reports
- Ankush Kathuria
Westports_Result Update 3Q22
After massively underperforming the Drewry Port Equity Index in 2021, Westport’s stock price moved in tandem with the broader equity index in 2022. The stock slumped 11.2%, in line with the 12.2% decline recorded by the Drewry’s sectorial index. At the current EV/EBITDA valuation, the company trades at a premium of 18.0% when compared with Drewry Port Equity Index, but is at a 16.1% discount from its five-year historical average. Our fair value estimate of MYR 4.08 provides an upside of 8.9% com...
- Nikesh Shukla
Star Bulk Carriers - Changing our view to Neutral as market gets chall...
Stock prices of dry bulk shipping companies constituting the Drewry Dry Bulk Equity Index came under pressure in the beginning of 2022 after a great performance in 2021, but market disruptions in the aftermath of the Russia-Ukraine conflict led to a surge in demand and earnings of dry bulk carriers. As a result, the index as well as the stock price of Star Bulk Carriers (SBLK) rose from February to May, but both declined thereafter due to demand concerns in China in the aftermath of Covid restri...
- Nikesh Shukla
Nordic American Tankers to benefit from improved supply-demand fundame...
The crude tanker market was largely on an uptrend throughout the year barring the initial weakness amid the Omicron-led demand concerns and high oil prices. We expected the tanker market to recover gradually in 2022, but the changes in trade patterns as a result of Europe’s move to reduce energy dependence on Russia in the aftermath of the Russia-Ukraine conflict accelerated the pace of recovery in the crude tanker market. The diversion of Russian barrels on long-haul routes to Asia and increase...
- Nikesh Shukla
Diana Shipping - Recent plunge in stock prices offers opportunity to a...
Stock prices of Diana Shipping Inc (DSX) and other companies operating in the dry bulk shipping market have been on a roller coaster ride in 2022. After a dream run in 2021, the stock price of DSX came under pressure in the beginning of 2022 before the rally from February to May. Covid-19 restrictions in China and increased tensions between Russia and the West in the aftermath of the conflict in Ukraine took a toll on dry bulk shipping equities in June and the early part of July before the stock...
- Ankush Kathuria
ICTSI mid year review
The stock price of ICTSI continues to outperform the broader Drewry Port Equity Index. Even though the stock price is down by 11.2% YTD, it has outperformed the Drewry Port Equity index. At the current EV/EBITDA level, ICTSI’s valuation is almost at par with the Drewry Port Equity Index but is still at a 10% discount compared with its long-term average, highlighting the scope for the stock to move up. We estimate the fair value of the company at PHP 218.7, converting into a potential upside of 1...
- Nikesh Shukla
Teekay Tankers - Well-positioned to cash in on opportunities from a sh...
Mid-sized crude tanker demand and day rates improved substantially from March after remaining under pressure at the beginning of 2022 because of Covid. However, increased tension between Russia and the West in the aftermath of the Russia-Ukraine conflict and Europe’s attempt to reduce the dependence on Russian energy resources opened new avenues of Russian crude exports to long-haul routes from ports in Western Russia to Asia (China/India). Growing trade on these long-haul routes favoured mid-si...
- Nikesh Shukla
Ardmore Shipping poised to benefit from favourable market fundamentals
The product tanker market started on a weaker note in 2022, but firmed up with Europe’s attempt to reduce dependence on Russian energy supply (including refined petroleum products) against the backdrop of increased tensions between Russia and the West. Vessel earnings of product tankers on key trading routes across vessel classes were on the rise from March with product tanker earnings substantially higher than their break-even rates. The impact of strong freight rates was reflected in the rally...
- Nikesh Shukla
Frontline - Dip in Frontline’s stock prices in late September offers a...
The Russia-Ukraine conflict proved to be a boon for the crude tanker market over the past nine months, with occasional corrections. The year began on a weak note amid the Omicron-led demand concerns and rising crude oil prices that affected seaborne trade and crude tanker day rates. However, the market dynamics turned favourable for tanker companies as the conflict led to a surge in spot TCE rates of mid-sized crude carriers. Strong earnings of mid-sized crude carriers have supported the rally i...
- Nikesh Shukla
DHT Holdings - Despite robust performance DHT’s stock price continues ...
The crude tanker market remained volatile in 2022 YTD. The year began on a sluggish note amid the Omicron-led demand concerns and high oil prices, which limited seaborne trade. However, the market dynamics turned favourable for shipowners after the Russia-Ukraine conflict led to high spot TCE rates of mid-sized crude carriers. This supported the uptrend in the Drewry crude tanker equity index that registered a gain of 29.9% between the last week of February and the first week of June. However, D...
- Nikesh Shukla
Euronav NV - Large crude tanker fleet and high spot exposure to drive ...
The crude tanker market remained volatile in 2022 YTD. The year began on a sluggish note amid the Omicron-led demand concerns and high oil prices, which limited seaborne trade. However, the market dynamics turned favourable for shipowners after the Russia-Ukraine conflict led to high spot TCE rates of crude tankers in general and of mid-sized crude carriers, in particular. This supported the uptrend in the Drewry crude tanker equity index that registered a gain of 29.2% between the last week of ...
