. making fewer ships available, which in turn is pushing rates up. In addition, the global fleet growth is at a low level, with 409 ships currently in service and only seven more to be delivered in 2025. We keep an eye on the LPG FFA market, which is currently pricing the balance of 2025 at an equivalent of low $60,000 per day for the Middle East Japan benchmark leg. Next slide, please. This slide shows how the LPG market dynamics played out after the Chinese retaliatory tariffs were implemented. The US LPG export volumes shifted from Chinese destinations to India, but also Japan took a big chunk of the rerouted cargoes. US LPG exports to India were above 1 million tons in the second quarter of 2025, compared to less than 100,000 tons for the entire 2024. Middle Eastern volumes also played a key role by replacing US cargoes to China and thereby redirecting traditional cargo flows for India to longer haul destinations in China and absorbing more shipping capacity. Furthermore, China substituted US LPG with cargoes from Canada and Australia, a trend that we see continues. All in all, the massive reshuffling of cargoes that took place was creating substantial inefficiencies in the LPG supply chain, which required more shipping capacity and moved rates up. The trade pattern is now pivoting towards the pre-liberation day structure in anticipation for a trade deal between the US and China. But the Panama Canal has created new inefficiencies for the fleets. Next slide, please. In 2023-24, we all spent significant time analyzing the Panama Canal dynamics. Now with the canal regaining relevance, it's worth revisiting its key aspects driving our markets. The new Panama Canal locks have a daily capacity of around 10 ships in total combined for both directions. VGC's have over the last years taken up between two and three of these 10 transit slots. As previously explained, wheeled GCs are not prioritized through the canal during periods of increased traffic. So when waiting times become excessive or auction fees for available slots are prohibitively high, the alternative is the route vessels around the Cape of Good Hope. And this rerouting increases sailing distances by up to 50% compared with the Panama Canal route to Northeast Asia. And has an immediate and material impact on the VLDC market by raising demand for tallage to offset the longer voyages. Monitoring developments in the Panama Canal will therefore be important in assessing the direction of the VLDC freight rates going forward. The increased demand for shipping capacity has pushed spot rates up to a level above $70,000 per day for loading in the US Gulf. As you can see from the graphs on this page, shipping is currently capturing almost all the profit in moving cargoes from the US Gulf to the Far East. And there is very little room left for profit on the cargo price itself. Demand for vessels driven by increased export volumes and the aforementioned inefficiencies is growing faster than the capacity of the VLDC fleets. And the upcoming export terminal expansions will likely lend support to shipping share of the U.S. Far East arbitrage. In the LPG value chain, there is a daily arm wrestling going on between terminals, cargo owners, and the shipping market on capturing as much as possible of the price difference between the US and the landed price in Asia. For the time being, the supply-demand balance in the VLGC market is tight, and the bargaining power is in the shipping market's favor. On that note, I'd like to remind you how this may impact the Q3 accounting results for product services since the change in the mark-to-market valuation of their shipping portfolio is not captured in the P&L, while forward cargo and paper positions are included. Looking ahead on this slide, the US export volumes are forecasted to continue growing on the back of increased production of LPG. The crude oil wells in the Permian Basin are more gaseous than we expected some years ago, and the gas production is forecasted to grow at least twice as much annually as the crude oil production, where lower growth figures are expected in the next five years period. The growth in US LPG exports is reported by several terminal expansions from now into 2028. And Energy Transfer has already started their LPG exports from their Needland terminal expansion. Moving over to the Middle East, the export growth is forecasted to accelerate next year with Qatar leading the way as well as Abu Dhabi. In neighboring Saudi Arabia, the Jafura project is worth keeping an eye on. Although it's further out in time, the size of the LPG volumes made available for exports are potentially adding another five to 10 million tons of LPG to the growing volumes from the Middle East. On the fleet and new building front, there is little new to report, and the order book counts 111 additional vessels to the current fleet of 409 vessels, where about 15% equal to 60 ships and thereabouts are older than 20 years. And then it's over to you, Samantha.

