Tsakos Energy Navigation Limited (NYSE:TNP) Q1 2023 Earnings Call Transcript May 30, 2023

Tsakos Energy Navigation Limited misses on earnings expectations. Reported EPS is $-0.12 EPS, expectations were $2.79.

Operator: Thank you for standing by, ladies and gentlemen, and welcome to Tsakos Energy Navigation Conference Call on the First Quarter 2023 Financial Results. We have with us Mr. Takis Arapoglou, Chairman of the Board; Dr. Nikolas Tsakos, President and CEO; Mr. Paul Durham, Chief Financial Officer; and Mr. George Saroglou, Chief Operating Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advice you that this conference is being recorded today. And now, I’ll pass the floor over to Mr. Nicolas Bornozis, President of Capital Link, Investor Relations Advisor with Tsakos Energy Navigation. Please go ahead, sir.

Nicolas Bornozis: Thank you very much, and good morning to all of our participants. I am Nicolas Bornozis of Capital Link, Investor Relations Advisor to Tsakos Energy Navigation. This morning, the Company publicly released its financial results for the first quarter ended March 31, 2023. In case you do not have a copy of today’s earnings release, please call us at 212-661-7566 or email us at ten@capitallink.com and we will have a copy for you e-mailed right away. Please note that parallel to today’s conference call, there is also a live audio and slide webcast, which can be accessed on the Company’s website on the front page at www.tenn.gr. The conference call will follow the presentation slides. So please, we urge you to access the presentation slides on the Company’s website.

Please note that the slides of the webcast presentation will be available and archived on the website of the Company after the conference call. Also, please note that the slides of the webcast presentation are user controlled and that means that by clicking on the proper button, you can move to the next or to the previous slide on your own. At this time, I would like to read the Safe Harbor statement. This conference call slide and slide presentation contain certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, which may affect TEN’s business prospects and results of operations.

And before passing the floor to the Chairman, I would like to highlight that, as mentioned in the press release today, TEN celebrates 30 years as a public company. I’d like to extend my own congratulations to Dr. Tsakos and the entire team. And the Company is kicking off 2023 with a record quarter in terms of the performance and results. And at this moment, I would like to pass the floor to Mr. Takis Arapoglou, the Chairman of Tsakos Energy Navigation. Please go ahead, Mr. Arapoglou.

Efstratios Arapoglou: Thank you. Thank you, Nicolas. Hello, and welcome, everyone, and thank you for joining us on our call today. I must congratulate management for an extraordinary set of record first quarter results and stellar operational performance and also congratulate TEN as a whole for celebrating 30 years as a public company, 30 years of uninterrupted growth. So many happy returns to TEN. We continue to benefit from the prevailing solid market fundamentals, building healthy cash reserves, which allows us to maintain our policy of redeeming expensive preferred issues when we can, steadily reducing debt and paying seriously increased dividends in this [U.S. base] a dividend 140% higher than in 2022. Subject to the market continuation of this firm market, the Board may consider paying an extraordinary dividend during 2023, over and above the already announced annual common dividend of $0.60 per share.

At the same time, we take advantage of the prevailing attractive charter rates, locking in accretive long-term employment for our vessels resulting in over $1.6 billion of future contracted revenues over the next three years, which, of course, secures a high and sustainable, profitable performance. Our vessels operating in spot are taking advantage of the high rates in the market as is the case with our vessels benefiting from profit-sharing arrangements. All this – the combination of all this puts us in a position to comfortably continue as always to consider new strategic accretive investment divestment opportunities as and when this may arise in order to grow TEN further, always in a measured and prudent way and for the benefit of our shareholders.

So congratulations, again, to management and employees of TEN and best wishes for another 30 years of successes. I’ll now pass the floor on to our CEO and President, Nikolas Tsakos. Thank you.

Nikolas Tsakos: Thank you, Chairman. Thank you, Nicolas, and good morning, good afternoon to everybody. It’s with great pride that we are celebrating our 30th anniversary. The year that the company was established, started as a small garage type of start-up with 4 vessels to where it has been today. And also, we are celebrating it together with a lot of friends, a lot of colleagues who have been with us all the way. A lot of new colleagues that are carrying the torch now. And of course, we are even happier that we can report record earnings on our 30th anniversary. Like last year, which was our 20th continuous year on the New York Stock Exchange, we also had the luck to celebrate a record year, and we hope that this year, it’s going to be another record year.

