First Ship Lease - Stunning Cash Generative Business

Despite the vagaries of the shipping market and the current weak industry conditions, I like FSL for these reasons :-
- Solid new management team that has engineered the turnaround of its operations since FY13
- Over a period of 4 ½ years, borrowings were significantly reduced from usd 430m to usd 243m; funded from operating CF and sale of vessels.
- Based on latest annual results, FCF yield was at 16.8% (taking into account of loan repayment and interest servicing)
- Net surplus Op CF yield was at a staggering 53% (based on price of 17.7 cents).
- FSL generates on average about usd 70m surplus operating CF annually (since FY13)
- Counterparty risk of its customers is stable (check out latest Annual Report)
- FSL is looking at refinancing the current loan which is due to expire in Dec 2017. I expect that once this is done, the group can resume its dividend distribution.

I believe this stock is worth a look. Please do your own due diligence.
Am vested.

I have reworked the FFO on a 4 QTRs trailing basis, the gross FFO yield exceeds 90%. Truly incredible.

A Deep Value stock at its current price of 18 cents. The new management has done incredibly well to steady the ship - reduce borrowings, reduce counter-party risk, generate huge FFO. It is now in the pink of health. Trailing FFO yield > 90% is just abnormal. A small cap gem in the making.

Resignations of 2 directors were rightly queried by SGX. The air is cleared as it concerned HR issues (CFO appointment) which in my view is not material. Share price is recovering strongly. The refinancing of existing loan will be a major catalyst
for a price re-rating as this would mean resumption of dividend payment. I would see this coming soon before the end of current FY.

Meanwhile, operations are hugely cash flow positive.

FSL was recently identified in EDGE as a “Buying opportunities in the Small Cap space”. Stock was suspended yesterday and no announcement as yet being made.
My hunch is that the announcement should be positive, either refinancing of existing loans has been finalised (hence resumption of dividend pay-out) or, better still, a takeover proposition.
If it is the latter, I would not be least surprised for these reasons:-
- Price/Book at 0.2
- Business model is highly cash generative
- Solid Operating Cash-flow
- FCF yield > 15%
- External borrowings have been reduced significantly
- Borrowings/Operating Cash flow < 4x
Hope for the best.

News just released - not good.

Investing thesis will need to be reviewed, particularly, whether there is a major impact on operating cash (which FSL said is still positive)..