Genco Shipping & Trading (Buy, TP: USD27.10) - Undervalued gem in dry bulk
We see 60%+ upside potential to our target price, as we view Genco as materially undervalued at 3.3x 2023–2025e EV/EBITDA, versus peers at c5.0x. The stock is trading at a 30% discount to steel values, which screens as an attractive entry point given the long-term prospects of the dry bulk space, fuelled by the record-low orderbook-to-fleet ratio, encouraging demand newsflow from China, and latent upside to ROW imports. We reiterate our BUY, but have trimmed our target price to USD27.1 (27.4).
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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