For us, TEN means personally a lot, also for me and the family. It’s a very big part of our lives. How big I will not reveal because I will give out my age, which most of you know. But I can say that very soon, it’s going to be more than half of my life in dealing with the company that we all enjoy and our shareholders. It’s really a scary thought to think of this. But of course, it’s not only the longevity of the company, it marks a lot of milestones for us going forward. The year that we actually started our quotation on the New York Stock Exchange, so we had the arrival of our son. He has proven a great investment so far and even a better investment in 2004, the order of our first LNG, together with the arrival of our two daughters. And this year, a record year and the rollout of the house and in colleges around the world.

So it’s been a long process, but it has been an exciting process, building the company with friends all over the world. The way we see the future is that we are in a period that I have never experienced in my, as I mentioned, 30 years of working life in which the order book has never been so dry, to use that expression. Never in the last 30 years, we’ve seen a percentage of 3% or 4% of the world fleet being built. Some categories are really completely unattainable to compete with the demand that is coming. We are seeing demand coming back after the couple of long COVID years, more ton miles because of the world, occasional closures of canal. I mean, as you know, we have delays many times in the Bosporus, mainly in the winter that have an effect on the market.

Right now, we are seeing a very strange situation in the Panama Canal, where because of drought there’s the significant need of dredging and a big number of our larger ships, including our LNGs, not only ours, big containers Suezmax and VLCCs either have to wait for a long queues or they have to decide to do additional long ton miles going around South America in order to get to the other side. So every small – right now, the market is so balanced that every small detail makes the market even stronger. So this is how we are looking at a very good – as far as supply and demand situation, we are seeing more refill of strategic reserves around the world. The driving season – and I hope all of our good friends will take their time and enjoy driving around, started yesterday in the U.S. and in other parts of the world.

So with that, I would say that we believe that this market has legs to go forward. And talking about forward, I will ask George to give us a little bit a quick [indiscernible] over the past.

George Saroglou: Very good. Thank you very much, Nikolas. Good morning to all of you joining our earnings call today. We celebrate 30 years as a public company this year. And this morning, we reported record profits for the first quarter of 2023, the best quarter in the company’s history since inception. Key takeaways. First of all, we continue to experience the largest change in trade flows to ongoing crude and oil product movements as a result of the war and western sanctions on Russian seaborne oil. As the war in Ukraine continues, these changes appear to be permanent. Europe, before the war, was the biggest client of Russian oil, but since the world managed to replace these barrels from the United States, West Africa, South America, Guiana and the Middle East, creating a positive ton-mile multiplier effect for tanker demand and freight rates.

At the same time, tanker newbuildings are at an all-time low with new orders being less than 5% of the existing fleet. Many yards are now booking orders after the end of 2025. And at the same time, global oil demand is growing based on the latest monthly forecast from the International Energy Agency, which revised global oil demand upward by 200,000 barrels in May. This year, global oil demand is expected to grow on average by 2.2 million barrels per day. If or when realized, it will be an all-time record at 102 million barrels per day. Most of the demand growth is expected to come from non-OECD Asia and especially China. And despite potential global headwinds like stick inflation, tightening global financial condition, the war in Ukraine and the OPEC+ production cuts announced in May, the global economy is expected to continue growing this year.

Oil demand, as we mentioned, is growing and tanker sentimentals favor a strong tanker market for the next two to three years. Going to the slides in our presentation. If we start with Slide number 3, we see that since inception in 1993, we have faced 5 major prices, and each time the company came up stronger, thanks to its operating model. Recently, we came out of the COVID pandemic and continue to navigate the challenges created by the word in Ukraine. The fundamentals, a record low order book for tankers, the aging fleet and the post-COVID oil demand recovery, even without the tragic war, were positive for our industry. The Western sanctions and price cap imported on Russian seaborne oil served as an additional catalyst to propel freight rates higher as long established trade routes were disrupted and voyage distances elongate.

