Not a huge amount, but he is already a fairly large owner: Shares in Viking Line Abp owned by the person and/or companies controlled by the person as of 31 December 2020: 1,980,735 shares
A large owner compared to other management personnel, many of whom do not own any shares. Could it be a strategy of regular buying?
Interesting. I didn’t have time to dig deeper into the trades as the station was approaching. A strange bird in that administration, or just wealthier. Or more risk-tolerant. I’ve been following Viking and Tallink for some time, but not from an insider’s perspective. Tallink has indeed been sailing along nicely. Many things are linked to these companies: corona, fuel prices, the military situation in the Baltic Sea, environmental values, local tourism, alcohol and other taxes, weather conditions…
We put all our trust in Jakob Johansson. The current owners/board members have been relatively passive in protecting the company’s financial position and maintaining the status quo. Thanks to them. However, that is not enough for us investors who seek excess returns on every investment.
Johansson stated in an interview with Talouselämä (a Finnish financial magazine) that he aims to improve the company’s profitability and expand its revenue streams, for example, into freight operations (i.e., increasing vessel utilization). He also criticized the financial situation of competitors. Compare, for example, Tallink’s liquidity to that of Viking Line. (I won’t reveal them here.)
The pros and cons of Viking Line and Tallink Silja are about 50/50. In this thread, many would naturally choose a Viking Line cruise, but our investment thesis is not based on customer experience, as neither has a significant competitive advantage there. From an investor’s perspective, the age of the fleet is currently decisive, and more specifically, its carbon footprint. Two out of six of Viking Line’s vessels run on LNG, while only one out of ten of Tallink’s do. This is one of Viking Line’s competitive advantages as the EU seeks to make shipping more emission-free. Good luck to Tallink selling ships when they have twice as many with old technology as their competitor.
In this oligopoly, the competitor’s difficulties cannot be ignored in an investment thesis. We will certainly see all kinds of maneuvering from Tallink to overcome its debts, while Viking Line considers how to maximize cash flow.
Finally:
I wouldn’t want to be short-sighted, but the reception of Glory has been excellent, and some customers from the Turku-Stockholm route, which Tallink closed, have surely switched to Viking Line. It’s possible that the impact of these two factors will already be seen in the Q3 results.
Disclaimer: 15% of the portfolio invested in Viking Line
Jorma Erkkilä from Salkunrakentaja has written an article about Viking Line.
In the second half of the fourth quarter, the company’s passenger traffic has developed better than expected, which has improved the company’s result. Previously, uncertainties such as the geopolitical situation and its impact on energy prices, inflation, interest rates, and currencies were mentioned as negative influences on the result. These have not had as strong an impact as previously feared, Viking Line estimates.
This is a timely company right now in the lead-up to the parliamentary elections, as Viking Line is Finland’s largest recipient of corporate subsidies with its annual subsidy pot of 25 million.
Yeah, a big part of this company is state support. On the other hand, ships are quite critical for Finland’s security of supply. I don’t really know if it’s fish or fowl.
There seem to be quite a few sold-out departures. It was announced back in June: Provided that energy prices remain at their current level, the Board of Directors of Viking Line estimates that the profit before taxes will be better than the previous year.
Next year, maritime transport is set to come under the scope of emissions trading. But whether a so-called island exemption will be established between mainland Finland and Åland, which would exempt travel between them from emissions trading, remains to be seen. On the other hand, it would be a major victory for Viking if three or four out of five ships could benefit from the island exemption (that depends on Cinderella’s future plans, and whether it will only run Helsinki-Stockholm in the summers as it does now).
Eckerö is another matter; Viking is now a partial owner, and we’ll see if they acquire even more ownership in the future. The sale of Rosella certainly helped ensure that travelers to Åland might take an Eckerö Linjen ship as a substitute, and Eckerö Line’s Tallinn traffic is surely quite profitable (it seems Tallink no longer has a ship from Vuosaari, which is where Eckerö’s Finbo Cargo operates from).
Viking Line directly and indirectly owns 25.2% of the insurance company Alandia. It is a profitable marine insurance company whose value is not really reflected in the share price. You get it thrown in for free.
Its combined ratio was 94.5%, meaning it is a fairly good insurance company. In 2021, it paid a dividend of EUR 24.7m, whereas in 2022, only EUR 7m in dividends were received. As I understand it, this year Alandia will be treated as an associate company as the ownership stake rose above 25% last year, and thus this holding will be better highlighted.
Some value should be assigned to this in a sum-of-the-parts calculation.
Nya Åland has a good overview of the current competitive situation, especially from the perspective of Åland. It is indeed in Swedish, but it should be understandable via Google Translate.
As for Viking Line, all the pieces are starting to fall into place: fuel prices are under control, the competitive situation has stabilized, and there is plenty of demand for the existing capacity. This isn’t just a “cigar butt,” but it has likely been off the radar for many investors lately.
Thinking about it further, the competitive landscape for Viking Line is favorable for the first time in a very long while. Capacity has been removed from the Helsinki-Tallinn and Helsinki-Stockholm routes. Finnlines is of course upgrading its vessels on the Naantali-Kapellskär route, but even this isn’t a completely direct competitor for Viking Line, as Viikkari’s (Viking Line’s) ships sail from Turku to Stockholm. Silja’s continuation on the Turku route is a question mark, and on the other hand, Viking Line could make a strategic move by exiting the Helsinki-Stockholm route entirely, especially if they get a good price for the Gabriella. The Cinderella will either be sold, chartered out, or placed on a route that is profitable. So, Viking Line still needs to make a decision regarding the remaining vessels, but there is no urgent need or rush.
