Company Overview
GasLog Ltd. is an international firm engaged in managing, operating, and owner of the LNG carriers that includes a fully owned fleet of 22 carriers (Reuters). The company primarily operating in the liquefied natural gas market by providing worldwide maritime transportation including technical ship management services to five of the LNG carriers owned by third-party subsidiaries. The company’s corporate office is located at Rue Du Ga, Monaco, and currently trading in New York Stock Exchange under the ticker symbol GLOG after being incorporated in 2006 (Reuters). The discussion aims to analyze the GasLog Ltd. in terms of financial performance from the last three years of its operations. This includes, the stock market activity, financial statement, and relevant ratios. The financial analysis will determine the company’s growth and performance trend, which is paramount in any major investment decision-making.
Recent Challenges
Despite the unprecedented growth that GasLog Ltd. has experienced during the past five years, the company has also faced several challenges that had a major implication towards its performance. Prior to the company’s expansion in Bermuda in 2015, there had been financial issues that need to be addressed involving repayments of the existing facilities attributed to the acquisition of new vessels. In addition, the company also needed new capital to fund its ownership interests in the entities that owns the other carriers of liquefied natural gas. This funding requirement resulted in raising additional capital by means of issuing $7.5 worth of common stocks acted upon by Conyers Dill & Pearman (The Lawyer). Another issue financial issue faced by GasLog Ltd. is the effect of the mounting pressure on Greece in resolving issues with China. The problem arises from the lack of resolution to the finalization of Piraeus Port concession in Greece, which has an ongoing negotiation with China’s Cosco Group. The impact of the problem between the two countries in taking control of the said port affects the European operations of GasLog Ltd. as Piraeus Port becomes inaccessible because of intermittent closure. This problem poses significant threat to the company’s maritime transport operations as the lack of access to the port means revenue losses (World Maritime News). Given the issues that GasLog Ltd. is facing, it is important to determine if the financial implications also reflect on its overall performance.
Stock Market Activity
Gas Log Ltd. is currently trading in New York Stock Exchange and NASDAQ under the ticker symbol GLOG. The company’s historical stock market performance shows a three-year average stock price value of $18.12 at closing while posting a higher opening price at $18.14 within the same period. In terms of average volume, GasLog Ltd. sold average stock units of 754,594 a consistently posting a three-year average high of $18.48 per share and lowest at $17.77 per share (NASDAQ). During the three-year period from 2013 to 2015, the company had the highest stock market activity in 2014 where the price per share reached an all-time high of $23.69 per unit while the 2015 price per share fell the lowest within the three-year period at $14.83 per unit. Currently, the share price stayed within the $14.43 average per unit offering a 3.10% return per annum and trading 142,754 shares volume with $80 million outstanding shares (Bloomberg).
Financial Statement Analysis
The financial statement shows that the company has been experiencing significant growth as observed in its three-year financial data from 2013 to 2015.
Note: Data obtained from 2015 GasLog Ltd. Annual Report (GasLog Ltd.)
Given the above data, it is apparent that the company has performed better in 2014 considering the $171,439 increase in total revenue from the previous year as compared to $86,399 increase in revenue for 2015. Furthermore, the observed trend in terms of change in percentage shows that 2014 had an increase of 109.03% in revenue as compared to 26.29% for 2015. This difference in performance from the two previous years suggests an increase in financial activity in 2015. Despite the larger percentage of growth in 2014 in terms of revenue, the observed change in the net income demonstrates a higher net income for the company judging from the 5.72% increase for 2015 as compared to 2014, which shows a 10.83% loss from 2013. In addition, the observed accumulated operating expenses of the company are higher in 2014, which is 103.58% as compared to the previous year. On the other hand, the higher net income for 2015 can be owed from the lower operating expenses accumulated for the year at only 6.16% difference from 2014. On the other hand, the cash flow trend showed a positive outcome for 2015 where the total cash flow from operating activities demonstrated an 8.96% growth in 2015 as compared to the 70.95% in 2014 as a result of the activities in 2013.
