As of this week the fleet of fast growing Indonesian tanker owner PT Buana Lintas Lautan (BULL) will number 33 vessels totalling 2.3m dwt, making the 15-year-old company one of Asia’s larger tanker owners.
The fleet is a mix of aframaxes, handysizes, an FPSO, a VLGC and smaller tankers. Since 2013, the company has grown by around 12 times in deadweight terms with a focus on mid-cycle vessels.
“Ship prices reflect ship earnings, and we have found that given our focus is only on mid-cycle vessels even a one-year contract would remove most of the risk of such an investment,” says Kevin Wong, BULL’s president director.
Although tanker rates have been strong this year, Wong argues that values have not followed suit, something he reckons is largely down to the dearth of financing curtailing buyers.
Under Wong, who worked for Berlian Laju Tanker for 15 years prior to taking over BULL in 2014, there are new potential directions for the fleet.
We are looking for selective opportunities in dry bulk not only as a growth opportunity, but also importantly as a hedge
Wong tells Maritime CEO in an exclusive interview that the company is now looking at entering the dry bulk market where prices for secondhand tonnage are deemed attractive.
“We are looking for selective opportunities in this sector not only as a growth opportunity, but also importantly as a hedge,” Wong says.
Conceding that what he is about to say are “strong words indeed”, Wong makes the case for why he is so bullish for the unique prospects BULL has in front of it.
“What makes us very different from any other shipping company in the world is that BULL is the only company that can not only build on a very stable and fast growing Indonesian cabotage market, but also benefit from the much better rates in the international market,” Wong says, explaining that the stable Indonesian market can guarantee his company stable cash flows, allowing it to get funding much more easily. To further protect the downside BULL always has at least 80% of normalised revenues under contracts.
“As the downside is protected, we can then have the confidence to seek additional returns from the international market,” Wong says, claiming that helps explain why BULL’s Q1 net income was 4.8 times higher than that of the same period in 2019. Moreover, BULL’s EBITDA has consistently increased every year since 2014, even during some weak tanker markets such as 2017-2018.