Ardmore Shipping poised to benefit from favourable market fundamentals
The product tanker market started on a weaker note in 2022, but firmed up with Europe’s attempt to reduce dependence on Russian energy supply (including refined petroleum products) against the backdrop of increased tensions between Russia and the West. Vessel earnings of product tankers on key trading routes across vessel classes were on the rise from March with product tanker earningssubstantially higher than their break-even rates. The impact of strong freight rates was reflected in the rally of product tanker stocks over the past eight months that led to a surge of 292.5% YTD in the Drewry Product Tanker Equity Index. Ardmore Shipping’s (ASC’s) stock price also generated a hefty return of 319.2% YTD as the company benefitted from substantially high spot earnings of MRs and
Handysizes coupled with ASC’s high exposure to the spot market.
Although vessel earnings of product tankers are expected to normalise to some extent over the next six months, we expect day rates for these vessels to remain higher than their break-even costs between 4Q22 and 2024. Limited growth in supply of product carriers till 2024 coupled with rising long-haul trade of refined products from India, the Middle East and US to Europe will drive the top line and profitability
of ASC which is expected to create shareholder value and support an upside in the company’s stock.
Drewry, since 1970, has been providing research and advisory services on the global Maritime and Shipping industries and has established itself as a firm with long history of credibility and expertise on various aspects of the maritime industry. Leveraging this in-depth market knowledge and understanding, we have extended our offering to deliver a unique, independent investment research service on globally listed companies operating in the maritime industry. Under the brand Drewry Maritime Equity Research and in accordance with the FCA, DMER led by Rahul Kapoor and his team, offers fundamental analysis on listed companies. DMER analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. By combining these market-leading resources with seasoned sector expertise and commercial awareness, we are able to offer a highly differentiated and comprehensive investment research service to prospective investors in listed maritime companies. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.
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