Songa Bulk is set to turn a profit already from the fourth quarter and will also have the capacity to pay dividends from early 2018, Clarksons Platou Securities says.
The broker has reiterated its “buy” recommendation on the bulker owner and lifted the target price to $7.50 per share.
In a meeting with Clarksons Platou on Thursday, Songa’s chief executive Herman Billung said there is a potential for 10% to 15% higher asset prices near term, and possibly 40% to 50% higher values in 2018.
Songa has already acquired 14 ships for $259.2m in less than a year, boosted by equity issues of $179m and $120m of bonds.
Its latest acquisition was confirmed earlier today, with Songa Bulk adding a Tsuneishi-built 81,918-dwt bulker, due for delivery in September.
TradeWinds has reported that Songa has snapped up the 81,000-dwt Goddess Santosh Devi (built 2014) from the fleet of bankrupt United Ocean Group.
This will be the fourteenth vessel to be acquired by Songa.
Clarksons Platou said: “With the bond fully drawn, we estimate that Songa Bulk will be fully invested based on their conservative leverage strategy.”
Billung is confident that even with a significant ramp-up in new orders, it would still not be possible to impact supply growth through 2019.
He added that he expects fleet utilisation to improve to up to 88% by 2019, with panamax rates at $17,000 to $18,000 per day.
According to Clarksons, applying this scenario to Songa would give Ebitda of up to $78m in 2019 with a net profit of between $49m to $59m.
Songa reported a net loss of $0.1m in the second quarter on the back of $4.9m revenue.