In my opinion, the stock looks cheap, considering that the competitive landscape is likely to remain disciplined in the future. Finnlines’ new ships will soon enter the Naantali-Kapellskär line, but these new vessels shouldn’t disrupt the competitive environment. Looking at it from several different angles, Viking Line’s stock seems like a good investment in both the short and long term. I’ll probably have to load up some more into my portfolios…
Here is an interesting profile of Viking Line’s majority owner Jakob Johansson. My own unscientific gut feeling about the guy is positive. If this feels like an irrational take, one can reflect on the fact that the guy bought a significant stake in Viking Line based more or less on intuition, “magkänslan”. It should translate fine with Google Translate, so here is the link.
[Hotellstädare, mopedsäljare, fastighetsköpare, skidåkare och störst i Viking Line - Ålands Sjöfart (prenly.com)](Ålands Sjöfart
It’s unlikely that the fleet will be cut down to just three ships, considering they’ve already started reducing it from seven. Are there really that many profitable routes left where Viking could deploy its ships? Helsinki-Tallinn could be an option, of course, but could the end result for that traffic be that Viking owns a larger stake in Eckerö, with XPRS and Finlandia running like Tallink’s Megastar and MyStar—where one departs from Helsinki while the other departs from Tallinn?
Cinderella is a nice ship, but its problem is the internal sponsons (whereas others have them externally, like Gabriella at the stern), which results in lower cargo capacity. Cinderella is fine in its main role on Stockholm-Mariehamn cruises where there’s hardly any cargo, or on the Helsinki-Stockholm route where cargo is less important than in Turku.
I’d personally bet that Viking will still acquire its next large vessel for the Turku route to replace Grace. That would mean an extra cargo lane from Turku and all the new technology that Glory has but Grace lacks. Cinderella and Grace could be a decent pair to compete with Serenade and Symphony. I suppose the XPRS will also need replacing at some point, and it should fetch a better price than what was received for Mariella and Amorella…
A very well-justified vision. It is also interesting to speculate what fuel the next newbuild will run on. Viking’s investment pace is inherently very cautious and slow, so it would be good if we see even one new ship delivery this decade. This traditional caution also dampens Viking’s appeal as an investment case slightly. Unless the new management speeds things up.
"Viking Line begins cooperation with Gotlandsbolaget – joint cruise operations
Viking Line and Gotlandsbolaget are forming a joint venture to develop and provide cruises on the M/S Birka Stockholm from Stockholm to Mariehamn and from Stockholm via Mariehamn to Visby. In March 2023, Gotlandsbolaget purchased the M/S Birka Stockholm for a purchase price of 38 million euros, and it has now been agreed that 50 percent of the vessel will be sold to Viking Line for 19 million euros."
I almost mentioned in my previous post that I doubt the Cinderella will remain on the Stockholm overnight cruises once Birka Stockholm starts operations. It’s quite something, considering Viking used to fully own 7 ships, but now they would have 5 in their own company, while gaining revenue through partial ownership from Eckerö’s 4 ships in addition to Birka. (Finlandia, Finbo Cargo, M/S Eckerö, Transporter ro/ro) The Tallink vs. Viking dynamic has shifted quite a bit since COVID…
I am a bit concerned about whether there will be enough passengers for the Helsinki-Stockholm route if the plan is to keep Gabriella on this line in the future. Perhaps there are other strategic moves in the works besides this and, above all, hopefully some new and fresh thinking.
What especially interests me in that Birka concept is whether Viking Line aims to offer longer cruise packages in the future? In my opinion, there would be demand for this, and it seems strange that they haven’t really managed to capitalize on it before. In theory, one could imagine, for example, a trip from Helsinki first to Mariehamn, then continuing to Gotland, and then back via either Stockholm or Mariehamn. If Viking Line could grow beyond just traditional ferry traffic, this could also be a promising start for the investment thesis.
I hope Johansson has perhaps managed to get Viking thinking about some new ideas over there. On the other hand, I’ve sometimes wondered, since Viking doesn’t have a separate Stockholm-Tallinn route, whether they could have developed a three-night cruise for Swedes to visit both Tallinn and Helsinki, with two nights on the Helsinki-Stockholm ferry and one night on the Helsinki-Tallinn vessel. (Of course, it’s challenging due to the XPRS schedule and the fact that XPRS is planned to be moved to West Harbour [Länsisatama].) Hotel accommodation would certainly be one option.
Given how eagerly Finns exceptionally traveled to Riga during the first year of COVID, one could believe there would be some demand from Finland for destinations other than just Stockholm as well. It’s just a matter of how they can get the connecting services to work in Mariehamn, and they’d probably need Finnish-speaking staff on the Birka if things start to go well. Of course, the ship’s maximum capacity of 1,800 people could fill up quickly during the summer season, but could they achieve better results before and after the peak summer period?
This new Viking Line route Turku-Mariehamn-Gotland is really a great thing! At least everyone close to me commented today that they’ll go there as soon as possible. I believe many Finns will have the same reaction. I suppose other options were also considered, and this one was then chosen as the new route.
