Genco Shipping & Trading (Buy, TP: USD27.50) - A diamond in the rough
We find Genco’s current risk/reward dynamics highly favourable, with 70% potential upside to our target price and 25% NAV downside to historical low-point asset values. In our view, this limits the downside risk from current market headwinds, although 2023 FFAs have climbed from a low of USD11k/day to >USD16k/day on the rapid reopening of China’s economy. In a sector with latent upside potential, Genco remains among our top picks, with favourable pricing and earnings capacity on its low cash breakeven (USD9.2k/day in Q4), derived from modest leverage. We reiterate our BUY but have cut our target price to USD27.5 (27.7).
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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