- Nikesh Shukla
DS Norden’s exposure to product tankers supports the rally in the stoc...
In the past 12 months, DS Norden has outperformed the Drewry dry bulk equity index by 84.6% because of strong freight rates in the product tanker market, partially offset by a recent fall in freight rates of dry bulk vessels. Although vessel earnings of dry bulk have fallen, the company will be profitable as the it has already covered the dry bulk vessel days above operating costs for 2H22 and 2023. Vessel earnings of product tankers are likely to be lower than 2022 but above the historic averag...
- Nikesh Shukla
Tsakos Energy Navigation - High exposure to mid-sized crude carriers o...
The crude tanker market remained volatile in 2022 YTD. While the year began on a sluggish note for tankers amid the Omicron-led demand concerns and high oil prices which limited seaborne trade, the market turned favourable for shipowners after the Russia-Ukraine conflict that led to higher spot TCE rates of tankers in general and of mid-sized crude carriers and product tankers, in particular. This supported the uptrend in the Drewry crude tanker equity index that gained 25.2% between the last we...
- Nikesh Shukla
Pacific Basin - Recent fall in stock prices offers opportunity to buy
In the last 12 months, Pacific Basin’s stock price fell by 26.6%, but we believe there is significant upside, especially considering our positive outlook on Supramax and Handysize vessels. Trade of minor bulk and coking coal will continue to rise in addition to the projected strengthening of demand for wood chips and wood pellets as alternative energy sources. A surge in soybean imports in China to feed the increasing hog population will keep Supramaxes busy. These coupled with limited fleet gro...
- Nikesh Shukla
Ardmore Shipping to benefit from Europe’s aim to reduce dependence on ...
The product tanker market started on a weaker note in 2022, but firmed up due to Europe’s attempt to reduce dependence on Russian energy supply (including refined petroleum products) against the backdrop of increased tensions between Russia and the West. Vessel earnings of product tankers on key trading routes across vessel classes were on the rise from March to levels not seen in the past two years. The impact of strong freight rates seen in the rally of stocks of product tanker companies over ...
- Ankush Kathuria
1H22 Result Update
HPHT briefly underperformed the broader Drewry port equity index in 2H21, but thereafter the stock resumed its relative outperformance. Despite the recent outperformance, the company’s stock remained in the undervalued territory, based on its current EV/EBITDA multiple, which is below compared to its peers and its long-term average. We continue to believe that at the current price the stock is value accretive for mid-to-long term investors. We reiterate our Attractive rating on HPHT with a fair ...
- Nikesh Shukla
Nordic American Tankers - Strong demand for mid-sized crude carriers o...
The crude tanker market remained volatile in 2022 YTD. The year began on a sluggish note amid the Omicron-led demand concerns and high oil prices which limited seaborne trade. However, the market dynamics changed after the Russia-Ukraine conflict led to higher spot TCE rates of crude tankers in general and of mid-sized vessels, in particular, which took the Drewry crude tanker equity index up by a high 25.2% between the last week of February and end May. The index started trending downwards yet ...
- Nikesh Shukla
Golden Ocean Group - Recent plunge in stock prices offers opportunity ...
The dry bulk shipping market recovered at a fast pace in 2021 on the back of robust global demand, coupled with limited fleet growth. Although TCE rates of dry bulk carriers are expected to ease slightly in 2022, before improving in 2023, overall vessel earnings will remain substantially above operating expenses across vessel classes for GOGL because of favourable market dynamics - implying a healthy topline and profitability over the next three years. We believe a healthy profit margin will sup...
- Nikesh Shukla
Frontline - Correction in stock prices offers opportunity to accumulat...
The year 2022 began on a sluggish note for the crude tanker shipping market amid the Omicron-led demand concerns, coupled with high oil prices (a result of curtailed supply from OPEC+) that limited the seaborne trade. However, as we moved forward, the Russia-Ukraine conflict led to higher spot TCE rates of crude tankers in general and of mid-sized vessels, in particular, which completely changed the industry’s prospects. Heightened geopolitical risks coupled with high inflation and expectation ...
- Nikesh Shukla
Teekay Tankers: The recent rally is not sustainable
The year 2022 began on a sluggish note for the crude tanker shipping market amid the Omicron-led demand concerns, coupled with high oil prices (a result of curtailed supply from OPEC+) that limited the seaborne trade. On the contrary, the crude tanker market boomed as spot TCE rates of crude tankers in general and of mid-sized vessels, in particular, rallied in the aftermath of the Russia-Ukraine conflict, which led to global oil trade disruptions and the rerouting of cargos. Heightened geopolit...
- Ankush Kathuria
SM SAAM - initiating report
We initiate SM SAAM with a fair value estimate of CLP 66.4 and a value of ‘Attractive’. The company operates in the marine industry with significant exposure to international trade. We have used DCF valuation to arrive at the fair value (CLP 66.4), implying an upside of 20.7% (based on the share price of CLP 55 on 10 May 2022). Also, at the current EV/EBITDA level of 3.2x, the company trades in the undervalued zone when compared with its historical average (last 17 quarters) of 5.8x and with th...
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