Star Bulk (Buy, TP: USD31.00) - Near-term negativity looks priced in
We are reassured by the Capesize H2 FFA trajectory indicating dayrates of USD18k, and believe Star Bulk’s scrubber-fitted fleet should be resilient to the current weak rates and H1e softness. Its shareholder-friendly dividend policy should facilitate earnings run-through to investors (27% yield on 2023–2025e DPS) as markets improve with Chinese demand returning and a constrained delivery profile, with c7% of the fleet on order. We reiterate our BUY, but have cut our target price to USD31 (32).Star Bulk Carriers is an international company providing worldwide transportation solutions in the drybulk sector through its vessels-owning subsidiaries for a range of customers of major and minor bulk cargoes including iron ore, coal, grain, cement, fertilizer, along worldwide shipping routes. As of Dec 31 2016, Co. owned and operated a fleet of 73 vessels consisting primarily of Newcastlemax, Capesize as well as Kamsarmax, Ultramax and Supramax vessels with a carrying capacity between 52,055 dwt and 209,537 dwt. Co.'s vessels transport a range of major and minor bulk commodities, including ores, coal, grains and fertilizers, along worldwide shipping routes.
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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