Search Results for: SBLK

SBLK-US (BUY, TP 14) 3Q17 Review: Weak 3Q17 but TP unchanged

The 3Q17 report was a bit soft in our view, with average TCE of $9.6k/d vs our 10.7 forecast and G&A $2m higher than expected. Thus, EBITDA of $26m came in below our $35m forecast and consensus at 30m. EPS of -0.12 compares with our +0.02 forecast and consensus’ -0.02. No significant surprises in the report, but we lift our near-term estimates as the company reports 80% of fleet days in 4Q17 locked in at $12.6k/d (vs our $11.3 estimate). Although we see short term downside risk to shares from falling spot rates, significant price depreciation would represent an opportunity to BUY the share. We reiterate our 1y TP of $14/sh.

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SBLK-US: Initiation (SELL, TP 5.2)

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2020 Bulkers Initiation (Hold, TP NOK 31)

2020 Bulkers is the newly established dry bulk investment vehicle of Mr Tor Olav Trøim (50% ownership), in partnership with Titan Opportunities Fund (20%) and former Clarksons Platou partner Fredrik Halvorsen (20%). We estimate a NAV of NOK 16.3/sh, but base our NOK 31/sh target price on a weighted average of future asset price appreciation models after a 10% discount. We believe a small discount is warranted as there are still some road to be covered before realizing the potential value appreciation behind our forecast, including a likely equity raise in order to pay the next newbuilding installments in 3Q18E (or options declared in 1Q18E).

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Dry Bulk: Sector Upgraded to BUY

As we argued in our Dry Bulk: Sector Update in early April, share prices had moved too far too fast, disconnecting from the underlying fundamentals of the early expansionary phase of the cycle. We highlighted that the risk was skewed to the downside ahead of 2Q17E, and we issued three SELL recommendations and four Neutral. Since then, share prices have fallen some 30% before recovering somewhat in recent days, hitting or undershooting our target prices. Although share prices could fall even lower in the coming months, a period which is usually marked by a lull in activity ahead of an active Autumn market, we now find the risk/reward highly attractive. We upgrade the dry bulk sector to BUY (Neutral) and assign a BUY rating to nine of the 11 companies we cover.

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GNK-US: Initiation (Neutral, TP 10.9)

We initiate coverage of Genco Shipping with a Neutral recommendation and target price of USD 10.9

We find the dry cargo space very interesting and believe that the trough was 1Q16. The company is recently restructured, in a sound liquidity position and well placed to take advantage of the ongoing cyclical upturn. We find the share very reasonably priced comparative to steeper valued peers such as GOGL or SBLK, and could be contemplating a rating upgrade if the share price continues to slide.

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EGLE-US: Initiation (Neutral, TP 5.5)

We initiate coverage of Eagle Bulk with a Neutral recommendation and target price of USD 5.5

We find the dry cargo space very interesting and believe that the trough was 1Q16. The share is attractively priced comparative to peers, but we deem its fleet to have strong industrial qualities which is less opportune in the current point of the cycle.

Something that could spark the stagnant and peer-trailing share price into life is further corporate actions (accretive equity issuances & vessel acquisitions) in addition to increased focus from positive investment banker analysts. We do believe the share will outperform peers in the short to medium term, and suggest the hedged dry bulk investor to go long EGLE and short steeper valued peers such as GOGL or SBLK.

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