Odfjell SE (Buy, TP: NOK179.00) - Red Sea tailwinds on rates
A record chemical freight market (c75% above 10-year average), with a low orderbook (c8% of fleet), could create a new normal for rates, and supported by a 20% average rate increase on COA renewals LTM, should result in strong earnings for Chemical Tankers. We see further upside potential from Red Sea disruptions, with product tanker rates poised to react. We find Odfjell attractively valued at a 2024–2025e average EV/EBITDA of 2.9x and P/E of 3.6x versus the broader tanker peer group at 4.5x and 7.0x, respectively. We reiterate our BUY, and have raised our target price to NOK179 (168).Odfjell is engaged in the global market for transportation and storage of chemicals and other specialty bulk liquids, LPG/Ethylene products as well as a provider of related logistical services. Co.'s principal business is the transportation and storage of organic and inorganic bulk liquid chemicals, acids, animal fats, edible oils, potable alcohols, LPG/Ethylene and clean petroleum products. Co. has three reportable business segments: Chemical Tankers, which involve the servicing ports around the world; Tank Terminals, which engaged in cargo-consolidation programme in combined shipping and storage services; and LPG/ Ethylene, which Co. owns two carriers, Bow Guardian and Bow Gallant.
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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