Odfjell SE Minor model adjustments
We have updated our estimates following the Q2 report, including Odfjell’s guidance for Q3 to be ‘somewhat’ below Q2, and adjusted our estimates for recent freight rate trends. QTD Q3 MR rates are down c20% QOQ (still c35% above the 2019–2023 average), which has increased the share of chemical volumes lifted by product tankers to c5% (c3% in YTD 2024 low). However, we remain positive on the market outlook with our expectations for tanker rates to rise towards end-2024 and again limit swing tonnage. Thus, we estimate an average 27% earnings yield, translating into a 14% dividend yield until end-2025. We do not consider these changes to be material, and we have not changed our BUY recommendation. We reiterate our NOK222 target price.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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