BW LPG Limited

Hi, everyone. A warm welcome to PWLPG's third quarter 2024 results. The presentation today will be given by our CEO, Christian, and our CFO, Samantha. Afterwards, we will open up for a question and answer session. Before we begin, I would like to highlight the legal disclaimers displayed on the current site. Please also note that today's call is being recorded. I will now give the word to Christian.

Hi everyone, and thank you for taking time to join us today as we present our financial results and recent events. It's been another eventful quarter for our company, so let's turn to slide 4 for the highlights and our market outlook. Our Time Tracker Income per available day ended at $46,800, somewhat lower than the previous quarter, but above our guiding of $43,000 per day. The market went through a roller coaster during the quarter, with rates fluctuating in the range from low $20,000 per day and back into the $50,000 per day within a short period of time. In addition to a great job done by our chartering team by navigating through the ups and downs, we are pleased to see that our downside protection through our time charter portfolio and FFAs took out quite a lot of this volatility. We're also very happy with the new ships starting to enter our fleet. And as of today, we have 5 out of the 12 acquired Avansgas chips safely delivered. As explained in this slide, another 4 chips are expected to be delivered with share issued in time with right to receive dividends for Q3. The board has declared a dividend of 42 cents per share, which translates to 100% payout of the NPAT from our shipping activities. Moving on to product services and as for our trading update in October, our trading activities benefited from a considerable uptick in the 12 months forward mark-to-market valuation of the trading portfolio, reflected in a net accounting profit of $58 million. Although we're glad to see that the forward trading portfolio is becoming more valuable, the volatility in the trading market may drive the portfolio valuation up or down before the positions are realized. And it's important to understand that it is the profitable realized trading positions which matter as we move forward when they are eventually converted to cash in the bank accounts. Two subsequent events since end September were the refinancing of our $400 million revolving credit facility, which is now replaced by a new seven years and larger facility of $460 million. Samantha will comment more on this later. In addition, we recently announced two sale and purchase transactions where we sold the 2007 vintage vessel BW Cedar from our India subsidiary at around $65 million. while declaring a purchase option on the 2019 built BWK Izuku at just below 70 million, which is equivalent to a new building price in the mid 80 million dollars. This is a strong testament to our business model, which creates optionality, we think, along the way, allowing us to harvest profits. Our market outlook for Q4 and next year is positive, as the export levels from the U.S. Gulf have stabilized after a period of maintenance and slightly reduced exports. However, it is important to note that a small market like the VLDC market is quite sensitive to only a few cargoes being added or taken out of the market. At the moment, freight rates in the U.S. Gulf seem to have found an equilibrium level plus minus $40,000 per day. There is currently little to no delays around the Panama Canal, which means that there is an upside potential from today's rate level the way we see it. Let's turn to page 6 for a closer look at the market fundamentals. The market volatility we have been through lately is well illustrated in this slide. When you see the rate movements against the variation in U.S. Gulf Coast loadings on the right side of the slide, it shows how finely balanced the VLDC market is at the moment with no delays in Panama. I used to say that our market is driven by three engines, exports from the U.S. Gulf, exports from the Middle East and the availability of Panama Canal slots for VLDCs. The next round of US export capacity increase starts second half next year as energy transfer increased their ethane and LPG export capacity at the Needland terminal in the US Gulf. The enterprise terminal follow up in 2026 with their planned expansion. And we estimate that the North American export will increase another 10 million tons from 24 to 2026 on the back of increased production of oil and natural gas in the US, combined with increased terminal capacity. Looking at the Middle East, the growth in export volumes is expected to ramp up from 2026 as Qatar commenced the expansion of their new LNG trains. Abu Dhabi's LNG project is coming a bit later. We expect 2028. Looking at the Panama Canal, it remains a wild card in the market and unexpectedly we can see that the number of container vessels passing through the canal so far in Q4 has come down, leaving more slots available for VLGCs and consequently more VLGCs sailing the shortest route from the US Gulf to Asia. Whether we will see more congestion in Panama is hard to predict, but the number of daily slots in the Neo Panama Canal locks is fixed at 10 transits totally both directions combined. So it takes only a couple of additional container or LNG vessels to pass through to tilt the availability of slots in the other direction. Let's turn to slide eight for a look at the LPG demand side. The picture is pretty much unchanged since the last update, and directionally, the Asian region continued to grow their appetite for LPG in the residential sector in the Indian subcontinent as well as Southeast Asia, while the pet cam sector in China specifically continued to expand their consumption of propane as feedstock. The trade pattern, which has developed over the last years on the back of increased LPG demand in India, deserves attention. The country is absorbing close to 50% of the Middle East exports, and all countries further east in Asia are increasingly dependent on sourcing LPG from the US, underpinning the growing need for long-haul shipping. If you look at the VLGC fleet and the new buildings, there is good visibility on the new building deliveries over the next 18 months. And for 2025, we have 13 vessels on our list over new building deliveries. Worthful to note is that the number of ships going into dry docks in 2025 will more than double from this year, as we count approximately 80 ships due for dry dock next year. And then I leave the floor to you, Samantha, for an update on the financials.

