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.

Much as expected

Q1'24 EBITDA of USD 38m, TCE pre-announced. Q2'24 average fleet TCE earnings in-line with ABGSCe. Much as expected, stock flat today.

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.

Dry bulk: It's the fleet growth, stupid!

Rates have now appreciated, but new orders have not followed, and low fleet growth is enough for continued optimism.

More upside from the dry bulk market

It's the fleet growth, stupid! ABGSCe 46% above cons. for ’25e net profit. TP NOK 147 (125) – P/NAV 0.91x.

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...

Klaveness Combination Carriers (Buy, TP: NOK124.00) - Superior, high-q...

Despite negative revisions for our 2024e, we continue to believe KCC is still set for superior yields compared to its tanker and dry bulk peers, while retaining dynamic exposure to both dry bulk and product tanker markets and a superior risk profile. We reiterate our BUY, but have trimmed our target price to NOK124 (127).

Klaveness Combination Carriers (Buy, TP: NOK127.00) - Extending its st...

KCC looks set to report another quarter of strong earnings amid soaring product tanker rates and healthy dry bulk earnings, solidifying its solid distribution potential. Also, the valuation has improved to a P/NAV of ~0.9x (0.6–0.7x historically), as solid cash-generation capacity comes in to focus, in our view. We reiterate our BUY and have raised our target price to NOK127 (100).

Klaveness Combination Carriers (Buy, TP: NOK100.00) - Combination trad...

Q3 was another strong quarter, with a big dividend beat and ~15% run-rate yield. We see upside potential from KCC’s caustic soda shipment fixtures for 2024, which have generated sound returns for its CABUs YTD, and from the effects of KCC shifting more of its exposure to tanker trading (guided at 65–70% for 2024), which we believe is ‘by the book’ and raises its earnings potential for the year. We reiterate our BUY and NOK100 target price.