All of the Russian volumes are now flowing long haul to India and China. At the same time, US crude oil exports have gone up from averaging about 3.1 million barrels per day last year to about 4.1 million barrels per day to day. In the next slide, we see the company’s fleet growth and capital market access since inception. We raised capital for growth, not at the top of the market, but at times when asset prices were usually low. The numbers in the blue boxes present the company’s common share offerings and in red the series of preferred sales offering since our listing in the New York Stock Exchange. The first two preferred series of 50 million each, the Series B and Series C have already been redeemed at par. Today, we announced the redemption of a third preferred series, the Series D, redemption will take place on July 7.

The company will pay approximately $88 million to the holders of the Series B preferred. Since 2019, the company has bought back and retired 188 million of preferred shares, saving preferred annual dividend payments of approximately $16.1 million per year. In the next slide, we see the fleet and its current fleet employment. We have an operational fleet of 58 vessels with 31 out of the 58 or 53% of the fleet in the water, having market exposure, a combination of spot contract of affreightment and time charters with profit sharing. 41 out of the 58 vessels or 77% of the fleet are in secured contracts, fixed time charters and time charter with profit sharing. This means that TEN is well positioned to continue capturing the positive tanker market fundamentals as evidenced also by the company’s first quarter results.

Since the start of the year, we have renewed and/or extended 15 of our tankers to time charters with higher fixed time charter rates or higher minimum base rates and higher profit sharing schemes. Fleet modernity is a key element of our operating model. We sold, during the first quarter of the year, eight tankers, six, 2005 build MRs and 2006 built handysized tankers realizing a capital gain of $81 million by taking advantage of strong demand for secondhand tonnage. We also bought back with company cash to 2005 build Suezmaxs for a price under the fair market value. With this, Suezman is currently operating in the spot market, management is exploring divestment opportunities as asset prices for quality secondhand tonnage will continue to remain strong.

Any divestment of earlier generation vessels will be replaced with modern eco-friendly greener vessel. TEN has currently a newbuilding program of eight tankers consisting of two shuttle tankers for delivery during 2025. For dual fuel as [indiscernible] for delivery in the second half of this year and first quarter of next, plus two echo-friendly scrubber-fitted Suezmaxes. Except for the two Suezmaxes that will be delivered after 2 years, the rest of the company’s newbuildings have been fixed forward against medium to long-term time charters. Slide 6 shows the company’s current and long-term clients. And as you see, we have a blue chip customer base consisting of all major global energy companies, refineries, commodity traders, with Equinor currently topping the list as our largest charterer with nine vessels and four newbuildings all on long-term time charters.

On Slide 7, the left side presents the all-in breakeven cost for the various vessel types we operate in TEN. We have a simple operating model. We try to have our time charter vessel to generate revenue to cover the company’s cash expenses, paying for the vessel operating expenses, finance expenses, overheads, chartering costs and commissions and net revenue from the spot trading vessels contribute to the profitability of the company. Fleet utilization in the first quarter of 2023 amounted to 96.4%, reflecting efficient technical management and a low number of scheduled drydocking during the period. Thanks to the profit sharing element for every $1,000 per day increase in spot rates, we have a positive impact of $0.15 in annual EPS based on the number of 10 vessels that currently have exposure to spot rates.

Debt reduction is an integral part of the company’s capital allocation strategy. Our debt peaked in December of 2016. Since then, we have repaid $363 million of debt and repurchased 188 million of 3 series of preferred shares, including the Series D we announced today. Slide 9 is a snapshot of the company’s main financial metrics and performance since 2004. We need to highlight here the growth of the fleet. We have almost doubled the fleet since 2004. We have maintained very strong balance sheet, very strong cash reserves. And at the same time, for most of the period, we have maintained a very profitable operation. How this strong operating performance and financial performance translates for our shareholders, it translates through the dividend distribution, which is in addition to paying down debt as dividend continuity is important for the common shareholders and management.

TEN has always paid the dividend irrespective of the market cycle. $0.30 will be paid on June 15 and another $0.30 will be paid in December at the date that will be announced later in the year and closer to the December distribution. If we compare the $0.60 that will be paid this year against the $0.25 paid last year, the dividend distribution has been increased by 14%. In total, following this year, $0.60, the company would have distributed in excess of $516 million to its shareholders since the listing in 2002. The market continues to be – global oil demand continues to recover as the world emerges from the COVID pandemic. And despite financial and geopolitical headwinds as we mentioned earlier, the International Energy Agency expects global oil demand to grow by approximately 2.2 million barrels per day this year.

