First Ship Lease Trust: 4Q11 results – negative surprise in DPU cut.
Revenue at US$29.6m, +23% yoy, contributed by the full quarter lease revenue from the two newly acquired vessels leased to TORM A/S in Jun ’11, as well as higher freight income generated by the two pdt tankers trading in the spot mkt.
Net profit at US$7.4m, vs $0.9m loss in 4Q10, mainly due to a US$2.5m write back of a provision for call on a banker’s guarantee made in 2Q11, and US$5m receipt of settlement from Daxin Petroleum pursuant to the amicable out-of-court settlement in Nov ’11.
Income available for distribution jumped 4-fold to US$19.7m, but net distributable amount collapsed to US$0.7m, -89% yoy, as mgt decided to conserve cash and reduce the distribution. FSLT intends to conserve cash, strengthen its balance sheet to stay more firmly within its loan covenants, citing deteriorating freight rates and asset values as well as heightened counter party risk.
DPU cut to US 0.1 cts from US 0.95cts yoy. This translates to an annualized yield of just ~1.7% based on last close at $0.30.
NAV drops to US 53cts/ sh, -7% yoy, which translates to a valuation of 0.44x P/B on last close at $0.30.
The stock gapped down at open today, and is -22% at $0.235 on above avg volume.