PT Buana Lintas Lautan Tbk (“BULL” or “Company”) has just taken delivery of its 7th Long Range 2 (LR2) tanker this year out of the 8 vessels delivered so far this year. Since First Quarter 2020 the Company has taken delivery of 3 vessels with a total capacity of 253,801 DWT. This addition resulted in the Company’s total fleet of 33 vessels with a total capacity of 2.3 million DWT, where 17 of its vessels are LR2s/Aframaxes (80,000-119,999 DWT).
The newly acquired vessel has a capacity of 109,647 DWT, and a length of 245 meters (for comparison, it is larger than a 56-storey building). This caps the Company’s growth from 2019 to now of 16 vessels, growing the effective tonnage by 142% with an investment of around US$300 million. From First Quarter 2020 to Second Quarter 2020 alone the effective tonnage increased by 20%.
The Company’s strategy of acquiring high-margin mid-cycle vessels with age of around 10-15 years from well-known owners together with stable contracts minimizes risk and optimizes returns. PT Buana Lintas Lautan Tbk’s President Director, Kevin Wong is confident that purchasing mid-cycle vessels results in a much lower risk compared to purchasing a newly built vessel.
“For comparison, for the price of a new vessel we can acquire three 10-15-year-old vessels, so we can
generate 3 times as much revenues with mid-cycle vessels while reducing our capital risk by 80%. As such, this strategy enables the Company to expand its fleets while maintaining low debt-related ratios”, he said.
Combining this strategy with stable contracts, BULL has been able to expand its fleet from 8 vessels with a total capacity of 202,782 DWT in 2013 to its current 2.3 million DWT capacity while simultaneously cutting its debt to EBITDA ratio by half, a testament to its consistent and strong cash flows and profitability. The Company plans to continue to prudently expand its fleet, given its strong financial position and the continuing opportunities in the domestic and international markets.
“As we entered 2020, BULL was confident of the positive outlook for the business due to the expected tight supply-demand dynamics as a result of the extremely low orderbook of new vessels under construction, the lowest level in over 20 years, combined with the three new IMO regulations that must be implemented between 2020-2025. This catalyst is then further enhanced by the COVID-19 pandemic, which resulted in a huge demand for tankers to be used as floating storage”, said Kevin Wong. “The initial strategy, coupled with the opportunities arising from the COVID-19 pandemic, further enhances the Company’s growth performance and opportunities,” he continued.
In the first quarter of 2020, BULL’s revenues increased to USD 43.1 million, an increase of 1.8x from USD 23.4 million in the same period last year. Meanwhile, net profit increased 4.8x from USD 4.1 million to USD 19.7 million.
The Company looks forward to its performance improving further in the second quarter this year.
“We believe that Q2 will be even stronger than Q1, as vessels purchased in Q1 will fully contribute in Q2 combined with higher TCE rates”, Kevin concluded.