The full story of Gulf Navigation Holding's earnings has been somewhat hidden beneath the surface.
The shipper, based in Dubai, said its net profit increased by more than fivefold to Dh20.5 million for the second quarter compared with the same period last year. However, that was primarily through a one-off payment that helped the company sustain its numbers.
It received a full advance payment with interest of Dh23.7m over cancelled orders from the South Korean company SLS Shipbuilding, which was reported as financing income, said Kareem Murad, the senior vice president at Shuaa Capital investment bank based in Dubai. "Other than that one payment, nothing was out of the norm in the second quarter," he said.
Mr Murad said that without the advance payment, Gulf Navigation Holding's bottom line showed a net loss of Dh3.2m in the second quarter.
The stock, which closed yesterday at 50 fils, has fallen by more than 15 per cent since its peak in February. It had been trading up recently on initial investor reaction to the headlines regarding the initial results, in addition to management comments that the company may increase its fleet.
The shipper, which owns and operates 15 chemical and oil tankers, has two additional chemical tankers under construction that will be launched later this year. It is likely they will be paid for out of the company's Dh400m cash reserve.
Gulf Navigation Holding will be hard-pressed to pull off further fleet expansion as that would require it to take out debt financing and many banks remain reluctant to lend money in the current environment. The company already has a significantly leveraged balance sheet with a debt-to-equity ratio of 61.3 per cent before taking into account vessels under construction, Mr Murad said.
The shipper is also at risk of volatility in charter rates, which some expect will take a dip in the third quarter and then recover by the end of the year. "A drop in rates will have an immediate impact on revenues and bottom line," said Mr Murad.
halsayegh@thenational.ae
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Find the right policy for you
Don’t wait until the week you fly to sign up for insurance – get it when you book your trip. Insurance covers you for cancellation and anything else that can go wrong before you leave.
Some insurers, such as World Nomads, allow you to book once you are travelling – but, as Mr Mohammed found out, pre-existing medical conditions are not covered.
Check your credit card before booking insurance to see if you have any travel insurance as a benefit – most UAE banks, such as Emirates NBD, First Abu Dhabi Bank and Abu Dhabi Islamic Bank, have cards that throw in insurance as part of their package. But read the fine print – they may only cover emergencies while you’re travelling, not cancellation before a trip.
Pre-existing medical conditions such as a heart condition, diabetes, epilepsy and even asthma may not be included as standard. Again, check the terms, exclusions and limitations of any insurance carefully.
If you want trip cancellation or curtailment, baggage loss or delay covered, you may need a higher-grade plan, says Ambareen Musa of Souqalmal.com. Decide how much coverage you need for emergency medical expenses or personal liability. Premium insurance packages give up to $1 million (Dh3.7m) in each category, Ms Musa adds.
Don’t wait for days to call your insurer if you need to make a claim. You may be required to notify them within 72 hours. Gather together all receipts, emails and reports to prove that you paid for something, that you didn’t use it and that you did not get reimbursed.
Finally, consider optional extras you may need, says Sarah Pickford of Travel Counsellors, such as a winter sports holiday. Also ensure all individuals can travel independently on that cover, she adds. And remember: “Cheap isn’t necessarily best.”
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
About Karol Nawrocki
• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.
• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.
• Cultivates tough-guy image, posting videos of himself at shooting ranges and in boxing rings.
• Met Donald Trump at the White House and received his backing.
