DS Norden’s exposure to product tankers supports the rally in the stock price

In the past 12 months, DS Norden has outperformed the Drewry dry bulk equity index by 84.6% because of strong freight rates in the product tanker market, partially offset by a recent fall in freight rates of dry bulk vessels. Although vessel earnings of dry bulk have fallen, the company will be profitable as the it has already covered the dry bulk vessel days above operating costs for 2H22 and 2023. Vessel earnings
of product tankers are likely to be lower than 2022 but above the historic average, and we expect day rates for these vessels to remain higher than their break-even costs between 2H22 and 2024. Therefore, overall vessel earnings will remain above operating expenses across vessel classes- implying a healthy topline and profitability until 2024. We believe a healthy profit margin will support the company’s dividend policy of paying at least 50% net profit to its shareholders. The share price stood at DKK 334.20, and we believe there is a substantial upside.