WilhelmWilhelmsenHoldinganalysis(Part2)

July10,2016InthisfinalpartIwillbediscussingthetopicsbelow:

1) Postspin-offfromWWASA2) WilhelmsenMartimeServicesdivestment3) TheWilhelmsen’scapitalallocationrecord4) Acloserlookatshareholder’sequityinthebalancesheet(nerdwarning!)5) Acloserlookatcurrentearnings

WWIBsharepricecurrently:147,5NOKWWIBmarketcap:6,8billionNOK(800MUSD)USD/NOK:8,52Excelcalculationsfrompart1:https://hammerinvesting.files.wordpress.com/2016/05/wwib-presentation-excel1.xlsx

Postspin-offfromWWASA

- TreasureASAtradesatalargediscount,approx.40%- Possiblereasons:

o Bigchunkofshareso Bondliabilityo Vesseldebtnot100%ruledout

- Fairvalue:15%discounttounderlyingGlovisshares?- ArbitrageopportunityforSouthKoreanplayers- WilhelmsenHoldingmaybuyupdiscountedTreasuresharesatsome

point

WMSdivestment

- 1/5ofWMSsoldtoindustryplayer,Survitec- 110MUSDincash+20%shareinSurvitec,accountinggainof60MUSD- SalesuggestsoverallWMSvalueofapprox.6,5billionNOK- SalehighlightsthatbookvalueinWMSisprobablyunderstated

Wilhelmsen’scapitalallocationrecord

- Lowdividendratio=capitalallocationbecomesespeciallyimportant- Canhistorybeaguidetothefuture?

Trackrecord:

- HyundaiGlovis.Investmentof100MUSDin2004.Return977MUSD11yearslater=9,8x,23%annualizedreturn.(Dividendsexcluded!)

- CallenbergTechnologyGroup.Investmentof55MUSDin2007.Return:Unknown-stillavailableforsalebutrevenuegrowthfrom130MUSDin2007to220MUSDtoday.

- QubeHolding.Investmentof134MUSDin2011and2016.Returntoday176MUSD(dividendsandsalesincluded).32%in5years.5%annualizedreturn.(Australiandollardepreciated30%vsdollarinthattimeframe.)

- NorSeaGroup.Investmentof87MUSDin2012andin2014.Value2015yearendplusdividendsreceived84.(Exposedtotheoilsector).

- VehiclesServicesAmericas,CAT-WWLacquiredin2016(owned50%inbothbeforetransaction).SoldVehiclesServicesEurope.Gainof80MUSD.Notsurewhattomakeofthis,notmuchinformationreleasedbutpositivethattheyincreaseinvestmentsincompaniestheyalreadyownandknow.Conclusion:1homerun,3moreorlessawash,nomines.Positivethatallinvestmentsarewithintheircircleofcompetence(althoughNorSeaislessrelated).Iftheystarttostrayintounrelatedfieldsthatwouldbeawarningsign.Verdict:ComfortablewiththeirchoicesandIbelievethatwillcontinuegoingforward.

Shareholder’sequityadjustment

- Adjustmentstostatedequity:Excludegoodwill&depreciatevesselvaluemoreaggressively.GainfromsurvitecdealandGlovissharescarryingvaluetoolow.

- Result(inmyopinion):1885–216–94+60+140+165=1940MUSD.(Currentmarketcap:800MUSD)

- 1940MUSDdividedby46,5millionoutstandingshares=41,7USD/share=355NOKpershare.(Currentmarketprice=147,5NOK)

Currentearnings

- Q1resultslookgoodonthesurfacebutarescewedbyonetimegains- UnderlyingEBIT-marginsunderpressurecomparedtopreviousquarters

Sothethreemainthingstolookforinthecomingcoupleofquarters:

- WastheEBIT-margindeclineinWMSaonetimeevent?Troublesomeifitcontinuestobearound6%

- OperatingrevenuefromWWASAQ22016vsQ22015willthiscontinuetodeclineasitdidinQ12016vsQ12015?

- H&Hdevelopmentandthecartransportationdevelopment