Global Ports Holding (GPH), the Istanbul based company that operates 15 cruise ports and two cargo facilities, said in its first half 2019 interim report a major review of its business is underway.

“A strategic review was announced, after period end, to explore ways to maximise value for all stakeholders and includes a range of potential corporate activity including the sale of certain assets as well as strategic investments and partnerships,” GPH said.

In addition to the cruise ports, GPH operates two cargo ports – commercial in its words –in Turkey.

“Strong Cruise EBITDA growth of 14.3% (21.7% ccy) to $16.8m was offset by a decline in Commercial EBITDA of 13.1% (12.6% ccy) to $22.3m,” GPH said in the interim report.

No synergies

It might serve GPH well exit the Commercial part of its business. A few reasons could be said to favour this option. It is difficult to see any synergies between the two businesses.

Parts of the cargo port business, such as container handling, are already highly consolidated. It is difficult to imagine major growth prospects for GPH in this area.

In cruise port operation, GPH is the largest player and the only one that can be said to actively drive consolidation in the business, which unlike cruise ship operation, remain highly fragmented. It has a lot of work to do here, which will require both money and management resources.

Cruise portfolio needs diversification

GPH has said it wants to refine the business of the ports that it currently operates e.g. through developing retail in them. It also wants to add new facilities to its portfolio.

As the cruise industry continues to grow – more than 100 ships are on order - there should be a broad scope for GPH to grow its business, both organically and by signing contracts to operate additional facilities.

At present, its portfolio remains heavily centred on the Mediterranean. The company lists the location of its cruise ports on its website as follows:

-Western Mediterranean: 6 ports

-Adriatic: 4

-Eastern Mediterranean: 1

-Caribbean: 3

-Asia: 1

Driving diversification further would deepen GPH’s global footprint and reduce risks linked to heavy focus on a single region.

Investors could welcome cruise port focus

GPH went public in London in late 2017, when its shares floated at £7.43. They currently trade at about £2.65.

Clear focus on cruise port operations and elimination of disruptive events from the commercial business would probably help to lift the price.

On a positive note, GPH pays healthy dividends and at its current depleted share price, the stock yields about 17%.