TORM plc (TRMD) Q1 2022 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining TORM plc First Quarter 2022 Results Call. [Operator Instructions]. I would now like to turn the conference over to Andreas Abildgaard-Hein. Please go ahead.

Thank you. Thank you for dialing in, and welcome to TORM's conference call regarding the results for the first quarter of 2022. My name is Andreas Abildgaard-Hein, and I'm the Head of Investor Relations in TORM. As usual, we will refer to the slides as we speak. And at the end of the presentation, we will open up for questions. Please turn to Slide 2. Before commencing, I would like to draw your attention to our safe harbor statement. Please turn to Slide 3. The results will be presented by Executive Director and CEO, Jacob Meldgaard; and CFO, Kim Balle. Please turn to Slide 4. I will now hand the call over to Jacob.

Thank you, Andreas, and good morning to all of you in the U.S., and good afternoon. Thank you for dialing in. It's truly a pleasure to be here. Today, we published our results for the first quarter of 2022. As you can see at the end of February 2022, TORM had fixed 85% of the open days in the first quarter of 2022 at $15,569 per day. And then due to a number of factors the market firmed during the remainder of the quarter, and we ended at $16,743 per day. Now that is then put it into perspective, the current market, we are trading our vessels above $40,000 per day for our fleet. Now since the demand recovery finally materialized in product tanker rates, we ended with an EBITDA of $60.4 million, and we had a profit before tax of $10.7 million. This equates a return on invested capital of 4.4%. Now in the largest segment, the MR, the rates we achieved were $16,462 per day whereas the LR vessel class obtained rates above $8,000. Now looking into the second quarter of 2022, changing traveling patterns, increase in supply of products and thereby meeting an increased demand, that mean that we've secured spot bookings at $28,348 per day. And we have again outperformed our peers in the largest segments in the MRs. Since the end of 2021, we've sold one vessel in each vessel class, and we've entered into an agreement to acquire a secondhand LR2 vessel on what we believe to be attractive terms. Here in the first quarter of the year, we increased our scrubber commitment to 60%, thereby increasing obviously, our access to lower fuel prices. We also invested in Flettner Rotors for the 2 new buildings we had delivered in the fourth quarter and here in the first quarter, respectively. And these Flettner Rotors, we are currently having them tested, and I expect them that they will be installed during the second half of the year. Here, please turn to Slide 5. And here, we'll talk -- no surprise, I think, to anyone will talk about geopolitics and the Russian invasion of Ukraine that has caused the greatest humanitarian crisis in Europe since the second world war. And my thoughts are with the people of Ukraine whose suffering is beyond anybody's imagination. This contract has also prompted a geopolitical awakening as this year in Europe with the ambition from here on to reduce Europe's energy dependency on Russia. The immediate effect of this has been felt on the product tanker market already as we speak, with official sanctions by the U.K. and also by the U.S., and there is self-sanctioning taking place by several Western market players that has led to a search in product flows from regions further afield. What we've seen on the ground is that U.S. and engine refiners, they were really quick to respond to this increase in demand for distillates which arose from the self sanctioning of the European receivers of -- primarily of Russian oil. U.S. Gulf refinery utilization responded and quickly increased to near maximum levels at around 95%, resulting in a significant increase in exports as the demand, both here in Europe but also in Latin America continued. Freight levels, as an example, in the U.S. Gulf went from lump-sum $800,000 in February 2022 to as high as $3 million during April 2022 for carrying diesel back to Europe. This increased MR earnings to close to $100,000 per day at the peak. In the Middle East, the increased demand for LR2 is to carry diesel, jet fuel back to the Atlantic Basin has also increased its port earnings. We experienced LR2 prior to the outbreak of the war at the range of around $10,000 per day at the end of February, which is currently, as we speak, trading up to $80,000 per day. The medium, the long-term implication on the product tanker market are yet to be seen. European Commission presented a plan last week to have a full ban of imports of Russian crude oil within 6 months and imports of Russian refined products by the end of the year. And effectively, this means that half of Europe's clean petroleum products import or 7% of the global clean petroleum product close would need to be replaced by other sources. As we have announced at the release of our fourth quarter release, TORM made the decision immediately after 24 Feb not to enter into any new business involving Russian port goals and also not taking on any new business for Russian accounts for whatever original destination it may be. Please turn to Slide 6. The need to recalibrate the whole oil product trade ecosystem will lengthen trade distances, hence, increasing the ton mile demand for tankers, given the obvious proximity of Russia to Europe, for example, if Northwest Europe imports diesel from the Middle East instead of from the Russian Baltic ports. It will increase the ton mile for the same amount of fuel by around 3x. So far, we've seen only a limited shift in the trading patterns, meaning that most of this effect will actually not be visible until the coming months. When we do our calculations and modeling, a total oil embargo by the EU on Russia and the corresponding trade recalibration would add a net of 7% to product tanker ton mile, purely based on changes in trade distances only. This would be a permanent effect, which will bring the fleet utilization rate to a new higher level as long as sanctions and self sanctions are in place. This trade recalibration effect comes on top of the 3% ton-mile growth we already forecasted for this year