Flex LNG (Buy, TP: NOK320.00) - Set to hold course on 14% DPS yield

With ~90% of days fixed for 2025 and 2026, and a cash balance of 11x its ‘regular’ quarterly dividend, Flex LNG’s USD0.75 DPS looks insulated from market storm, offering a compelling 14% yield. Additionally, we expect freight markets to recover from 2026, with current newbuild prices implying a long-term TC contract of cUSD90k/day to justify the investment, in our opinion supporting a firm long-term rate outlook. We reiterate our BUY but have cut our target price to NOK320 (340).

ABGSC Shipping Daily 7 April

Q1'25 as expected, future remains uncertain

ABGSC Shipping Daily 31 March

25% tariff on US car imports

Yesterday’s news is likely to weigh on the car carrier sector as it strikes at the core of shipping demand. We would expect headwinds for the stocks.

‘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...

Market chatter yields buying opportunity

Höegh Autoliners ASA (Hold, TP: NOK104.00) - At the tipping point into...

The Q4 report confirmed to us that the best is probably behind us, as Q1 should see a YOY drop in EBITDA, and mounting uncertainties dampen the car shipping market outlook. However, we believe substantial cash flows for 2025–2027e should limit the downside risk. We reiterate our HOLD and have cut our target price to NOK104 (116).

~40% annual dividend yield for '25e and '26e

Q4 DPS miss, soft Q1'25 guiding

EBITDA USD 179m (ABGSC USD 185m, cons USD 181m). Q1'25 EBITDA to be "...slightly below same quarter last year". Share price down 2-4%.

Weak start to '25, but gross rate above our estimate

Net rates of USD 82.1/CBM in January, down 2.4% from December. ~23% downside to consensus Q1'25e EBITDA. A weak start to the year.

A. P. Møller Mærsk (Sell, TP: DKK10800.00) - Just too many ships

We expect Q4 to mark a turning point, with probable distributions announced and clear downside risk. Simply comparing the ratio of ships to cargo, we find there should be a significant number of ships without work versus 2019, and believe the depth of the downturn has yet to be priced in. We have downgraded to SELL (HOLD) and cut our target price to DKK10,800 (11,700).

Red Sea re-opening is well discounted

Q4 beat and '25 guidance better than feared

Well protected in this market downturn

Flex LNG Minor model adjustments

We have updated our estimates following the Q4 report. We still believe Flex LNG’s solid contract backlog, leading to limited spot exposure near-term, and ample liquidity (11x its Q4 dividend) leave it well placed to maintain its quarterly USD0.75 DPS for an attractive 12% run-rate dividend yield, despite our expectations for the current historically weak freight market to remain soft for at least 2025. We do not consider these changes to be material, and we have not changed our BUY recommendati...

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.

Q4 in line, FY'25 guidance as expected

A. P. Møller Mærsk (Hold, TP: DKK11700.00) - Potential for USD4bn–8bn ...

We expect the Q4 results to reflect continued strength in the container freight market, which picked up further over December–January, and have raised our 2025 forecasts. However, our 2025e EBITDA of USD6.0bn remains 17% below Bloomberg consensus. With guidance likely the main focus, we expect it to target underlying EBITDA of USD4bn–8bn. As vessel oversupply is set to continue hampering rates for a dreary long-term outlook, we reiterate our HOLD and DKK11,700 target price.

Valuations to withstand trouble

We foresee increasing risks to continued demand growth on headwinds for Chinese export growth, while facing a hefty delivery schedule. Add to this the potential return to Red Sea transits, and we find rates should be under pressure and inevitably deteriorate the earnings potential for our covered companies. However, the attractive backlogs secure sizable value in near-term cash flows, offsetting much of the risk. Due to diverging valuations, we reiterate our BUY on Wallenius Wilhelmsen but have ...