everyone, and welcome to our webcast. I'm Nicholas Bornois, President of Capital Link, and it is our pleasure to welcome today Mr. Pancaos Khanna, the CEO of Heidmar Maritime Holdings. Before we begin, the usual disclaimer, please know that this discussion is for information and educational purposes only. It should not be considered investment advice or an offer to buy or sell securities or advice of any kind, and Capital Link bears no responsibility for the content. We're also proud to work with Heidmark on investor relations. Heidmark is a one-stop maritime service provider listed on NASDAQ since February 2025 under the ticker HMR. The company offers a wide range of services focusing primarily on four key areas, commercial management, technical management, corporate management, and project management with deal sourcing, ship acquisitions, and finance. Pankaj, thank you for joining us today after the announcement of your quarterly earnings. We appreciate your taking the time, and it's a great opportunity to follow up on key developments for the company and also on the market, the broader market situation that you follow very closely let me start with the first quarter 2026 revenues they increased as you reported by over 200 percent year over year can you walk us to the main drivers for this growth yeah good morning good morning everyone so basically you know last year was a bit of a consolidation cleanup year we merged with the reverse merger into a company to do the ipo so results were impacted by a lot of cleanup over there in the business as such
is doing great we have expanded in terms of the number of vessels under management and then also at the same time margin expansion as rates took off in q1 and it's not just because of the war because a lot of people focus on the fact that there is a war and so maybe it's transient but that's not the case the rates in january and february were extremely strong as it is vlccs were making over 200 000 per day afros and suez maxis were in the 100 to 200 000 per day range so they were already at record levels the war just exacerbated that and it went up even further so actually our q1 results don't even reflect the full impact of what happened there that will be reflected in Q2. So our revenues basically come from two main sources. One is the fee-based business from commercial management and technical management of vessels. And the other is where we have proprietary trading of vessels for short term or medium term. So in Q1, we ended up with eight, nine vessels, which were doing proprietary trading for us. And then at the same time, the commercial technical management side of the business took off as well. So growth has been on both sides thank you now because you described you know the the growth of the company as the foundation of a multi-year growth story looking ahead can you elaborate on this expectation especially given that maybe right now we are at an unusually elevated point especially in the tanker market yeah but i think that we're talking about rates right so our revenues or earnings will come from two sources and one is growth more number of shifts the other is uh rates where the rates are high and then we take a percentage of that so what we have when we when i took over the company six years ago we were doing only tanker pools in the six years since i have diversified the company into a platform that basically provides various services to the maritime industry So we expect now all of the pillars of that growth are set. So now we're talking about scaling up, and this is where we are in the process. So we expect growth in the number of ships, both on technical and commercial management, more growth coming from the various other ancillary services that we offer. But in terms of the rate cycle on tankards in particular, we're looking at, I think, a 12 to 24-month rate cycle where rates stay quite strong. So even if peace were to be announced tomorrow, it will take three to six months to normalize flows because there are very, very few ships available now in the Middle East Gulf or outside the Middle East Gulf to go in and load. So when the Straits opens up, there's going to be a bonanza. I think VLCC rates could go to $600,000, $700,000 per day because there are hardly any vessels available to go in. Of course, that will normalize over time. But I expect close to, say, strong three to six months just to get to a normal level because some countries are very, very short on fuel and there's rationing going on in Asia. And then there is the stock aspect of it. Let's not forget that the OECD in China have released a huge amount of stocks to keep the market at the kind of oil price levels we are looking at. If it was not for that, we'd see oil prices at $150, $200 per barrel. So there needs to be some stock building as well on top of the normalization, because we will have probably another Middle East crisis or another crisis. So people who have used up their stocks need to replenish as well. So we're looking at a 12-month cycle, I think, to get to that point where stocks are replenished, flows are normalized. And of course, in there is the seasonality. Q4 is, by the time, let's say, flows normalize by the end of Q3 or even into Q4, you have the winter season when rates and demand, demand goes up and the rates go up. So that is one aspect. The other aspect is sanctioned vessels. You have 1,000 ships which are sanctioned. They are old ships. They will not be usable even when sanctions are lifted and they need to be scrapped. Those old ships, which are mostly Afromax and Suez Maxes and some Google CCs, need to be replaced. And for example, if Iranian cargos come back on the market and are not sanctioned, then unsanctioned vessels need to lift them. You know, if they're going to Japan, Korea, China, US dollar payments are being made, they need to be on ships which are not previously sanctioned. So again, that increases demand for vessels. So I'm quite bullish on both aspects for Heidemar, where we have growth in the number of ships and we see strong rates for a period of time, a long period of time.
Very good point, Pankaj. By the way, we just had recently a webcast with Anir Sharma of GMS, and we were discussing about the sanctions vessels. And as you pointed out, there were 1,000 tankers that are 17% of the tanker fleet in the sanctioned fleet. So that's a huge number. And as you pointed out, that would have a very important commercial impact on the non-sanctioned fleet.
