MJL to invest Tk800cr for a brand new oil tanker
MJL Bangladesh Ltd has opted out of its previous plan to buy a used oil tanker following an abnormal price hike of old vessels.
The company now has its eyes on a brand new, modern and slightly bigger one to carry petroleum products in bulk at a nearly double price of $75 million, equivalent to around Tk800 crore.
The ambition comes through a cost-benefit analysis, said MJL Managing Director Azam J Chowdhury.
He said due to higher global demand, the price of a 10-12 years old 107K DWT oil tanker that his company was planning to buy earlier this year at $30.72 million, has now risen to $40-45 million.
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Chowdhury said an oceangoing oil tanker's operational life is 24 years.
As such, a brand new tanker would offer MJL higher revenues for the entire 24 years while a used one would fetch lower revenue for half of the period, on top of the fact a used one is not available at half price, he added.
Old tankers need higher maintenance and operations cost and are less environment-friendly, said the managing director of the firm used to own two used 107K DWT oil tankers previously and sold off one after its 24-year life.
For example, Chowdhury said that if one wants to carry different petrochemicals, an old tanker needs to be cleaned costly, while modern brand new ones cost much less due to their easier cleansing features.
Besides, old vessels cost more for fuel to control pollution to the extent asked by the International Maritime Organization nowadays.
A brand new oil tanker would join MJL fleet by next year and the company would get loans from local and foreign lenders for the purchase, likely from a Korean shipbuilder.
Foreign exchange rate volatility would not be an issue for the new tanker project as it would also earn revenues in foreign currency.
Just like the existing oil tanker Omera Legacy, the new one would carry bulk petroleum products across oceans.
MJL's business in FY22
The company's board of directors recommended 50% or Tk5 cash dividends against each share having a face value of Tk10 for the fiscal 2021-22.
The company's self-operated core business of Mobil and Omera branded lubricants and shipping, the liquefied petroleum gas (LPG) cylinder manufacturing business operated by a subsidiary, have fared well in the last fiscal year, said Azam J Chowdhury.
MJL's lubricant market leadership continued with its supremacy in industrial and premium automotive segments, he told The Business Standard, adding that the company still struggles in the low-cost non-premium segments where more and more brands are entering.
MJL Bangladesh posted an earnings growth to Tk6.91 per share for FY22, an increase from Tk6.78 in the previous year.
However, the tighter pricing regime for LPG cooking gas amid the soaring costs since the Ukraine war breakout in February forced MJL's LPG subsidiary Omera Petroleum Ltd to post annual losses.
Including the loss against its stake in the country's second largest LPG firm, MJL posted consolidated annual earnings per share of Tk6.36, which was Tk7.53 in the previous year.
At the end of June, MJL's net asset value per share stood at Tk37.77, which was Tk40.55 in consolidated accounts that include the figures of subsidiary firms.
MJL Bangladesh entered the stock market in 2011.
Chowdhury's conglomerate East-Coast Group owns more than half of the over Tk21,00 crore turnover firm, while state-owned Jamuna Oil holds nearly one-fifth of the company shares.
On Tuesday, MJL shares closed 0.35% higher at Tk87 on the Dhaka Stock Exchange.
