Golden Ocean Group - Recent plunge in stock prices offers opportunity to accumulate
The dry bulk shipping market recovered at a fast pace in 2021 on the back of robust global demand, coupled with limited fleet growth. Although TCE rates of dry bulk carriers are expected to ease slightly in 2022, before improving in 2023, overall vessel earnings will remain substantially above operating expenses across vessel classes for GOGL because of favourable market dynamics - implying a healthy topline and profitability over the next three years. We believe a healthy profit margin will support the uptrend in GOGL’s stock prices and will create shareholder value. The company’s stock price in the past five weeks has fallen by 35.1% in line with the broader Drewry dry bulk equity index as restrictions in China coupled with fears of a potential recession encouraged the bearish sentiment. Prior to the recent slump, the stock was on an uptrend, benefitting from the robust consumer demand. However, with the steep fall in the company’s stock price the upside potential is substantial vs the downside risk. As a result, we remain bullish on the company’s prospects and recommend accumulating on dips.
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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