based on the continued oil demand recovery from the COVID-19 effect as well as the impact of the recent refinery closures and, as you all know, for example, Australia, New Zealand, South Africa, where the import needs of all these regions have been increasing correspondingly. Further support is likely from the need to replenish both commercial and strategic oil inventories in many countries, which have been drawing for almost 2 years now. However, our opinion is that the timing of this effect is highly uncertain given the current backward dated oil price environment. Now on the tonnage supply side, we have seen low fleet growth this year and also expected in the next couple of years. The order book fleet ratio now standing at 5% for product tankers and contracting activity over the past 3 quarters being nettable. From this, you can easily deduct that also Russian-owned product tanker fleet will not be part of the active fleet due to sanctions and this is accounting for 2% of the total product tanker fleet. Since the start of the year, we've also seen a considerable number of LR tankers shifting into dirty trades, underpinned by the strong crude Aframax earnings as a result of Europe's search for alternative crude oil after Russia's invasion of Ukraine as well as subsequent crude strategic petroleum storage releases in the U.S. Here, please turn to our Slide #7. So far, we have only seen a small fraction of the potential trade recalibration effect with only 200 kilo barrels per day of European oil products import from Russia being replaced by supplies from the United States and the Middle East region, whereas this is from a high base in February 2022. However, the impact on the freight rates has been significant already. With a full ban on Russian oil products, we believe that the price incentives for these producers from the U.S. and the Middle East India will increase even further. The diesel market is currently very tight and a EU ban on Russian diesel would aggravate that tightness even further. However, the ramp-up of the Jazan refinery in Saudi Arabia and the start of Al Zour refinery in Kuwait, both scheduled for the coming months will facilitate the needed trade recalibration. We cannot disregard the fact that higher oil prices and high inflationary pressure on the global economy in general are likely to slow down the growth pace of global oil demand. Nevertheless, we believe that the positive demand effects of the redistribution of the energy supply chain will outweigh the negative effects caused by slower demand growth. This will be further supported by the need to refill commercial and strategic reserves once the oil price structure is supportive. I kindly ask you to turn to Slide 8. And here, if we look at medium and long-term drivers that go beyond the trade recalibration due to the political conflict we are facing in Europe right now. We're already seeing that more than 2 million barrels per day of refining capacity has been closed down permanently, and a further 0.6 million is scheduled to be closed down during this year and next year. On top of that, another 1 million barrels per day of capacity could risk being shut down. Most of the affected capacity is located in regions which are already largely importers of refined oil products such as Europe, U.S. West Coast, U.S., East Coast, Australia and New Zealand, South Africa. Even in the regions where refiners have already been closed down here in 2021 or 2020, we have not seen the full effect on import demand yet as oil demand has been negatively affected by COVID 19. At the same time, more than 4 million barrels per day of new capacity is scheduled to come online, mainly in the Middle East, China and India, regions which already today are large exporters of oil products. Both these developments are positive for trade flows and ton miles in the coming years with only a few projects that are less positive for trade. And here, please turn to our Slide #9. The positive outlook for the demand for product tankers in the next 3 to 5 years coincides with the supply side, which is the most supportive it has been for at least the last 25 years. With record high newbuilding prices, limited shipyard space, tanker ordering has, as I mentioned, been muted for the past 3 quarters. And here, consequently, the order book to fleet ratio for product tankers is now at a historically low level of 5% if we leave out chemical tankers. This is further supported by similar historically low 7% order book fleet ratio for crude tankers. So consequently, we are the fleet growth in the next 2 to 3 years will be hovering around 2% a year, only half the pace seen over the past 5 years. My concluding remarks here on the product tanker market, we do expect volatility on the market due to the current geopolitical tensions. That's considerable ton mile increases due to crude and all product tanker rerouting. This recalibration of the transport of refined oil products will take some time to settle. Once it is settled we are of the opinion that the average rate environment will be above the level we saw prior to the outbreak of the conflict in Ukraine. This will further be supported by increasing refinery dislocation effects as well as the need to rebuild depleted crude and product inventories further supported by this very positive supply side outlook. Please turn to Slide 10. And here, if we look at our commercial performance, we have again outperformed the peer average in almost all quarters during the past 6 years in the largest vessel class MR. And here, in the first quarter of 2022, we achieved rates of $16,462 per day in that segment. And I can say that I am, in general, very satisfied that the One TORM platform consistently deliver these superior results on a day-to-day basis. And here, kindly to Slide 11. These above-average TC units is driven by our continued focus on positioning our vessels in the basins with the highest earning potential. In the first quarter of 2022, we again had an overweight west of the Suez Canal, where we also saw an outperformance when looking at the full quarter. Now with that, let me hand it over to you, Kim, for a further elaboration on the cost structure, our liquidity position and the balance sheet.

