‘The times they are a-changin’

The recurring theme at our 18th Energy & Shipping Conference was geopolitical uncertainty and a potential trade war, warranting a wait-and-see approach, particularly on the Trump 2.0 effect. The consensus view pointed to high asset values, with no rush to the yards, aligning with below-NAV valuations across most of our coverage. However, panellists generally saw less downside risk than the 25% average discount to steel for our Tanker, Dry Bulk and Gas coverage. Overall, the day highlighted uncer...

Klaveness Combination Carriers (Buy, TP: NOK125.00) - Undervalued busi...

Despite negative revisions to our 2025e EBITDA on the Q1 guidance and weaker underlying markets, we still believe Klaveness Combination Carriers has a superior risk profile from its dynamic market exposure (dry bulk, tanker and fuel prices), while also achieving 2025–2026e earning yields in line with or above its pure sector peers. Thus, we find the stock remains undervalued, and we reiterate our BUY. We have lowered our target price to NOK125 (128).

P/NAV of 0.64x, but downside to '25 estimates

Q4 miss, Q1 guidance as expected

Klaveness Combination Carriers (Buy, TP: NOK128.00) - Attractive risk/...

KCC’s operational outperformance during challenging underlying dry bulk and tanker markets in Q4 was further testament to its business model. We believe this leaves an attractive risk/reward relative to its pure-play sector peers, particularly given our cautious view on the dry bulk space and a possible drag on product tanker sentiment from prospects of an end to disruption in the Red Sea. Hence, we reiterate our BUY, but have cut our target price to NOK128 (141).

A playbook on US tariffs

As a response to recent news flow of potential tariffs and countermeasures, we highlight the main implications for the shipping sectors we cover. While the specifics remain uncertain, the below input might assist in gauging potential impacts of the disruptions.

2025 could be wild. Or not.

Dry bulk should continue to improve

Klaveness Combination Carriers (Buy, TP: NOK141.00) - Dynamic market e...

KCC continued to prove the value of its business model in Q3 amidst a deteriorating freight environment, by adjusting its share of wet/dry and combination trading with developments in the relevant freight markets. We believe this highlights the company’s superior risk profile, through its ability to outperform in challenging market conditions compared to its tanker and dry bulk peers. We reiterate our BUY, but have lowered our target price to NOK141 (145).

Soft rates reduce near-term estimates

Q4e up on guidance, '25 estimates down on lower rates. ABGSCe 18% above cons. on ’25e net profit. BUY, TP NOK 152 (unchanged) – P/NAV 0.73x.

Q3 results and Q4 guidance as expected

Winter is not here yet

Klaveness Combination Carriers Minor model adjustments

We have adjusted our estimates following the company’s business update and our latest near-term rate forecasts. Pre-announced Q3 TCE earnings were above the somewhat muted guidance, and leave us 8% above consensus on EBITDA (the full Q3 report is due prior to market open on 30 October). However, we have reduced our Q4 EBITDA estimate by ~20% on our lowered rate assumptions for product tankers and mid-sized bulkers, reflecting recent rate movements. Hence, we have trimmed our 2024e EBITDA by 2% a...

Klaveness Combination Carriers (Buy, TP: NOK144.00) - Short-term slump...

Despite cuts to our 2024 estimates, we still believe KCC’s unique flexibility and risk profile represent an attractive investment case and should warrant a premium valuation compared to its dry bulk and tanker peers. We calculate it is trading at an EV/EBITDA of 6.0x and dividend yield of 11% for 2024–2025e. We reiterate our BUY and have raised our target price to NOK144 (143).

Q3e down on lower guidance

Q2 as expected, weak Q3 guidance

Q2'24 EBITDA of USD 36m, Q2 TCE pre-announced. Q3'24 average fleet TCE earnings 7% below ABGSCe. Weaker Q3 guidance and lower dividends, share down 1-3% vs. peers.

Klaveness Combination Carriers (Buy, TP: NOK143.00) - Highly valuable ...

KCC is set to report another solid quarter, driven by continued strong product tanker markets. This underscores the company’s unique ability to capitalise on favourable developments in the freight markets while mitigating some of the downside risks. Hence, we believe KCC presents an undervalued alternative to pure commodity shipping and reiterate our BUY. We have raised our target price to NOK143 (137).

5% upside to cons. Q2e EBITDA

Klaveness Combination Carriers (Buy, TP: NOK137.00) - Harvesting stead...

The Q1 report revealed strong operations to maximise the value of the company’s unique three-legged market position, providing attractive exposure to upside potential in strong shipping markets, while diversifying possible downside risk. Bulkers and tankers are seeing a constructive supply story over the coming years, while regulations monetise KCC’s unrivalled efficiency. Thus, we find KCC remains undervalued and we reiterate our BUY. We have raised our target price to NOK137 (124).

Continue to trade where rates are best

Q2e up on guidance, reiterating our long-term outlook. ABGSCe 47% above cons. for ’25e net profit. TP NOK 156 (147) – P/NAV 0.90x.