Frontline (Buy, TP: NOK226.00) - Closer to a multi-year upcycle
Overall, we believe consensus is underestimating Frontline’s near-term earnings potential, indicating a QOQ EBITDA decline in Q2, despite continued tanker rate strength. Given the all-time-high import figures from China for March, lasting effects of the embargo on Russian oil, and exceptional supply-side fundamentals, reflecting a 2.8% orderbook-to-fleet ratio (implying negative fleet growth for 2024–2025e), we believe we are inching closer to a multi-year upcycle and still see Frontline as attractively valued following the recent sell-off. We reiterate our BUY and NOK226 target price.
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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