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.

Wallenius Wilhelmsen ASA Minor model adjustments

We have marginally lowered our 2024-2026 estimates (results due at 07:00 CET on 8 May), on the more impactful Red Sea disruptions and the company’s estimated USD5m–10m negative EBITDA effect from the Baltimore bridge collapse. We believe WAWI could further renew its contract portfolio at significantly higher levels and build earnings momentum for the years ahead. So far in 2024, the company has announced USD2.8bn of committed contracts (nearly USD1bn in annual revenues, or 19% of 2023, for the n...

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...

Wallenius Wilhelmsen ASA (Buy, TP: NOK152.00) - Market strength with l...

Q4 was somewhat disappointing, but the potential cash flows remain attractive. With 46% of volumes up for renewal this year, and with a tight market also fuelled by Red Sea and Panama Canal disruptions, we believe there should be sequential net rate improvement at least until 2025e. Thus, we see up to ~NOK85/share in potential dividends by end-2026e. We reiterate our BUY and have raised our target price to NOK152 (148).

Wallenius Wilhelmsen ASA (Buy, TP: NOK148.00) - Cash flow-heavy earnin...

The car carriers are securing long-term revenues and substantial cash flows, considerably derisking the investment case, leaving plenty of upside potential to the share prices, in our view. While uncertainties about supply (OB-to-fleet of 36%) and demand persist, there is no sign of weakness for the sector as we continuously see legacy contracts rolled over to attractive levels. Wallenius Wilhelmsen should see nearly 70% of the market cap in FCFE by 2025e. We reiterate our BUY and have raised ou...

Wallenius Wilhelmsen ASA (Buy, TP: NOK140.00) - 2024e strength inbound

Management’s confidence in positive contract renewals and the customer outlook for shipping demand has enabled it to guide for 2024 to be a better year than the record 2023e. We repeat our view that positive earnings momentum continues ahead on baseload values to aid profitability for years to come. We reiterate our BUY and have raised our target price to NOK140 (123).

Wallenius Wilhelmsen ASA Minor model adjustments

We have made minimal adjustments to our assumptions and thus limited changes to our estimates. We do not consider these changes to be material, and we have not changed our BUY recommendation. In our view, solid supply/demand fundamentals should fend off a considerable orderbook delivery schedule in the coming years. Despite brewing political risk and a sluggish macroeconomic outlook overall, we continue to find the stock attractively priced. We have raised our target price from NOK118 to NOK123.

Wallenius Wilhelmsen ASA (Buy, TP: NOK118.00) - Building confidence fo...

In our opinion, the Q2 report suggested continued earnings momentum for the car carriers, unlike consensus, which is clouded by the 30% orderbook-to-fleet. Hence, we believe limited value is being reflected beyond the next 12 months, which appear fundamentally strong in our view, leaving upside potential for the share price. We reiterate our BUY and have raised our target price to NOK118 (114).

Northern Lights

Wallenius Wilhelmsen ASA Minor model adjustments

We have updated our estimates ahead of the Q2 report (due at 07:30 CEST on 15 August), primarily relating to changes in fuel prices and minor adjustments to our underlying assumptions. This leaves our Q2e EBITDA broadly in line with consensus. We do not consider these changes to be material, and we have not changed our BUY recommendation. We have lowered our target price from NOK119 to NOK114.

Northern Lights

Wallenius Wilhelmsen ASA (Buy, TP: NOK119.00) - Weighed down by sentim...

The company missed expectations for Q1, directly shaving USD91m off our 2023 EBITDA estimate. However, we continue to believe the market will stay tight for 2023 and that companies should benefit from renewing contracts at higher rates for longer durations, thereby de-risking cash flows and equity value. Thus, we find the shares attractively priced despite the concerning orderbook due to a strong demand outlook. We reiterate our BUY but have cut our target price to NOK119 (127).

Northern Lights

Northern Lights

Wallenius Wilhelmsen ASA (Buy, TP: NOK127.00) - Bullish momentum set t...

We believe the company will report a solid Q1, confirming the ongoing underlying earnings momentum from renewing contracts in ever-better markets. With its peer signalling a strong start to the year, we believe the Chinese export story has merit, supporting long-term fundamentals despite a concerningly building orderbook. We reiterate our BUY but have trimmed our target price to NOK127 (128).

Generally an optimistic bunch

DNB hosted its 16th annual Energy & Shipping Conference. On day two, we hosted sector panels and presentations for dry bulk, LPG, car carriers, LNG and tankers with senior management representatives from 29 shipping companies. A resurging Chinese economy coupled with tight supply outlook, strong demand growth potential and regulations putting pressure to remove older vessels were among the common themes. Overall, the discussions showcase optimism across the sectors.

Northern Lights

Wallenius Wilhelmsen ASA (Buy, TP: NOK128.00) - The sector that keeps ...

A strong Q4 has laid a solid foundation for 2023e, which is set to benefit from continued positive earnings momentum as slow-moving contracts are renewed in a capacity-starved market. The orderbook is building towards 30% of the fleet, but any simple comparison to the ongoing container crunch is misleading, in our view, as fundamentals remain strong. We reiterate our BUY but have trimmed our target price to NOK128 (131).

Wallenius Wilhelmsen ASA (Buy, TP: NOK131.00) - More fuel in the tank

Focus has turned to significant vessel deliveries from 2024e, but we believe Chinese exports and recovering production volumes should deflect excessive pressure. In the interim, in our view, focus should be on the strong earnings momentum at an attractive valuation. We reiterate our BUY and NOK131 target price.

Sector Fast Comment - ABGSC Shipping Daily

Mixed tanker market, dry bulk and LPG down Shipping peer group trades as P/NAV 0.89x US LPG fundamentals still solid