And most of the growth is going to come from Asia Pacific, fueled mostly by the resurgence in China. On the supply side, most of the growth in 2023 is expected to come from non-OPEC countries, including Brazil, USA, Vienna, Canada, Mexico and Norway. As global oil demand continues to grow, let’s look at the forecast for the supply of tanker. The order book stands at less than 5% over the next three years, which is the lowest it has been in the last 30 years. At the same time, a big part of the fleet is over 15 years, and we currently have almost 11% of the fleet that is over 20 years. The last slide is the slide that shows the scrapping activity since 2018. We have upcoming regulations, an industry that is – with the carbonizing initiatives and almost 11% of the fleet being over 20 years.

We think that all these factors point to a balanced tanker supply market for the next few years. And with that, I will ask Paul to walk you through the financial highlights of the first quarter. Paul?

Paul Durham: Thank you, George. Well, in the first quarter, the company achieved a net income of $96 million before gains. Total revenue amounted to $261 million, an increase of 75% over the prior year that contributed $236 million EBITDA compared to only $42 million in the prior quarter one. While our time charters generated $136 million and spot freight provided $125 million, this clearly indicates that the tanker market had considerable strength in the opening weeks of the year. And even now despite demand concerns that George has pointed out, with respect to potential cuts, the sale of the new vessels in the new year, as mentioned in the press release, also generated extra cash proving asset values are also buoyant. In all, the first quarter, including vessel sales, resulted in net income of $177 million a record net income for the first quarter.

Our total vessel utilization reached maximum employment, helped by having just two vessels in dry dock. Our Suezmaxes and Aframaxes participated in a market that provided high rates upwards of $60,000 per day which, together with our smaller vessels, led to a daily average TCE of over $42,000 per vessel in quarter one, double that in the prior quarter one. OpEx increased, but much was due to inflationary factors and because we used a large part of our cash reserves to build up our vessel supplies and increased maintenance throughout the fleet. Cash resources continue to grow and have by now increased to record highs, allowing a welcome reduction to our outstanding preferred shares that will have a positive impact on our bottom line through many quarters in the future.

As a result of bringing our quarter one operations into readiness, our fleet, as always, is in a perfect state to serve our customers. So there we have it. And that’s fairly calm quarter one.

Nikolas Tsakos: And I hope we will do as well or even better for the next quarter call. Good. Thank you. Thank you, Paul. Thank you, George. So it’s like the [indiscernible]. And on that note, again, I would like to restate that the market fundamentals, the way we have placed the company, the strategy of always maintaining ships in the spot market, but also ships with high utilization that makes us always – even in difficult times be able to have the propeller earn at least 96% of the quarter has made the company be able to navigate, as you see on the slide that George has left on the screen. Even at difficult times, has always been able to pay a dividend, has always been able to grow, never had an issue. I guess we are one of the handful of companies that we have never ever negotiated any of our loans or banking facilities.

We have – I mean, kept on paying and reducing significantly our debts. We picked at difficult times because the time to invest in ships is when the market is low. And we have picked our debt at around $1.8 million back in 2016. Since then, we have not only reduced our debt, but at the same time, grow our fleet from internal cash flows. But also, as George said, we will be reducing by another $180 million and perhaps more our perpetuals. These are perpetual preferred. So we don’t have to reduce them. But I believe it’s good housekeeping for us. It makes our balance sheet simpler. And it saves at least $17 million straight from our bottom line on interest savings. In a period where interest rates have been growing in – around the inflationary world that we are living with, we took advantage of this market just in the first quarter.

We have recharters or new charters of 15 ships at significantly higher levels and for significant long periods of time, anything from 15 years down to two years. And that gives us a mix of business of $1.6 billion with an average duration of 3.5 years, which is something that we know that going forward, the company has secured paying all its obligations and grow even if the spot market goes under breakeven. So this is the position we are right now. And with this, I would like to open the floor for all of us, if you have any questions. Thank you.

Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Omar Nokta with Jefferies. Please proceed with your questions.

