Yesterday the world’s largest independent cruise port operator, Global Ports Holding (LON:GPH), announcedits interim results for the six months to end September.
They showed a significant improvement in the group’s performance and caused an upgrading in current year expectations.
The Business
The group was established 19 years ago and is 62.14% controlled by an Istanbul quoted group – Global Investment Holdings (BIST:GIH).
After recently announced agreements, its global network of award-winning ports and terminals is up to 26.
It now is working in some 16 countries across the Caribbean, Mediterranean, the South Atlantic, Asia and Northern European cruise regions.
Its Operations
The £74m capitalised company has two segments, its Commercial and Cruise Business divisions.
It operates cruise ports for serving cruise liners, ferries, and mega-yachts, as well as individual passengers.
The company also engages in the commercial port operations that specialise in container, bulk, and general cargo handling activities; storage business and offers marine services.
There are differences between the services sought and handled for each of the ports contracted.
The group considers its cruise revenue is based on two defined sides:
Cruise services: its revenue is mainly derived from handling cruise ships and their passengers and crew through terminal and marine services.
Ancillary services: revenue is generated from a portfolio of additional services offered at each port: Port services; Destination services; and Area management.
The company’s focus is on providing the most efficient, flexible and value-adding services at each port.
The Equity
With 62.82m shares in issue, the Global Investment Holdings stake dwarfs all others, with 62.14% of the equity.
Other large holders include Lansdowne Partners (6.47%), JP Morgan Securities (4.19%), Forsta AP-fonde (4.03%), GarantiBank International (2.35%), HSBC Private Bank (2.28%), TD Prime Services (1.89%), Hargreaves Lansdowne Stockbrokers (1.50%), Syd ABB (1.24%) and Athena T (1.21%).
The Interims
An increase in the number of passengers passing through its various ports saw a 673% leap to 4.35m handled.
The six-month period to end September saw adjusted revenues up 334% at $64.1m ($14.8m), while the pre-tax loss was seriously reduced from $29.4m to just $4.4m negative.
The group’s Chairman and Chief Executive Mehmet Kutman stated that:
“I am delighted with the strong recovery across our ports in the interim period. The last two years have presented significant challenges to the Group. However, our robust business model and continued focus on our strategic goals mean that we have exited the pandemic with a more extensive and diverse cruise network capable of generating significantly higher levels of profits and cash than pre-pandemic. While the industry has yet to fully recover from Covid, we are reporting a record amount of Cruise EBITDA for a six-month period.
The strong performance is testament to the strength of our business model and the successful delivery of our strategic goals. Year-to-date, we have experienced higher than expected passenger volumes, driven by a faster recovery in occupancy rates across our port network. As a result, we now expect to report Adjusted EBITDA for the financial year ended 31 March 2023 in excess of USD 60.0m, ahead of current market expectations.”
Broker’s View
Analyst Greg Johnson at Shore Capital, the group’s brokers, considers that, after debt, overheads and minorities, the run-off valuation would suggest a worth of 400p a share or thereabouts.
His estimates for the current year to end March are for revenues to rise 164% to $106.5m ($40.3m) while the previous pre-tax loss could be slashed from $43.4m to just $15.4m negative.
For the coming year he is looking for $153.3m revenues, $15.5m adjusted pre-tax profits generating earnings of 5.8c per share.
My View
Yesterday saw a significant uplift in the group’s dealing volume, rising from just less than 100,000 shares dealt daily – coming in at a massive 460,651 shares traded.
Certainly, interest in the company and its potential is perking up considerably. More Port agreements can be expected within the next year.
Since my Profile a month ago, then at 81.5p, the group’s shares have been edging higher, with another 11% added yesterday – seeing them close at 122.5p up 12.5p on the day – and that was after someone paying 130p for stock just before the close.
That 50.3% gain in the month is impressive, especially so when it is realised that the shares could well be on their way to cruise up to 150p in 2023.
(Profile 11.11.22 @ 81.5p set a Target Price of 100p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)