London, UK, 22 June 2021

Ocean Wilson Holdings (OCN): Smoother sailing ahead

The COVID-19 pandemic has been tough on Brazil but OCN has weathered it well with a respectable 5.1% ROE in 2020 and maintained its 70c (4.3%) dividend. Business volumes fell in Wilson Sons (WSON), its Brazilian maritime services company, but prices firmed up and allowed WSON to post a 4.3% ROE. OCN's international investment portfolio (OWIL) had a good year in 2020 with favourable if choppy markets. Business is now picking up in WSON's key container terminals and tugboat business and a recovery seems underway. We forecast OCN's PBT to rise by 44% in FY21 and by 20% in FY22 as business recovers to normal. OCN is currently trading on a 35% discount to look-through value despite having risen 27% since 1 April. Its stake in listed WSON alone is worth 99% of its market cap.

Despite the shares having strongly rallied in recent months, OCN is still trading at a 35% discount to its look-through value, which comprises the market value of the stake in WSON (which has also been rallying, up 64% in three months) and the last reported value for the investment portfolio held by OCN. Despite a good growth outlook, WSON is trading at significant discounts to its peers in market multiples such as P/E (44% FY21e, 35% FY22e) and EV/EBITDA (about a third less). 

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