What are NAV and P/NAV?

How is it calculated?

1. Value each ship at what a ship of its type and age sells for today, usually from shipbrokers' valuations, and add them up.
2. Add other assets, such as instalments already paid on ships still being built and stakes in other companies.
3. Subtract net debt: borrowings minus cash.
4. Divide by the number of shares for NAV per share. Divide the share price by that for P/NAV.

An example with round numbers, not a real company: a fleet worth $1,000m, debt of $450m and cash of $50m give net debt of $400m and a NAV of $600m. With 50 million shares, NAV per share is $12.00. At a share price of $10.80, P/NAV is 0.90×.

Why do shipping investors use it?

Ships change hands in an active secondhand market, so a fleet has a market price in a way that most companies' assets do not. The value in the accounts is cost less depreciation, which can sit far from what the ships would fetch.

A P/NAV below 1 means the shares price the company below the value of its ships net of debt. Above 1, investors pay for something beyond the ships, such as its contracts, its management or its expected earnings.

NAV has limits. A broker's valuation is an estimate for a typical ship, not a sale. Values move with freight rates. A ship on a long charter above or below the market rate is worth more or less than its charter-free value, and a whole fleet could not be sold at once without moving prices.

Where does our site show it?

• NAV per share and P/NAV appear only where the company prints its own NAV per share in its quarterly report. The company page shows the figure as printed, and P/NAV is our arithmetic: the latest share price ÷ that NAV per share. The compare page and the valuation table on each segment page show P/NAV for those companies; others show a dash.
• Fleet value at broker prices appears on a company page where we can value at least 90% of its owned deadweight from recent secondhand values published by Xclusiv Shipbrokers and Advanced Shipping & Trading. It is the value of the owned ships only, not a NAV: it does not subtract debt.

A NAV of our own (that fleet value minus net debt, per share) is not published yet. Tested against companies that print their own NAV, our figure did not match closely enough, so it stays off the site until it does.