Thanks for this. Running the numbers through the machine offers the following progressions:
Debt-to-Equity Ratio:
2023: 1.82 (Total Borrowings $8,046.7m / Equity $4,415.9m)
2022: 1.47 (Total Borrowings $6,078.6m / Equity $4,128.9m)
2021: 1.41 (Total Borrowings $4,971.1m / Equity $3,517.6m)
Interest Coverage Ratio:
2023: 2.08 (OP $782.3m / IE $375.6m)
2022: 3.19 (OP $751.4m / IE $235.4m)
2021: 3.87 (OP $762.2m / IE $197.1m)
Return on Assets (ROA):
2023: 2.94% (NP$403.0m / TA$13,713.0m)
2022: 5.51% (NP $622.3m / TA $11,302.4m)
2021: 3.79% (NP $400.5m / TA $10,569.6m)
Operating Margin:
2023: 43.0% (OP$782.3m / Revenue $1,820.7m)
2022: 44.3% (OP $751.4m / Revenue $1,697.4m)
2021: 46.3% (OP $762.2m / Revenue $1,646.6m)
Net Profit Margin:
2023: 22.1% (NP $403.0m / Revenue $1,820.7m)
2022: 36.7% (NP$622.3m / Revenue $1,697.4m)
2021: 24.3% (NP$400.5m / Revenue $1,646.6m)
If interest rates were to decline then this looks to be a counterbalance to the interest income from the bond portfolio. As long as it can remain a profitable single digit grower while they consolidate the industry then that will be a good outcome. Happy to have this grind away and become “surprisingly” accretive later this decade.
Edit: other key numbers where the trend is not really your friend, but there may be some timing issues associated with the fleet build out. Ultimately Prem is forecasting 400+m this year and 500m next year, seems plausible.
Return on Equity (ROE):2023: 9.43%, 2022: 16.28%, 2021: 11.21%
Return on Capital Employed (ROCE): 2023: 6.19%, 2022: 7.32%, 2021: 8.11%
Return on Invested Capital (ROIC): 2023: 6.35%, 2022: 7.54%, 2021: 8.59%
From the letter:
"Upon completion of Poseidon's containership newbuild program, Poseidon is expected to deliver more than $2.5 billion of revenue and $1.9 billion of adjusted EBITDA.“
"Poseidon is expected to make net earnings in excess of $400 million in 2024 and $500 million in 2025. We carry our 43% ownership in Poseidon at $1.7 billion – 10x 2024 expected earnings or 8x 2025 expected earnings."