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Company
Wallenius Wilhelmsen ASA is a Norway-based shipping company. It specializes in Roll On/Roll Off (RoRo) shipping and vehicle logistics, transporting cars, trucks, rolling equipment and breakbulk around the world. Wallenius’ main customers are global car manufacturers as well as manufacturers of high & heavy equipment for construction, agriculture and mining. The Company’s activities can be divided into three key segments: the Shipping segment’s main objective is to strengthen its position in the RoRo shipping market with unrivaled high & heavy and breakbulk capabilities; the Logistics segment offers sophisticated logistics services including vehicle processing centers, equipment processing centers, inland distribution networks and terminals, while the Government segment provides ocean transport of U.S. flag cargoes and performs global logistics services for the U.S. government. The Company has several subsidiaries, including ARC Group Holding AS and Wallenius Wilhelmsen Ocean Holding AS
Deep Value Play
Ratios
P/E: 4.0 (5yr average is 34.6!)
Forward P/E: 3.81
P/B: 1.51
P/S: 0.88
P/FCF: 0.39
Dividend Yield: 12.1-17.95% [ranges]
Book Value/Share: 7.44
EPS: kr20.18
Beta: 1.62
Current Ratio: 1.1
Quick Ratio: 1.05
Gross Margin: 58.22%
Operating Margin: 20.21%
Net Margin: 18.79%
- MARKET CAPkr44.52B (4.04B USD)
- 422.7 Shares Outstanding (Million)
Dividend
Last ex-date: Sep 25, 2024
Last pay date: Oct 10, 2024
Dividend amount: 11.251 NOK (9.5NOK before that)
Dividend yield TTM: 17.98%
They have enough cash reserve for me to expect dividends to continue, albeit perhaps at a reduced rate of 10-12% annually.
Cash Flow
Free Cash Flow Yield: 39.67%
https://www.walleniuswilhelmsen.com/where-you-find-us/all-locations-list Here you’ll find where they operate when not at sea
You can see how steady the revenues are and how this translates into the same predicted percentage of cash from operations and overall earnings. It moves slow and steady in terms of it’s cash flow, but it predictable gives you some runway to receive some dividends in the interim.
They are beating their own averages as well as the industry average. I believe this to be impressive because despite semi conductor stocks and tech stocks roaring to sustain the “market” many resource (look at oil prices) and consumption driven companies have been contracting, yet WAWI is holding its own.
Over the last year, Wallenius Wilhelmsen increased its EPS from US$2.04 to US$2.15. That amounts to a small improvement of 5.6%.
Balance Sheet
As of September 2024 (NOK)
Cash/Short term investments: 19.38B (Usually 17.6B)
Accounts Receivable: 6.61B NOK
Total Current Assets: 32.46B
Total Assets: 92.06B (Very stable)
Total Short Term Debt: 6.14B (Usually 7.3B)
Accounts Payable: 1.18B (only 17.8% of Receivables)
Total Current Liabilities: 29.53B (91% of Current Assets)
Long Term Debt: 28.89B
Total Liabilities: 60.35B (65.5% of a Total Assets)
Risks
- I wouldn’t be keen to accept these large dividends and leave it in NOK. Instead I’d want to recycle that into more shares or cash out into USD (or better yet, gold!) (see below).
- Global bifurcation; less contracts as the world divides along political lines (this may be slightly mitigated by the fact that USA Congress is one source of revenues).
- ESG, green communists addicted to chasing government subsidies and not real net margins and dividends; they are quite frankly wasting money on “net zero” ships which will burn them in the long-term. Look at their BAF 2.0
- Overall less demand. I am less worried about this because of their capitalization and valuations. Also, while construction may take a huge hit, equipment for mining will prove vital whether you’re a green’y wanting battery materials or moving large equipment for oil/gas production.
Positives
- Not a super large cap stock; yet to appreciated by institutional money who will be value hunting
- Predictable cash flow and margins of profitability; Profitable 8 of the last 10 years.
- Dividends are back!
- Cash holdings can pay off short term debt; Accounts Receivable can take a huge hit and still cover Accounts Payable. All short term assets can cover all short term liabilities OR Long Term Debt.
News
Wallenius Wilhelmsen has signed a multi-year shipping contract with a leading automotive manufacturer. "This demonstrates their commitment to securing long-term ocean capacity and will further strengthen our partnership," says Pia Synnerman, Chief Customer Officer at Wallenius Wilhelmsen. The new contract has a duration of three years and three months with commencement on 1 January 2025.
In it for the long-run
Closing
Despite being in the era of bubbles in tech, semis, bonds and venture caps, many investors still adopt a more traditional strategy and I believe it’s an interesting time to get into these companies that are cash flow positive and critical for global commerce. They are boring, but boring is good when we’re in a set of crises not knowing if our companies can handle a corporate debt rollover.
This company has the value in its trading price, the cash holdings to stomach major set backs, pays a large dividend, are set up internationally and demonstrates their long-term commitment to shareholders. I encourage readers to explore Norwegian stocks as they often pay generous dividends and are trading at multiples much lower than New York. Please subscribe to find some more of my picks!