Omar Nokta: Thank you. Hey, guys. Good afternoon. Thanks for the update. And yes, congratulations on yet another record-setting quarter and the very strong performance. Just wanted to ask maybe strategically in big picture about Tsakos going forward. Recently, you’ve exited the MR segment, you got out of those older vessels. And your investments here recently have tended to be much more within the shell tankers or in the crude Suezmax, Aframax segment and you’ve also got LNG. So I just wanted to maybe think about or ask when we think about Tsakos in the future or going forward in terms of capital allocation, is it really maybe within these three buckets that you’re looking to deploy capital, it’s either within shuttle tankers, it’s within mid-sized crude and within, say, LNG? Is it those three buckets that make up the primary sort of long-term picture for the company?

Nikolas Tsakos: Yes. Thank you, and good morning. Well, these are high-end parts of the business that – we have the internal expertise, as you know, and we’re waiting for your visit. Don’t wait for Posidonia to come visit us. The office is still running, even without Posidonia. We have new developments in our – mainly in our control procedures. We have new control stations for our ships. We’ll be looking very forward to see you. I mean, we run everything in-house. So for us, the more demanding the trades are, they give us a better return, but it’s something we can handle internally. So we tend to focus to the high end of the business that is required by the major oil companies. But this does not exclude that we will look at opportunities like the MR segment because we always like to have participation in it.

The last participation ended up being a very successful one when we actually build those ships back 18 years ago now. My God. We were all much younger if you look at the delivery pictures. But we never expected that those ships would have such a good performance after 18 years, and will have proven to be one of our of best return over the years. However, it’s true that we are focusing on the bigger sizes, certainly tankers, LNG, Suezmax and VLCCs.

Omar Nokta: Great. Thank you. Yes. And then maybe just on the two Suezmax newbuildings, the ones that are scrubber fitted, you’re having employment discussions on those two. How would you characterize those types of discussions? And what I mean is, are they kind of – are they project-style long-term charters similar to the dual-fuel Aframax that you have or the shuttle tankers? Or are these more charters you’re seeking to de-risk the newbuilding investment?

Nikolas Tsakos: Well, I think it is more charterers want to secure a good quality operator with a long-term employment. So it is not so much on specific contracts, but all the major companies are looking to secure ships. There are very, very few ships out there. Right now, very few of us understand or know what will be the next phase of the engines. Is it going to be dual fuel with ammonia, with LNG, with methanol? So there is a wait-and-see situation. So there is a lack of ships. And when ships of that quality in this – in the most, I would say, prestigious yards in the world are being built by a good operator, they are a lot in demand.

Omar Nokta: Got it. Thank you. And maybe just one final one for me. Just within say LNG, I wanted to ask kind of what you’re seeing in that market opportunities wise? We’ve seen the spot market come off here recently, part of it’s seasonality, part of it’s pressure on LNG prices. But generally, we’ve seen the spot come off, but the term market appears that it’s much firmer. Just wanted to ask kind of if you can give some color on what you’re seeing in the term charter market for LNG and then also if you’re seeing opportunities to go into new buildings there against long-term contracts?

Nikolas Tsakos: Yes. I think you are very right to say that the – I think the spot market right now, it’s around 50,000 down from 100,000 six months ago. We have been, I guess, a likely – or ahead, and we have chartered our vessels out for very, very, very – perhaps for a very long time at very profitable levels. So we actually jumped on the charter long-term wagon sometime in the third, fourth quarter last year, and we have been able to secure a 12 to 15-year employment on one of those ships at very accretive levels. Then another 10 to 11-year employment again with profit sharing arrangements on another and very good year of extension on the third. So I think we’re going to be – at least from our LNGs, we are going to be enjoying – looking in the high end of the business.

I expect that as more – as the turbine vessels are coming up for renewal in business, and there is a significant newbuilding order book, and that’s perhaps the most in all the energy segment right now, we will see correction in that market. We are always there to participate. I mean, it’s a market that we want to participate more and more, but we always do it at the right time. The difference between us and LNG-specific companies is that we are not pressured to invest in LNG in order for us to grow our company. At the same time, as you said, we can do a shuttle tanker, we can do a Suezmax, we can do an MR. The Board sits around the table and see what are the best returns. So I think this is what makes TEN special. We do not have to follow just LNG.

LNG is going to be part of our growth, but not because – not if it’s not the best return.

Omar Nokta: Yes, that’s very clear. Thank you. Very helpful. I will turn it over and looking forward to my visit to your offices before possible.

