2020 Bulkers Minor model adjustments
We have updated our estimates following the Q3 results and latest business update. We continue to see significant risk to what we view as an imbalance between China’s excessive raw material imports and its underlying demand, showcased by ~5% growth in iron ore imports YTD being met by rapidly growing steel exports, with October up 41% YOY, while coal inventories are setting new highs. Bottom line, all else being equal, we calculate the current NAV/share would drop from NOK151 to NOK119 by applying current one-year TC rates and historical valuation multiples implying 17% downside potential to the current value of a 5-year-old Capesize. We do not consider these changes to be material, and we have not changed our SELL recommendation. We reiterate our NOK127 target price.2020 Bulkers Ltd is a Bermuda-based owner and operator of cargo ships. The Company owns as subsidiaries 2020 Bulkers I Inc and 2020 Bulkers II Inc in Liberia. Entities are parts to shipbuilding contract with New Times Shipbuilding Co. Ltd. for construction and delivery of Newcastlemax dry bulk vessel. The Company's main shareholders comprise Magni Partners and Titan Opportunities Fund.
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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