And we're already seeing that in Venezuela. As soon as the U.S. went into Venezuela in January this year, the entire trade which was on sanctioned vessels has changed to non-sanctioned vessels. So all the sanctioned vessels are out of there. So that has increased demand for tankers, for the regular tankers. So we do not expect those sanctioned vessels to come back into trade. Of course, if it's a fleet owned by Sokong Float, the national Russian company, those will get blessed and they will come back. But, you know, that's a small fraction of the 1,000 ships that are sanctioned.
And I will highlight, if you don't mind, what you said, that your revenue in the commercial management is, and the technical management, it's a percentage of the freight rate. So you have essentially some stability of revenue, and then you have the growth of the additional number of ships potentially coming in. So let me go to the next question. Given the current geopolitical backdrop and the ongoing disruption across key shipping routes, do you see change in terms of how tanker owners are approaching commercial management and pulling partnerships?
Yes. I mean, one, we see a lot of people have made a lot of money, so they want to invest and take part in this cycle. A lot of people missed out on the cycle completely because they time-charged the ships. so people are coming to us and saying hey i missed out the cycle i was on tc my ship is coming back open please trade the ship for me and there are others who are saying hey i made a lot of money in dry cargo but dry cargo for every dollar invested does not give me the same return as tankers so please i want to get into tankers can you assist us in getting into tankers so there is that aspect and then from regular tanker owners as well like i said the ones who were on time charter and missed out the market they are coming to us to trade spot because spot is not easy you cannot just turn up to an aramco and say i have one vessel take my ship you know to kyc clear aramco if they agree to do kyc takes 12 months so you know we're kyc cleared by every oil company on this planet so we definitely have an advantage there we touched upon that in a previous webcast together how important the KYC is in the overall process and clearly your platform is already approved on that level so but that's great.
Now let me ask you the Strait of Hormuz is a driver of longer voyages and stronger raids. Now how sustainable are those dynamics which touch upon geopolitical environment versus structural changes that may have happened And as a result of these geopolitical changes and these structural changes will maybe last longer.
Yeah, I think one of the key, I mean, one I mentioned about stocks and reserves that is quite important. Many countries have realized that. The other key element is diversification. For example, Japan imports 90% of its crude oil from the Middle East. I mean, that's clearly an untenable position. So they are now actively looking at diversifying. South Korea is 70 percent. India and China are 55 percent. So we see diversification of crude oil imports happening for sure. I think that is a given. And so that leads to an increased turnover demand because the only alternative you have to the Middle East is a little bit from Canada, West Coast. Otherwise, it's in the Atlantic Basin. So you go to Guyana, Brazil, U.S. Gulf, it's very important, the U.S. market, because also from a trade and tariff standpoint, if you buy U.S. energy, you're offsetting some of the trade imbalance. So that's a very key trade, and it's a long-haul trade. So I think everybody will want to buy U.S. oil, and of course, in the Atlantic, you have three, four sources, as I said, already mentioned, Guyana, Brazil, West Africa, and so on. So we expect more ton-mile demand, and that's really a positive for the tanker market.
So, Pankaj, within this global landscape of structural changes in routes and demand, are there any particular areas that Heigma is going to focus on?
I think, look, our fleet is diversified. We are in both the product side and we are on the crude side. On the crude side, by the end of next year, we will have significant presence in VLCC, Suezmax, and Afromaxes. So, you know, for us, we have to be a global trader. We cannot be focusing on one market alone. This is what Heidemar has done through time. So we have strong presence in the Asia Pacific with our Singapore office and people over there. We have a strong presence in the AG. We've been working that market for 40 years. and then a strong presence in the Atlantic through our London office and maybe as I've said in the past an office in Houston to cover the America's market as well. So from our standpoint being a global trader is quite critical. On the product side as well is the same. We are trading both the small the MRs and trading the LR2s. So you know our presence is across both MRs and LRs.
Thank you. Now, let me go to another point. As the commercially managed fleet continues to expand for Heidmark, can you share with us how incremental vessel additions can translate into earnings growth and margin expansion?
Look, there are a couple of things that we're doing, right? So one is that we are using AI to enhance what we're doing. so that will mean currently for example for every uh one vessel manager can uh can manage seven vessels but going forward using ai i think i could easily increase that to 10 and maybe in a couple of years to 15 because there's a lot of reparative processes that are used in this what we do in terms of vessel management so uh in that sense we become more efficient so even though there is revenue growth the gna does not increase proportionally it stays low the other thing is of course our pricing power and uh and negotiating uh position improves as we have more vessels we are able to improve utilization and get better rates from our customers as well so as we increase in size there are the scale advantages but also there are advantages in general uh in terms of being able to service customers getting access to certain private cargos etc that would be very advantageous for us so clearly commercial management have been a core activity for heidmark but you have referenced additional services service vertical technical management sale and purchase advisory fuel services and asset management so how important
of these adjacent businesses to the company's broader growth and strategy?
