Stolt-Nielsen Minor model adjustments
We have updated our model following the Q2 report. We still believe the underlying result was broadly in line with expectations, and the headline miss is mostly explained by one-off effects, thus we find yesterday’s share price reaction unwarranted. We estimate an 18% earnings yield the next four quarters, with the longevity of the current robust earnings supported by appealing fundamentals (orderbook-to-fleet ratio of 10%) and solid MR markets (average spot rate last month ~60% above the 5-year average) limiting swing tonnage, further backed by a 56% (46% in Q1) COA share with a strong average rate increase on renewals (up 18.1% on average in Q2). We do not consider the changes to our model to be material, and have not changed our BUY recommendation. However, we have slightly reduced our target price to NOK560 (567).Stolt-Nielsen is a holding company. Co. through its subsidiaries is engaged in maritime industries. Co.'s operating units include Stolt Tankers, providing transportation services for bulk liquid chemicals, edible oils, acids, biofuels and clean petroleum products; Stolthaven Terminals, offering storage for bulk liquid chemicals, edible oils, acids, biofuels and clean petroleum products; Stolt Tank Containers, operating a fleet of tank containers for shipments of bulk liquid chemicals, food-grade products and bitumen via road, rail and container ship, as well as Stolt Sea Farm, focused on the production of fish including turbot, sturgeon, sole and caviar.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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