Thank you, Jacob. Please turn to Slide 12. As Jacob mentioned, we have seen a recovery in the tanker market in the first quarter of 2022 with rates reaching $16,743 per day and a further increase in the second quarter of 2022 where we fixed 65% of our days at $28,348. In the first quarter of 2022, we saw a reduction in our operating expenses due to low repair and maintenance costs, but we still see an impact from COVID-19-related expenses. So for the rest of 2022, we could see slightly higher OpEx per day than realized in the first quarter of 2022, but in line with previous performance. We will maintain our focus on cost optimization without jeopardizing quality and customer focus. Please turn to Slide 13. It is part of our strategy to renew our fleet continuously. And since the beginning of 2021, TORM has acquired 11 secondhand vessels and taking delivery of 2 new buildings, thereby significantly expanding our fleet. Further, we have recently entered into an agreement to purchase the secondhand LR2 vessel of which we will take delivery in the third quarter of 2022. Secondhand vessels values have increased significantly over the last month, and we have used the opportunity to divest 5 oldest vessels since late 2021. Overall, this shows that we have strong capabilities in replenishing our fleet while maintaining a conservative capital structure. Please turn to Slide 14. As of 31st March 2022, TORM had available liquidity of USD 140 million. Cash totaled $95 million, and we have repaid our RCF facility and hence, have undrawn credit facilities now at USD 45 million. The total cash CapEx commitments relating to our scrubber program and other assets were USD 13 million as of 31st March, 2022. With our strong liquidity profile, the CapEx commitments are fully funded and we have a significant liquidity reserve. Slide 15, please. Looking at our maturity profile, we have no major refinancing until 2026, which combined with our strong cash position provides TORM with the financial and strategic flexibility to pursue value-enhancing opportunities in the market. Further, with the new dividend -- or sorry, the distribution policy that our Board of Directors approved this morning where we base our dividend payments on a fixed amount per vessel. We are not pleased we have good capabilities to distribute dividends to our shareholders or buyback shares. As displayed, we have not any major repayments until 2026. Further, in the first quarter of 2022, we have increased our interest rate hedges to plus 90% in the coming 3 years and 85% from 3 to 5 years. Thereby, we are prudently taking out the potential interest rate risk caused by the increases we have seen in inflation levels recently. Slide 16, please. Value of TORM business was approximately $1.96 billion by the end of the first quarter. Outstanding gross debt amounted to approximately $1.1 billion as of 31st March 2022, with limited committed CapEx, as I just mentioned, and a solid cash position, we have net LTV of 52%. All in all, we have a strong and attractively priced debt structure with reputable banks and leasing institutions. And we have hence demonstrated our strong access to diversified funding sources in the market. We are very satisfied with our current debt position. The net asset value was approximately $1 billion as of 31st March 2022. This corresponds to $13.6 or DKK 91.1 per share. And just before commencing this call, TORM shares were trading at DKK 79. I'm pleased that our conservative balance sheet supports our strategic flexibility as well as financial strength. With that, I will let the operate open up for questions.

[Operator Instructions]. The first question is from the line of Jon Chappell from Evercore.