The observed increase in cash flow in 2014 can be attributed to the increase in investing activities beginning in 2013 where the higher utilization of assets is apparent judging from the 48.22% increase in change percentage between the two periods. The result of the increased investment and financing activities in two years prior made a difference in the amount of dividends paid to investors, which shows a negative (-)$18, 852 or 66.64%. On the other hand, the investments made between 2013 and 2014 enabled the higher dividends paid in 2015 at 79.31%. When it comes to total current assets, the 2015 performance slowed down 23.54% whereas; the 2014 asset growth made an 80% increase from 2013. Since there was an increase in investment activities in 2013 to 2014, the change percentage in total liabilities increased to 71.34% as compared to 25.52% in 2015. One of the reasons for the observed increase in liabilities is the impact of the additional long-term debt of $796,924, which brought the liability to reach 78.31%.
Another notable changes in the company’s performance is the difference in the amount of capital surplus that occurred in 2014 pegged at 50.17% partly due to the issuance of new stocks and long-term borrowings from the previous year. However, the 2015 performance showed a relatively lower capital surplus at 10.68%, which can be attributed to the increased investment activities from the previous year. Another important indicator of the company’s overall performance is the changes in ratios in reference to the industry standards. Since GasLog Ltd. is engaged in maritime and shipping specifically of liquefied natural gas, the company can be classified under the transport and logistics industry in which the standard ratios will determine performance. For instance, the industry standard for quick ratio is 0.51, which GasLog Ltd was able to achieve in the 2015 performance. However, the 2014 current ratio of 1.4 and 2013 0.79 respectively have failed to meet the given industry threshold.
For the quick ratio, the company achieved a score of 0.49 for 2015, but performed well in 2014 at 1.166, which is close to the industry standard of 1.58 (CSI Market). On the other hand, the total debt to equity ratio from 2013 to 2015 was closely achieved by the company at an average of 6.3 as opposed to 6.1 of the industry standard. GasLog Ltd. demonstrated the same successful performance in terms of working capital per revenue in which the industry standard sets a high mark at 0.11 and an average of 0.07. In this area, the company posted an overall efficiency ratio of 0.10 in 2015 and 2014, but the 2013 performance fell on the low industry ratio of 0.86. It also appears that the average ratio achieved by the company in return of investment was impressive enough to get close to the industry standard of 0.01 considering that the 2014 and 2015 performance showed exactly the same ratio. However, the company was not very successful in achieving the same standard in 2013 when its return on investment ratio fell at 0.03 respectively. Overall, GasLog Ltd. have shown a successful run in 2014 and 2015, but made a slow growth in 2013. Despite the challenges that current issues with funding its new investments in Bermuda, and the delayed resolutions on port issues in Greece, the company is still showing a significant growth as observed in its financial performance.
Other details of the company’s performance can be observed on various financial KPIs as demonstrated below.
Note: some of the data were obtained from Yahoo Finance
References
Bloomberg,. "GLOG:New York Stock Quote - Gaslog Ltd - Bloomberg Markets". Bloomberg.com. N.p., 2016. Web. 16 Aug. 2016.
CSI Market,. "Transport & Logistics Industry Financial Strength, Leverage, Interest, Debt Coverage And Quick Ratios". Csimarket.com. N.p., 2016. Web. 16 Aug. 2016.
GasLog Ltd.,. Annual Report. Washington, DC: United States Securities and Exchange Commission, 2015. Web. 16 Aug. 2016. Form 20-F.
NASDAQ,. "Gaslog Ltd. Common Shares (GLOG) Historical Prices & Data - NASDAQ.Com".Nasdaq.com. N.p., 2016. Web. 16 Aug. 2016.
Reuters,. "Gaslog Ltd". Reuters. N.p., 2015. Web. 16 Aug. 2016.
The Lawyer,. "Conyers Advises Gaslog On Its 7.5 Million Public Offering Of Common Units".thelawyer.com. N.p., 2015. Web. 16 Aug. 2016.
Yahoo Finance. "GLOG Income Statement Balance Sheet Cash Flow Gaslog Ltd. Common Shares Stock - Yahoo Finance". Finance.yahoo.com. N.p., 2016. Web. 23 Aug. 2016.
Appendix I. Key Ratios
Annual Report see: GasLog Ltd. 2015 Annual report
Appendix II. Financial Summary