Thank you, Christian. And hello, everyone. Coming to slide 11. We're very pleased to share that we deliver a solid shipping performance in a volatile quarter. For Q3, we achieved a 98% fee utilization and a TCE of $46,500 per calendar day or $46,800 per available day. Maintaining a healthy time charter and FFA portfolio has been a key for success. In this quarter, the portfolio represents about 45% of our shipping exposure. For the fourth quarter, we have fixed 90% of the available days at about $36,000 per day. Looking at 2024, our Time Chartered Out fleet generates a profit of around $31 million of our Time Chartered In fleet. The remaining of our fixed Time Chartered Out portfolio is estimated to generate $69 million for year 24. Next slide, please. As shared in our earlier trading update, product services booked a strong quarter and yield a net profit of $58 million. The result was contributed by a gross profit of $71 million after netting off G&A and tax provisions. The gross profit includes an unrealized mark-to-market gain of $86 million, which consists of open cargo positions and hedges. This is offset by $14 million of realized trading loss. The unrealized gain is expected to be realized in the future periods, although some volatilities are expected to impact the final realized result to be higher or lower. At the end of Q3 24, product services book equity position arrived at $128 million, We would also like to highlight that the reported book equity does not include the unrealized physical shipping position of $17 million, which was based on our internal valuation. You can recall we have announced a multiple-year term contract with our enterprise products partners back in Q2. The related physical volume has started to phase in our 12-month rolling market valuation. As such, we expect greater volatility in our unrealized position in the future quarters. For Q3, our average VAR was $5 million on a well-balanced trading book, including cargoes, shipping, and derivatives. Coming to our financial highlights, on the back of a good performance from both shipping and product services, We reported a net profit after tax of $120 million in Q3, including a profit of 12 million from BWLPG India and 58 million from product services. Profit attributed to equity holders of the company was 105 million, which translates to an earnings per share of 79 cents. This translates into an annualized earning yield of 23% when compared against our share price at the end of September. We reported a net leverage ratio of 21% in Q3, an increase from 12% reported at the end of June. The net leverage ratio change was driven mainly by increase in short-term trade finance and margin requirements, deposit pay for the advance gas fleet acquisition, and increase in lease liability from the exercise of the purchase option for BW-Kisuku. These factors impacting the net leverage ratio as outlined above are mostly temporary. The delivery of advanced gas fleets commenced in November and is expected to complete by the end of this month. When the fleet delivery finalizes, we expect that our net leverage ratio will gradually increase to approximately range of 30 to 35% as we draw down on our financing facility. For Q3, our board has declared a dividend of 42 cents per share, a 100% payout of shipping impact. This excurs the dividend to be paid to newly issued share to advance guest shareholders and ensures that the existing shareholders are paid fully paid for. This also shows our confidence to deliver growth to our business and our continuous commitment to return value to our shareholders. The balance sheet and in quarter with a shareholder equity of 1.6 billion US dollar and our annualized Q3 return on equity capital return employed were 30% and 26% respectively. Looking at our year-to-date OPEX, it arrived at $8,400, a slight reduction than the previous quarter reported. for 2024 we expect our own fleet operating cash break even to be about eighteen thousand eight hundred dollars and twenty two thousand eight hundred dollars for the hopefully including time chart of vessels as you can see we continue to have a healthy repayment profile with outstanding shipping loan at 216 million of which 120 million is a term loan for BWLPG India, only due to be refinanced in 2026. A very manageable position. On the liquidity side, we ended the quarter with a strong position of $750 million, paving the way for the advanced gas fleet delivery. The vessels delivery have been smoothly taking place since November and scheduled to be completed at the end of this month, as mentioned earlier. Post-delivery, our liquidity is expected to remain healthy at a level of 552 million US dollar, supported by our shareholder loan and the seven-year revolving facility of 460 million newly signed in November this year. We will also evaluate and start refinancing our vessels in early 2025, following the Avanskas fleet's delivery. We're very confident to maintain a healthy leverage and financing structure, as well as a sustainable repayment profile with a larger fleet. On the product services side, trade finance drawdown stood at a moderate level of 248 million, or 30% of our available credit line, leaving a healthy headroom for the growth. With that, I conclude my update. Back to you, Kaja.