Star Bulk (Buy, TP: USD11.50) - Robust dry bulk market boosts estimates
We have raised our estimates ahead of the Q2 results (due before the market opens on 7 August), on improved freight rates and a wider fuel spread post 2020e. We are broadly in line with Q2 Bloomberg consensus and expect sailed-in Capesize rates to average USD11.0k/day. The rapid rebound in the dry bulk market since the Vale dam disaster has prompted us to remove the c9% downside to second-hand Capesize values we had assumed, which has increased our target price to USD11.5 (10.9). We reiterate our BUY.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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