Small revisions in the dividend machine

2020 Bulkers Minor model adjustments

We have updated our estimates following the Q3 results and latest business update. We continue to see significant risk to what we view as an imbalance between China’s excessive raw material imports and its underlying demand, showcased by ~5% growth in iron ore imports YTD being met by rapidly growing steel exports, with October up 41% YOY, while coal inventories are setting new highs. Bottom line, all else being equal, we calculate the current NAV/share would drop from NOK151 to NOK119 by applyi...

Q3 as expected, unchanged outlook

EBITDA of USD 15m (ABGSCe and cons at USD 15m), Potential downside to Q4 estimates - balanced outlook, Share to trade in-line with peers

Most expensive among peers, but still cheap

Small Cap Miner – August 2024

2020 Bulkers (Sell, TP: NOK118.00) - Premium exposure, downside risk

2020 Bulkers continues to offer premium dry bulk exposure, with an 18% run-rate yield on July DPS. However, the company’s pricing remains closely tied to its NAV, which is underpinned by asset values at 15-year highs that are not supported by current freight markets. Hence, we believe risk is largely skewed to the downside, with asset values most likely to converge lower, reflecting what we view as a fragile situation ahead. We reiterate our SELL and have cut our target price to NOK118 (149).

100% spot into the high season

Q2 as expected, unchanged outlook

Adj. EBITDA of USD 34m (ABGSCe at USD 34m). No material changes to estimates - balanced outlook. Share to trade in-line with peers.

Gains from sales lift Q2e net profit to USD 29m

Minor adjustments - long-term reiterated. ABGSC '26e EBITDA +105% vs. consensus. TP of NOK 215 (225) – P/NAV of 0.94x.

2020 Bulkers (Sell, TP: NOK149.00) - Top performer in murky sector

2020 Bulkers provides premium dry bulk exposure and dividend potential (~16% run-rate yield on June dividend) that has the stock trading at a premium to peers (currently P/NAV 1.0x versus the peer group average of 0.8x). However, the company is not exempt from what we believe are deteriorating markets ahead, while the strong YTD share price performance has added downside risk to what we view as elevated NAVs. Hence, we reiterate our SELL and have trimmed our target price to NOK149 (153).

2020 Bulkers Minor model adjustments

We have updated our estimates following the Q1 report and latest commercial update. We remain concerned about the outlook for the dry bulk market, versus the elevated vessel valuations and sentiment. On our numbers, 2020 Bulkers is valued at P/NAV 1.06x, above the peer group average of ~0.86x. Despite the company boasting impressive financial strength and a modern fleet with associated earnings premiums to buffer lower freight rates, we remain cautious on the potential downside should market tai...

2020 Bulkers (Sell, TP: NOK154.00) - Price surge adds downside risk

Recent strength in the dry bulk market combined with an even stronger share price performance leaves current pricing with material downside potential, in our view. Despite its impressive financial strength after asset sales and refinancing, we question the longevity of China’s record-high run-rate import demand, and find the elevated asset values and strong NAV valuations a fragile situation in months ahead. Hence, we have downgraded to SELL (HOLD), but have raised our target price to NOK154 (15...

Yard response and dry bulk qualms

Our trip to South Korea and China revealed Chinese shipbuilders are seeking growth to take on Korea’s established yards who are facing constraints. An eagerness to add capacity is one of our takeaways, as well as a gloomy outlook for Chinese real estate, which in our view should inevitably weigh on dry bulk demand.

A brewing challenge for the yards

Our 17th Annual Energy & Shipping Conference was well attended by investors and industry executives showcasing the still-growing interest for the sectors. Limited yard capacity is fuelling high newbuilding prices and raising freight rate expectations for the vast fleet renewal necessary in the coming decade. Long lead times underpin a bullish supply story for much of shipping in the coming years, albeit exposed to geopolitical risks affecting trade patterns. Our overall impression was general op...

2020 Bulkers (Hold, TP: NOK150.00) - Balanced return potential

2020 Bulkers’ strong year-end trading returned a ~18% run-rate dividend yield, while we forecast ~12% for 2024–2026, reflecting more balanced risk/reward dynamics. We still see downside risk to Chinese demand and the elevated vessel values, but upside potential from positive supply-side fundamentals. We reiterate our HOLD, but have raised our target price to NOK150 (146).

2020 Bulkers (Hold, TP: NOK146.00) - Share price leaves less on the ta...

The recent performance of 2020 Bulkers’ stock leaves a less-appealing entry point for investors, in our view. While the long-term case of limited supply growth constrained by yard availability and elevated newbuild prices is intact, we believe the excessive dry bulk demand in China for much of 2023 could be challenged in 2024e. With asset values reflective of better markets underpinning the valuations, we find reason to be cautious at these levels. We have downgraded to HOLD (BUY) but raised our...

2020 Bulkers (Buy, TP: NOK130.00) - Substantial distribution capacity

We believe 2020 Bulkers’ ~30% discount to NAV offers a continued attractive entry point into a quality name with substantial dividend power, reflected in the company’s October trading generating shareholder distributions equalling a ~27% annualised yield. While we expect more balanced fundamentals, the stock’s upside optionality remains substantial in our view, and we thus reiterate our BUY and have raised our target price to NOK130 (126).

Burdened by a sluggish economy

We reiterate our BUYs on all our dry bulk names, but catalysts for a marked re-pricing of the stocks now appear further out. In our view, valuation and risk/reward remain attractive, but potential negative earnings revisions and an uncertain outlook should cloud the sector into 2024e. However, we see meaningful upside potential if Chinese growth accelerates and a solid supply side lends support.

2020 Bulkers Minor model adjustments

We have updated our estimates following the Q2 results. Our H2 outlook is now less optimistic as the dry bulk market recovery is still on hold. We believe lacklustre headlines about the Chinese recovery could translate into softer imports and offset a subsequent global demand upturn. However, the fundamentals and valuation remain constructive longer-term, in our view. We do not consider these changes to be material, and we have not changed our BUY recommendation. We have raised our target price ...

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