Nikolas Tsakos: Thank you.

Operator: Thank you. Our next question comes from the line of Climent Molins with Value Investor’s Edge. Please proceed with your questions.

Climent Molins: Good afternoon. Thank you for taking my questions. I wanted to start by congratulating the team for reaching the 30-year mark.

Nikolas Tsakos: Thank you. Thank you very much.

Climent Molins: In the press release, you mentioned you have secured new contracts and extensions for 15 vessels, including two LNG carriers. Could you provide some commentary on the duration and the expected contribution from the new contract on the Neo Energy?

Nikolas Tsakos: We would like very much to tell you all these things in private, so please don’t feel free. What I can tell you is that the contribution of the 15 new charters and extensions that happened since the last quarter is of the magnitude of – in excess of $0.5 billion in freight, which will – which has brought our next 3.5-year forward the employment – future employment to income coming to 1.6. What we can say is that the Neo Energy has been chartered with a very healthy six-figure number.

Climent Molins: Makes sense.

Nikolas Tsakos: We would be happy to answer your questions in private in order to avoid confusing other people with our business.

Climent Molins: Makes sense. We’ll do that. Thanks for the color. And on the press release, you also mentioned that the Board may declare an extra dividend on top of the one you already announced. And I was wondering, could you provide some additional insight on what the drivers behind the decision would be? Is there a specific metric they would look at, such as cash on the balance sheet or the outlook? Or is it a mix of several factors?

Nikolas Tsakos: Well, this question, we have the luxury to have the Chairman of our Board here. So Mr. Chairman, please give us a little color on what will take us to convince you to give a higher dividend?

Efstratios Arapoglou: Thank you, Nikolas. An extraordinary dividend. We will examine that. We’ll see how business will progress for the remainder – in the next few months. It’s a judgment call. There are no triggers. And it all depends on the numbers that we expect to see that they materialize. So it is not based – it will not be based on any triggers or formulas or whatever. We really need to be convinced that what we see as being sustainable performance really materializes. That’s all.

Climent Molins: All right. Thank you for the color. That’s all for me. Thank you for taking my questions and congratulations for the quarter.

Nikolas Tsakos: Thank you.

Operator: Thank you. There are no further questions at this time. I would now like to hand the call back over to Nikolas Tsakos for any closing comments.

Nikolas Tsakos: Well, thank you very much for participating in our first quarter. We hope our second quarter and the six-month results to be as good or better. I mean, I think we’re going to be seeing the significant increases of new charters that we talked about actually becoming numbers in the second quarter and third quarter. So I think because a lot of the business that we actually concluded in the last eight weeks are going to be delivered without this period of time. So we’re looking at a good healthy year going forward. This is, as we said, it’s a milestone year for us. So it’s 30-year as an entity as a public company. We will be celebrating again by doing some business. In the meantime, whoever is in London on the – during the shipping – London International Shipping Week in the middle of September, TEN will be sponsoring a big shipping seminar and offering a few drinks for celebrating our 30 years in the IMO building, the building where our Board member and Head of our Operations and Environmental Committee, Mr. Mitropoulos, has a lot of memories from being the Secretary General and I’m taking this opportunity to wish you happy birthday and thank you, Mr. Mitropoulos, for celebrating your birthday with us today during a very important time.

And then, of course, the actual date of our first listing on the Oslo Stock Exchange was the 10th of October 1993. For those of us who still remember the past, which is good, and we will be celebrating that, thanks to Capital Link’s arrangements. And I think Nick is listening in, in New York together with part of the family having both my daughter studying at Columbia University in New York. At the time, they will be the main entertainment of that period. They’re here listening in. That’s why I’m saying this, and that will be another good opportunity for us to meet the shareholders face-to-face. But of course, the team is going to be in New York during Marine Money, which is in a couple of weeks. And we take this opportunity to thank you for your trust and looking forward.

I mean, what we did last year when we were celebrating 20 years on the New York Stock Exchange, we called it 10 or 20 in our surprise broke 20 for a considerable time. Now it’s under that, it’s very undervalued. Now, 10 or 30, it’s a higher target, but you never know. I hope we can achieve it. Thank you very much.

Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect at this time. Enjoy the rest of your day.