Hafnia Minor model adjustments

We have updated our estimates owing to the Q3 report and Q4 guidance. Hence, we have raised our 2024e EBITDA by 1%, while we have lowered our 2025–2026e by 2–1%. We continue to be positive on the tanker space, and forecast an 18–19% earnings yield for 2025–2026. Combined with its LTV now being below the 20% threshold for a 90% payout ratio, this should bode well for capital returns through dividends and/or accretive buybacks (we estimate a P/NAV of 0.7x). We do not consider these changes to be m...

Hafnia (Buy, TP: NOK96.00) - Appeal holds despite slowdown

Coming off a very strong H1, average product tanker rates remain fairly robust in a historical context (Q3 rates 20% above 5-year average). Furthermore, we maintain that tanker markets are set to improve towards year-end as seasonal demand picks up, while we expect 2024e tonne-mile growth is set to far outpace supply growth. We forecast a 90% payout ratio, allowing for an NTM dividend yield of 16%. We reiterate our BUY, but have lowered our target price to NOK96 (105).

Hafnia (Buy, TP: NOK105.00) - Powering onwards

Hafnia is capitalising on strong trading opportunities to outperform headline index rates in the seasonally slow Q3, with recent spot fixtures allowing for an impressive 18% run-rate yield to investors and ample upside potential towards the winter season. The product tanker orderbook points to 6–7% of the fleet being delivered in 2025–2026e, but the market remains fundamentally tight. All things considered, we appreciate the return potential and believe the stock will prosper in the coming month...

Hafnia (Buy, TP: NOK104.00) - Harvesting sound markets

Although freight markets are experiencing seasonal headwinds, the entry point to the stronger winter season remains comfortably high. Hence, we forecast ongoing market strength for product and chemical tankers to support an attractive NTM dividend yield of 19% for Hafnia. We are above consensus for Q2 and Q3, and thus see potential for the company to present a strong report on 23 August. We reiterate our BUY and have raised our target price to NOK104 (100).

Hafnia (Buy, TP: NOK100.00) - Churning out attractive returns

The product tanker market is going from strength to strength on lingering beneficial disruptions. As we see no end in sight, the current spot markets and Hafnia’s updated dividend policy could see 22% dividend yields on today’s share price, which to us illustrates good value and attractive exposure to the currently ‘hot’ markets. The fundamentals of a modest order book against continued demand growth also provide a solid foundation for the long-term potential, in our view. We reiterate our BUY a...

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...

Hafnia Minor model adjustments

We have updated our near-term rate estimates and made other minor adjustments to our model following the Q4 report. We still believe fleet utilisation is set remain at its current high, with supportive fundamentals on limited fleet deliveries and major renewal requirements, as well as continued tailwinds for rates due to the Red Sea disruption. Hence, we see potential for an increase in the group’s payout ratio to 80% of adj. EPS from Q3 2024 (70% in Q4 2023), and estimate a DPS of cNOK12 (USD1....

Hafnia (Buy, TP: NOK90.00) - Upcycle likely still in early innings

Already-high fleet utilisation is set to face continued volume displacements, waterway disruptions and vessel diversions amid rising oil demand, limited fleet deliveries and high renewal requirements. Hence, we believe the risk remains to the upside heading into what is likely still the early innings of the multi-year upcycle for product tankers. We reiterate our BUY and have raised our target price to NOK90 (88).

Hafnia (Buy, TP: NOK88.00) - Nearing USD1.0bn 2023e EBITDA

Hafnia has been showcasing consistently high earnings capacity in past quarters, and 2023 EBITDA looks set to match 2022 in strength as we forecast USD1.0bn. Its 0.92x P/NAV pricing screens as discounted exposure to ~USD1.2bn in FCFE until end-2025 on our estimates, despite strong vessel value and earnings tailwinds in the product tanker space. We reiterate our BUY and have raised our target price to NOK88 (86).

Hafnia (Buy, TP: NOK86.00) - Primed for higher payouts

Since December, Hafnia’s NAV has risen more than 30% on strong vessel value momentum and accretive transactions, while it has paid out NOK9.3 in dividends (~18% annualised yield) and paid down debt, with an outlook to generate substantial cash flow from still-strong product tanker rates. We see the stock’s NAV-discounted valuation as an attractive entry point to what we believe will be strong returns in the quarters ahead. We reiterate our BUY and have raised our target price to NOK86 (80).

Hafnia (Buy, TP: NOK80.00) - Just a taste of what may come

Hafnia achieved another strong quarter, with a 6% beat to consensus EBITDA, and we believe the momentum may continue on strong QTD fixtures, which has Hafnia trading at a run-rate 4.6x EV/EBITDA on Q3e. We see more cash heading towards shareholders as strong vessel values persist and Hafnia continues to deleverage to reach a 70% payout ratio in Q3e. We reiterate our BUY and have raised our target price to NOK80 (76).

Hafnia (Buy, TP: NOK76.00) -

Hafnia (HAFNI NO, Buy) - (17 pages)

Hafnia (Buy, TP: NOK85.00) - Charting a course to sustained DPS

Hafnia’s NAV has climbed over 30% YTD on robust supply-demand dynamics, diverging from its share price and leaving the stock advantageously discounted at 0.75x P/NAV and a 24% run-rate dividend yield. The latter signals sizeable payout capacity with potentially more to come as the company’s net LTV inches closer to below 30%. We reiterate our BUY and have raised our target price to NOK85 (81).

Northern Lights

Hafnia (Buy, TP: NOK81.00) - Defying seasonal gravity

Hafnia’s 0.85x P/NAV pricing suggests to us that the market is still not willing to price in sizeable cash-generation potential from the current exceptional market fundamentals in the product tanker space. Current rates are challenging typical refinery turnaround seasonality, and we see positive near-term consensus revision potential for Q2–Q3. Near-term value catalysts include incoming Q2 bookings acting as a litmus test for the persistently strong earnings potential. We reiterate our BUY and h...

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

Hafnia (Buy, TP: NOK80.00) - Unfounded sell-off

Hafnia’s Q1 guidance is supportive of our estimates and reaffirms the investment thesis for product tanker fundamentals. Thus, we see yesterday’s sell-off as unwarranted in light of the Q4 DPS implying a c20% run-rate yield, and probably more to come from a record-low orderbook and increased demand from trade disruptions. We reiterate our BUY and have raised our target price to NOK80 (74).

Northern Lights