Jacob, if I can start with you, a big picture one. I think you laid out a lot of what's happened since the invasion. I think there may be a perception that what's going on in the product tanker markets may be a bit anomalous. As we think about the future, what are some of the longer-lasting secular changes to trade flows, et cetera, that even if there is, God willing, a resolution to what's happening in Eastern Europe, hopefully as soon as possible. Why is this product tanker upturn going to last a lot longer than the war?

Thanks, Jon. It's a very good question. So I think if you had asked me on the day of the outbreak of the war, a, I would have been so much in shock that we have a war taking place on the ground in Europe. And, b, I would probably have been very much in the camp that this would be a shorter-term thing. You have had some disruption temporary and that would sort of, as we've seen many times in this product tanker market that it would be fading out relatively quickly. Now it's today, in my view a change in as much as I think the signaling from the political side. And I think more or less, Unity in Europe is that the dependency that has been now built up over the last 30 years on Russian energy gas oil to a much lesser degree coal, but anyway, the whole energy complex that even if the hostilities on the ground stopped today. And hopefully, it will end very, very soon. I don't think that we can take back the sort of the geopolitical situation and imagine that it will then come back to what it was on the 23rd of February. I think today, that is a very unlikely scenario. I think that what underline has communicated over the past week and the sort of negotiation that is taking place, especially in Hungary, I think it's a very clear signal that this -- even if the war ends, I do not believe personally that we will see a return to the way that energy was sourced because of that. So that's my long answer to this. But I think that is, of course -- this is an extreme situation that we're in. I think that personally, I'm of the opinion that we need actually as country to now no longer support financially this regime in Russia. So I'm probably a bit colored.

Yes. No, I think that all makes sense. Very thoughtful. Two questions for you Kim. The dividend distribution policy, excuse me, maybe not the clearest on the surface. I mean, you have to read it a few times to kind of understand it. Maybe for our purposes. Could you do like an illustrative example, just made up numbers. Second quarter, you ended with $100 million of cash. You have 81 vessels, the $1.5 million per -- but like the working capital facilities may be a bit less clear how some of these minuses work. I hope not too detailed in catching you off guard, but maybe an illustrative example of how we can get to the dividend.

Yes. Thank you, Jon. No, no, that's a good question. So the way we think about it, I say we have -- now you mentioned 81 vessels, let's do that, times $1.5 million if we just take the first Q2 quarter, is $1.8 million following that, but 8x -- sorry, 81 times $1.5 million, then you would end at with $121.5 million, right? And you will take the cash balance we have at the end of the quarter. Now we said that $100 million, let's make it $170 million to have a number where you will distribute some dividends. And that will consist of cash at hand and the RCF, the strong part of the RCF.

So that's the $45 million?

Yes. To say that -- okay, so say that will be $170 million all in all. Then you will deduct the restricted cash we would have. That is primarily related to freight instruments like the FFAs. Is there anything there or similar, Say that was $20 million, then you would go to $150 million. So the -- so just on these very simple numbers, then there's just about $30 million that you can distribute as dividends or share buybacks. Then the added thing is, as we mentioned, that you have this 12-month look-back period, where you can take into consideration vessels you have sold or refinancings you have made we did a refinancing, say, in the quarter that we just end up in [indiscernible] some vessels getting whatever, $10 million, $20 million in cash. we would do that probably because we would like to invest in vessels going forward. So we can choose to serve that for investments in the coming period. And of course, we would need to be somewhat vocal about how we think about that when we come to this positive situation, and we would try to communicate that to you as clearly as possible. So that is sort of the $30 million, and that could be minus something we will reserve for investments in vessels, for instance, in the coming, say, 3 to 6 months. Is that okay, clear?

It is. Yes. I think we'll just have to reassess how we model it every quarter based on some of those things. But that's very helpful. Final one..

Sorry, to interrupt but of course, also the working capital I like this formula because you do take the working capital into account. That is important, of course. But when it comes down to modeling, that can have an effect of course.

Right. Okay. Final one, hopefully quicker. All these transactions, the LR2 purchase, the sales for delivery in 2Q, most of the numbers you gave in the presentation were as of March 31, 2022. Can you tell us what the LR2 purchase price is and also the proceeds that you're expecting from all the deliveries in 2Q?

Okay. Sorry, I just have to have a chat with -- we've not published that, but it's around the $42 million number on the LR2.

And the proceeds?

And -- sorry, and the proceeds from the divestments. I didn't get that.

Yes, exactly. Yes.

