Klaveness Combination Carriers (Buy, TP: NOK104.00) - Delivering on high expectations
Our slight estimate revisions leave us ~25% below 2024–2025e consensus EBITDA, which has KCC trading at an average EV/EBITDA of 4.2x (6.2x on our estimates). This implies FCF covering ~36% of the current EV despite the newbuild capex, and using current dry bulk and clean tanker spot rates for all of 2024 (roughly in line with our estimates) still suggests a DPS of USD0.75. This would be a meaningful 12% yield in the current market and a bullish outlook. We reiterate our BUY, but have cut our target price to NOK104 (109).Klaveness Combination Carriers AS is a Norway-based fleet operator. The Company owns and operates combination carriers that can switch between dry and wet cargo shipments. Its fleet consists of approximately nine CABU (caustic soda/bulk carrier) vessels with the capacity to transport from approximately 72,500 deadweight tonnage (DWT) up to approximately 80,500 DWT of caustic soda solution (CSS), floating fertilizer (UAN) and molasses, as well as all form of dry bulk commodities. Furthermore, the Company has newbuilding orders for CLEANBU (clean petroleum/bulk carrier) vessels that in addition to transporting caustic soda and dry bulk products can also transport clean petroleum products. The Company's vessels operate on international trade routes, mainly in the Far East, the Middle East, Australia, Brazil and North America.
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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