Thank you, Christian. And hello, everyone. Let's dive into our shipping performance. The second quarter of 2025 completed with a TCE of $37,300 per calendar day or $38,800 per available day. Over 94% free utilization after deducting technical of hire and waiting time. The healthy result achieved in a volatile market was a strong testament to our commercial strategy. consistently taking on time charter and FFA for coverage in a strong market to provide support when spot market are under pressure. In Q2, the time charter portfolio was 44% of the total shipping exposure, amount which 32% is fixed rate time charter. Looking ahead for Q3 25, we have fixed a 90% of the available fleet days at an average rate of about 53,000 US dollar per day. For second half 25, we have secured 34% of our portfolio with fixed rate time charter and FFA hedge respectively at 45,200 and 51,700 US dollar per day. Our time charter out fleet is estimated to generate a profit of around 9 million US dollar over our time charter in fleet. On top of that, the balance of our fixed time charter out portfolio is estimated to generate 74 million US dollar. On a product services side, the business posted a realized gain of $6 million for Q2. The positive result reflected a disciplined approach and effective risk management in a volatile quarter. On the unrealized open positions, we reported a $12 million increase to market on our cargo position, which was offset by an active movement in paper position of $3 million. After accounting for other expense, which mainly comprise general and administrative expenses, product services reported a net profit after tax of 6 million for Q2, and net as a value of 58 million US dollar as at the quarter end. As we mentioned in the previous quarters, the large market to market valuation movement is due to the gradual phase in of our multiple year term contract, which reflects value adjustments in time of a volatile market. While the value is significant, it reflects the delta between the balance sheet dates and we'll continue to see fluctuations before the positions are realized. We also want to highlight that due to the nature of trading, Its gain and loss are realized in different financial periods and cannot be extrapolated and predicted using its historical performance. Its unrealized position will fluctuate depending on the valuation at the end of the financial period, driving the accounting results up and down drastically. It's important to remember that our trading model looks at creating value combining positions of cargoes, paper, and shipping positions. As such, we would like to remind you that the reported net asset value does not include the unrealized physical shipping position of $10 million, which was based on our internal valuation. In light of the strong shipping market outlook, The open cargo contracts and hedging position may in turn experience negative mark-to-market valuation changes, and we'll continue to see fluctuations before the positions are realized. In Q2, our average VAR value at risk was $6 million, reflecting a well-balanced trading book of cargoes, shipping, and derivatives, after including the increased term contract volume as mentioned. Going on to our financial highlights, we reported a net profit after tax of $43 million, including a profit of 16 million from BWLPG India, a 6 million profit from product services. Profit attributable to equity holders of the company was 35 million US dollar for this quarter, which translate into an earnings per share of 23 cents and an annualized earning yield of 8% when compared against our share price at the end of June. We reported a net leverage ratio of 31% in Q2, a slight decrease from 33% reported end of last year. The decrease was due to lease liability reduction of 123 million from the purchase option exercised for BW Kisuku and BW Yushi, partly offset by the net drawdown of some banking facilities. For Q2, the board declared a dividend of 22 cents per share, which translates to 110% payout of our quarterly shipping profit. These are also supported by some of the retained dividends from product services in 2024. For the period end, our balance sheet reported a shareholder's equity of 1.9 billion US dollar The annualized return on equity and capital employed for Q2 were 9% and 8% respectively. Our Q2 OPEX was $9,000 per day. For FY25, we estimate our own fleets operating cash break-even per day to be $19,100 per day and total fleets operating cash break-even including time-chartered in-vessels to be $21,700 per day. Please note, this is a reduction compared with the cash break-even of 2024 of $22,800 per day. Primary due to meticulously managed financing, reduced time-chartered in-vessels, and lower G&A per day. And this is also offset by increased OPEX. All in cash break given, including dry dock program for the year is estimated to be $24,800. Next slide, please. On the liquidity side, At the end of Q2, we maintain a strong position of $708 million, including $287 million in cash and $421 million in undrawn revolving credit facilities. Due to our meticulously managed financing plan, we are able to support our fleet growth and remain a robust and resilient financial position to weather the future. Our repayment profile continues to be sustainable and healthy. with major repayment only kicks in after 2029. On the product services side, trade finance utilization stood at a moderate level of $303 million, or 38% of our available credit line, providing sufficient room for future trading needs. OK. With that, I would like to conclude my update. Thank you for listening, and back to you, Aline.