Frontline Minor model adjustments
We still believe that VLCCs (62% of the fleet value) hold the key to unlocking Frontline’s full potential and that the company is well positioned to capitalise on a potential VLCC upcycle as we approach the stronger end of the year. We have cut our 2024e EBITDA by 1% on our updated rate forecasts, peer updates and updated fuel spreads. We do not consider these changes to be material, and we have not changed our BUY recommendation. We have, however, raised our target price from NOK346 to NOK358.Q2 preview – guidance in focus. We are 6% below consensus Q2 adj. EBITDA, but believe consensus is inflated, with some contributors seemingly including the USD56m gain on the sale of four vessels delivered in the quarter. We expect a DPS of USD0.65, giving an 11% run-rate yield. We are 11% below consensus Q3 EBITDA and believe the guidance could disappoint on recent weakness in the tanker market. The Q2 results are due pre-market on 30 August.
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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