Look, commercial management is a key revenue growth driver at this point in time. Technical management is in a startup phase right now. And so we just have, like I said, 10 vessels. We're looking at growing that. Eventually, I think, in let's say five years time, I see technical management being 200 vessels. That's my objective, whether that is through acquisitions, organic growth, whatever. So if we are at 200 vessels on technical, that's a $20 million a bidder, effectively. So that provides the base. And then commercial provides the upside from being part of the cycle. But the other services as well I mentioned can become significant as we scale up. because being where we are with having technical commercial management and all the other services, there are people coming to us, investors who are saying, hey, I want to invest in shipping. Some people are one-offs where they will buy one vessel, two vessels, so on. But there are also funds looking to invest where we could look at substantial investments with fleets being acquired through us and managed by us. If we are able to land one like that, it again steps up in terms of where we are effectively where we are and what we are building is a unique entity or unique platform and as we scale up it becomes more and more difficult to replicate it absolutely but on that level you noted that the current platform could absorb a meaningful number of additional vessels without materially increasing gna expenses so how should vessels think about the scalability of the business model over the medium term look i can get up to 70 80 vessels without adding significant gna so especially on the commercial side uh you know we are uh geared to take that kind of volume uh on the technical we will have to add but it is you know concurrent we take a shift we add people we take a trip we add people So, I mean, as far as G&A is concerned, I don't think it will impact our EBITDA margins or net income margins.
So, shipping carries about 90% of global trade. So, it is absolutely a critical link in the global supply chain, in the livelihood of countries and citizens. So you are in a unique position at Heidmar to be part of the maritime sector, but without exactly being a shipping company, you position Heidmar as a global maritime services and commercial platform. Do you believe that the market fully appreciates that distinction right now?
I think not fully, but it's getting there. As you can see in the last month or so, more investors have gotten into the stock. We're getting a lot of inbounds. uh it takes some time to uh you know get the message out there so i think eventually people will see the distinction you know we don't own any assets i have zero assets i'm not an asset light company i have zero assets i have zero debt i have no debt to service i have no depreciation i have no dry dogs etc so from our standpoint when commercially the markets inflect we are able to go into the market and either take shifts and you know make money from doing that or and make money from the commercial management so that differentiation people will get eventually but the most important differentiation is on the valuation since i have no assets there is no nav so the only way to value me is multiples of my net income so if you see where my peers are you know we're between they're trading at between 10 to 25 times so with no assets i should be at 10 15x of my net income so maybe you know 2025 is at the very high end that's where i would like to be but even if we were at 10 15 if i just extrapolate my q1 earnings i'm a 140 million market cap at the low end using 10x but if i'm 15x i'm 200 million plus so and that is of course this is just where we are today without scaling up the platform so i think that's a very important distinction that you cannot value height more on nav it has to be a multiple of my earnings and that's where the differentiation comes in so as you move into the second quarter of 2026 What are the most compelling opportunities that you see?
Would it be in vessel acquisitions, new service mandates, or partnerships?
I think some expansion on the technical side. And then also there are vessels already in the pipeline that we're taking over on commercial management. So that is already built into Q2. and also there are more vessels coming in the second half of the year so i think we have both growth on commercial and technical management and then you know the asset management aspect in terms of projects that is opportunistic it's not something that i can go down and say you know i have two projects in the pipeline we are discussing several projects right now some of them may come to fruition some may not so it's not something that i can put my finger on and say this one will but the commercial management technical management there are a few things in the pipeline which are i won't say certainty but near certain so bankers we're reaching the end of our discussion uh for shareholders and potential investors following your story what message would you like to leave with that look if people will talk about the run-up in the stock over the last, let's say, month or five, four, three weeks, whatever it has been, some people have made almost 100% return on their investment. I think some consolidation is going on now. In my view, it's a buying opportunity. We have a long way to go, and it's only the start of the run in terms of the stock price because it's the first quarter we have given our clean earnings and we have more of this coming so i would say watch the space in terms of news coming out and we will announce other positive stuff and we expect that we should be able to announce positive things going forward if you allow me a closing question just to remind everybody how much skin do you have in the game yourself uh i own 45 of the company it's my well-being is tied to the company so effectively this is my biggest holding anywhere so i'm very much
invested over here truly thank you that's a nice way to close our discussion podcast thank you very much for being with us always a pleasure to talk to you and always uh great to hear your insight on the market right now so many things happening and clearly you are in the middle of everything happening. So again, thank you for being with us. And that concludes our discussion. We had Mr. Pankaj Kanna, the CEO of Heidmar. And this webcast can be accessed upon demand on capitalingshipping.com, capitalingswebinars.com, and of course, our YouTube channel. And you can also hear it on Spotify. Thank you very much. Thanks, English.
