Star Bulk Carriers - Changing our view to Neutral as market gets challenging in 2023
Stock prices of dry bulk shipping companies constituting the Drewry Dry Bulk Equity Index came under pressure in the beginning of 2022 after a great performance in 2021, but market disruptions in the aftermath of the Russia-Ukraine conflict led to a surge in demand and earnings of dry bulk carriers. As a result, the index as well as the stock price of Star Bulk Carriers (SBLK) rose from February to May, but both declined thereafter due to demand concerns in China in the aftermath of Covid restrictions. With seasonal demand kicking in in July, the index as well as the SBLK stock started trending upwards, but in mid-August the trend reversed because supply increased due to easing port congestion in Europe and China in the latter half of August and largely remined range bound in 4Q22. Overall, SBLK’s stock price declined 15.1% in 2022. While it outperformed the broader S&P 500 (-19.4%), it significantly underperformed the Drewry Dry Bulk Equity Index (11.6%) which was largely driven by a 137.4% surge in the stock price of DS Norden (DNORD) - a company that benefitted from exposure to the product tanker market. The stock is changing hands at USD 20.44 per share and we see very limited upside in 2023.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.
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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