Photo: Illustration; Image Courtesy: StealthGas

StealthGas Forms New JV to Boost Presence in MGC Segment

Greek shipowning company StealthGas has decided to form a new joint venture that would acquire three secondhand midsize gas carriers (MGCs). 

As informed, StealthGas and an unnamed company would jointly buy three 2010-built 105,641 cbm ships for a total of USD 80 million.

The move comes as the company aims to expand further across the LPG sector and accretively invest its cash-on-hand, while sharing the operational risk, according to Michael Jolliffe, Board Chairman.

The strategic decision has been unveiled in the company’s financial results for the fourth quarter and twelve months ended December 31, 2019.

In the fourth quarter of 2019, the company reported a net income of USD 0.5 million, compared to a net loss of USD 5.3 million seen in the corresponding period a year earlier. Revenues for Q4 2019 amounted to USD 35.2 million, a decrease of 8.6% compared to revenues of USD 38.5 million for Q4 2018, mainly as a result of the strategic reduction of StealthGas’ average owned fleet by seven vessels, one less charter-in vessel and relatively low revenue stemming from the Asian spot market.

In 2019, StealthGas recorded a net income of USD 2.1 million, against a net loss of USD 12.3 million posted a year earlier. Revenues dropped by 12.2% to USD 144.3 million in 2019 from USD 164.3 million in 2018, primarily due to the sale of mostly older small LPG vessels.

“2019 was a successful and profitable year for StealthGas. Indeed in 2019 and in spite of the persistently difficult spot market in Asia, we achieved an operational utilization of 98%, increased our daily time charter equivalent earnings and managed to significantly reduce our finance costs; all these added towards our improved profitability,” Jolliffe commented.

“Going forward we feel confident for 2020. Our period coverage of 66% along with USD 135 million in contracted revenues, coupled with improved market rates particularly for our larger LPG vessels, signify good times ahead. We are trading close to our all time low share price and that might be an excellent entry point. In addition, the recent push into green investing might also benefit our company operating … Japanese built ships with minimal carbon footprint.”

“We do recognize however that the recent coronavirus outbreak may negatively affect seaborne trade should this situation deteriorate and positive market fundamentals might be afflicted. We hope that this issue will soon be resolved thus allowing the market to flourish,” StealthGas’ Board Chairman further said.

StealthGas will have a fleet of 51 vessels within Q1 2020. The fleet will be comprised of 47 LPG carriers, including one chartered in LPG vessel, eight JV vessels and an 11,000 cbm newbuilding pressurized LPG carrier with expected delivery in 2021. These LPG vessels have a total capacity of 439,035 cbm.

The company also owns three MR product tankers and one Aframax oil tanker with a total capacity of 255,804 deadweight tons.