Okay. Just -- I'm just having -- give us to look it up, you have it in 2 seconds. We'll get back to you, Jon, on that in a minute Have it in my mind you will get in a minute.

I'll hop out of the queue and let someone else go and then if you can just pop in at some point with that, that would be helpful.

The next question comes from the line of Magnus Fyhr from H.C. Wainwright.

Jacob and Kim, just couple of questions. To follow-up on the dividend distribution policy. With the stock trading at a discount to NAV, how do you think about stock buyback versus cash distribution going forward?

Yes. I think it's clearly something we need to take stock at on every quarter when we have the luxury of distributing whether it will be dividend and/or also a component of the share buyback. The authority to the Board and to the company is that you can buy to a total of approximately 10% of the share capital back. So there's plenty of room to put that in place. But we will take that decision, Magnus, depending on the circumstances at the time when we are to make the announcement. So we have not put ourselves strongly in One camp. But obviously, what we are trying, as Kim mentioned, what we are doing here is to make it very clear how the flows are between the operation and then the investors in my opinion is obviously that the gap that you point to on NAV, we should be supporting the share price with these friendly moves towards investors.

Okay. On the last quarterly presentation, you provided the breakdown of fixtures going forward between the different asset classes. I'm not sure if I found that on this presentation, but do you have a breakdown between the different bookings between LR2s and MRs for 2Q? Or just give a ballpark?

Yes, it's in the report.

Sorry.

It's fine. It's stated on in the report on Page 3, I can give them to -- for the individual process.

It's okay. I'll take a look at it.

Yes. But it's 32 for LR2s, and it's around [indiscernible] and 27.5 for the MRs.

Okay. Very good. And then just lastly, I mean, you have installed scrubbers on most of the ships, you have a few left. Any -- these are smaller ships. So can you share with us how the performance have been on those scrubbers if you can quantify kind of average on the LR2s, how many days they typically work out of the year and compare that with the.

The way we look upon this is a bit different, Mike. I mean, we put at the total -- we look at the total investment for the scrubbers. And then what we are evaluating is what is actually the return on that investment because that's a cash outlay, you can say, it's a pure investment that we've done. So we are not actually so focused on each of the segments. But it's so far proven for us to be a very attractive investment overall. And obviously...

Can you share the metrics sorry, Yes. Can you share any of those metrics then what the returns have been so far?

So I think that out of the $100 million plus that we have made of total investment, we are probably -- I look at my colleagues here, we're probably half money back, around 65% of that has been recouped by the end of this year is our expectation.

May I just come back to the question that I did not have at hand for you, Jon. We just the 4 vessels we divested this year. There's a net proceed -- net of debt of $33 million.

The next question is from the line of [indiscernible].

A couple of questions. You bought LR2. Are you still looking to buy ships at this point? Or are you kind of finished doing it given fairly firm market that you see, I guess, you could expect to see higher prices going forward?

It's obviously a trade-off between that the market is also very much favoring if you have a vessel I think -- there's no particular -- we'll look at anything, but there's no particular strategy. I would agree with you that currently after end of March, you can see what our outstanding vessel values were, and it's increased since then. So clearly, we need to be cautious at this time and not jumping on to vessels that are too expensive. But there might be a few ships that could be interesting still to take on our balance sheet, but I don't expect anything major sort of in terms of just small things. And it would need to be something bigger strategic.

Okay. In terms of fixing levels, you said in the report that levels are above what you have been fixing at for your guidance. What kind of levels are you actually fixing at this time on LR2s, LR1s and MRs?

So I think it's interesting. It's a good question. I mean, normally, when we internally have these conversations, people would pick it and by the thousands -- so you would -- you'd probably ask some and then they would mention to you, we are fixing at $15,000 or we were fixing at $16,500 or whatever the number will be. Now currently, it goes by $10,000, but I'll do it in $10,000. And then it's probably our MRs, we are across the board earning around 40 currently and on LR1, around 50 and LR2s around 60 sort of in a global mix.

Fantastic numbers. You also said that when things go off a little bit, do you expect that markets will normalize at the level above what you saw pre-COVID. What would you expect -- sorry, okay. So what will trigger that normalization?

I think there's a lot of stress in the system right now that clearly causes sort of the freight rates to be elevated above what you could sort of calculate yourself on a simple supply-demand metric. I think that will settle once some of these supply chains will be more known and you can plan it better, either as provider of the cargo with the receivable of the cargo. So that will be -- I don't think -- I don't have the answer to how long it will take, but there will be a normalization at some point in this market, but it's not necessarily next month.

