Tag Archives: SHIP
- TCE at USD 9.2k/d vs our forecast of 13.5k/d (100% utilization basis).
- Opex at USD 5.2k/d (+13% q/q) vs our forecast of USD 4.6k/d.
- Above weakness somewhat mitigated by G&A at USD 1.3m vs our USD 1.6m forecast.
- EPS adj. -0.13 vs our forecast of +0.02, after adjusting for a USD 11.4m one-off related to debt repayment
- TP upgraded to USD 2.9/sh (from 2.7)
As we correctly pointed out in mid-April, share prices were likely to be impact from the falling iron ore prices in 2Q. A similar pattern is developing as this report hits the press, and is key to the way forward for rates and shares in 4Q17E. Nevertheless, the low supply growth leaves us confident in the continued cyclical recovery over the next two years, and we reiterate our BUY recommendation on the Dry Bulk sector as we view the risk/reward as highly attractive in a historical context.
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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