Odfjell SE (Buy, TP: NOK185.00) - Top earnings yield potential
The company expects initial effects from the Suez disruption to be higher costs, partly offset by rates. However, we expect the TCE/day for Odfjell to slightly increase for 2024, on current chemical rates c85% above the 10-year mean, added tonne-miles on inefficiencies and a low orderbook-to-fleet ratio of c6%, resulting in a c26% earnings yield for 2024e. Hence, we find Odfjell attractively valued at a 2024–2025e average EV/EBITDA of 3.1x and P/E ratio of 3.8x (broader tanker peer group: 4.2x and 6.0x, respectively). We reiterate our BUY, and have raised our target price to NOK185 (179).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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