[Operator Instructions]. Our next question is from the line of [indiscernible].

Following up on the question regarding scrubbers, alongside Q4 earnings, you mentioned you had increased the total number of scrubbers to be installed in your fleet 57, and you have subsequently decided to increase the number to closer to 60. Could you provide any additional commentary and the reason behind the decision? Should we expect additional installations?

Not really a lot of color on that. We make a very detailed assessment vessel by vessel and case-by-case as to whether it makes economic sense to make the investment. So yes, we've decided to add a number of scrubbers. We've also purchased a vessel with a scrubber. So I don't think you -- it's not very material these type of investments. So I don't have a particular view as to whether we will make more. The ratio fleet is quite high now. So of course, number in that you potentially could is low and the cost for each of these units is also relatively low, given that we are producing them ourselves at a local special.

Makes sense. And you have provided ample commentary on the improving rate environment and your Q2 guidance, a perfect example of this trend. Could you provide some additional commentary on the medium and longer-term charter markets? Have period rates also increased noticeably on the back of the strength in the spot and charter markets.

So Peer [ph], I think what we're seeing is that our customers are also trying to adapt to this. I think I mentioned a couple of rates earlier. If we had to call, let's say, just turning the clock back 1 week, rates would have been significantly lower. So I'm not experiencing that there is a lot of activity in the charter market simply because rates have not filled between the bid and the ask as of now. So I'm not experiencing a lot of that. I think we need to see the markets, as I mentioned before, find itself on its feet before we sort of established a new market level, both for vessel prices but also for charter rates.

There are no more questions at this time. I hand back to Andreas Abildgaard-Hein for closing comments.

Thank you. I have a few questions online here. So we have One question from Evan Cosco. Q2 outlook is strong, but do you have any views on how the summer could fair. Looking at the FFA market expectations are cautiously optimistic but with lower rates. Any conviction on rates? And how would you position your fleet in this regard, more in the West or East.

That's a good -- very good question. We -- I don't have a particular absolute view on the market, given the volatility we just described. I think in general, to comment on the summer market, Well, with the European refinery runs at could be negatively affected by this high oil price. And the fact that European refiners would, in a way, either by sanctions or self sanctioning, have to get the crude supply from further far. Everything else equal lead to less gasoline being available for European refiners, is export into U.S. East Coast, and that could mean that you could actually see or the summer that you would need to get gasoline for instance from India or from Middle East into the U.S. We are not currently making many precise predictions about the summer market per se. I think that the freight rate developments over the last couple of weeks also caused for to be cautious around making predictions and making -- taking positions in this market. So we will operate our fleet spot and we will operate it very opportunistically. I think the thing that I'm experiencing in the market, if I may, is that you can say that there is a lot of leverage on the ship owner side that we didn't have only 2 months ago. meaning that when you have strong markets globally, basically all over the place, ship owners tend to then actually be willing to balance out even out of a load area if you do not get a premium contract. And this is doing 2 things to the market. It's doing, one, that market prices are staying relatively high right now. And, two, you're actually having a less efficient marketplace because if you can balance out of Load Area A and simply going to load Area B and get the same rate is, of course, less efficient actually for the whole system as such. So I'm careful to make any predictions around the market is very strong right now. And it's in my opinion, something that could stay for longer, how long is very difficult to say.

Thank you, Jacob. We have One more question from a participant. That's for you, Kim. So we have included in our distribution policy, and we have included that we could go for share buybacks. Can you put some words on that?

Yes, I think Jacob just touched on that earlier on. I think one thing we could add to it is this -- if you choose between dividends or share buybacks, you are basically trying to take as good care for your investors as you can. That is what drives you here in that decision. And two things you need to balance. One is, of course, liquidity in our shares. That is an adequate liquidity because that will be a strategy for our investors. And on the other side, of course, the price to NAV that you would also monitor. So I think as Jacob said, we will take that decision when we come to that very fortunate point in time, hopefully soon and have an evaluation on that. But you need to sort of balance both concerns.

Thank you, Kim. We have no further questions. So this concludes the earnings conference call for the results for the first quarter of 2022. Thank you for participating.

Ladies and gentlemen, the conference has now concluded and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Good bye.