Knightsbridge Tankers Limited

Knightsbridge Tankers Limited

Company Background

• Knightsbridge Tankers Limited is an international tanker company with the primary business activity of international seaborne transportation of crude oil.

• Knightsbridge is wholly owned subsidiary of Frontline Ltd., and has 4 VLCC or very large crude carriers

ShipsVessel Name Type Employment Expiration Date Terms

Camden VLCC Time Charter March 2009 $37,750/day

Mayfair VLCC Time Charter March 2010 $37,750/day

Hampstead VLCC Time Charter May 2012 $31,000/day

Kensington VLCC Time Charter May 2011 $45,000 /day

Statement of Cash Flows

Balance Sheet

AnalysisVLCCF NAT TK Industry

P/E 4.94 7.11 5.82 7.97

ROE 21.67% 16.27% 6.98% 25.09%

ROA 14.26% 14.69% 1.79% 3.99%

ROI 15.83% 14.97% 2.04% 9.98%

Operating Profit Margin

59.24% 53.20% 16.74% 36.15%

Stock Price

Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-090

5

10

15

20

25

30

35

VLCCF vs. S&P 500

Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09-20

-10

0

10

20

30

40

50

Strengths• Relatively new ships. Older ships have to be phased out over the

next few years, which Knightsbridge could take advantage of because they have no old ships.

• Expanding into dry bulk shipping with the purchase of 2 ships underconstruction

• Locked in charter rates for its two under construction vessels, which limiting its exposure to declining charter rates.

• Potentially limited risk in credit markets because of their large amount of cash on hand. If needed Knightsbridge could use cash instead of debt for financing.

• Have historically paid a consistent and high dividend, yielding approximately 10% over the past 3 years.

Weaknesses

• Expiring Charter on one ship• Mainly use charters as oppose trading on the

spot market• Possibility of charter cancellation• If the 2 vessels are not delivered within the

deadline set by the charter, the charterer will have the right to cancel the charter.

• Four customers accounted for 92% of gross revenue in 2007

Opportunities• Increase in oil demand leads

to increase in demand for oil transportation

• Route expansion into other areas of the world

Threats• Increase in government

regulation• Continued weakness in oil

demand

Questions