Heidmar provides commercial management services for large tanker ships. The global shipping markets went through a period of extreme volatility thanks to COVID. Investors are in doubt about whatever the "new normal" will be for the global shipping business.
Just when we were getting adjusted to the Russia/Ukraine shock, the global banking system unraveled some, and this adds to concerns about a slowdown in global GDP. We're not in the macro business here. We're looking for companies that can thrive in good times and bad.
Heidmar is worth a deeper look because it has rapidly growing revenue, extremely high margins, and has invested in technology that gives them a competitive advantage.
Heidmar is coming public via Home Plate Acquisition $HPLT, subject to the usual deSPAC process. The valuation will be ~$250M on 2022 revenues of $24M and $16M net income. Guidance for 2023 is $53M in revenue and $29M in net income.
A PE ratio under 5 seems cheap, but that's not uncommon for companies investors see as purely cyclical.
Some key secular trends can support sustainable and profitable growth here. The company has a strong balance sheet, and most of its business is insulated from changes in freight rates.
Before we get into more depth, a minimum cash condition of $40M will need to be addressed. Redemptions are typically very high, and no investors are named in a PIPE that would ensure they can meet it. With such high profitability, I wonder why we need a minimum cash condition here so it may be waived.
We will look at the global shipping market and then dive into the specifics of the business in 2023 before looking at the larger long-term opportunity in this evolving market. I've got some cheap warrants for now, and we will continue to monitor this for a post-deal opportunity if one emerges.