Swire and BW Group-backed Cadeler can be a force for consolidation in the growing offshore wind-farm vessel sector, according to Clarksons Platou Securities.

The investment bank has begun coverage of the shipowner, which carried out a $100m initial public offering in Oslo in November 2020, with a "buy" rating.

Clarksons Platou described the company as "a blue-chip play on green energy".

Cadeler, formerly Swire Blue Ocean, offers "pure-play exposure" to the strengthening market for offshore wind vessels, together with a long-track record and a solid balance sheet, head of research Turner Holm and renewables analyst Nikolai Odegaard said.

Time for tie-ups?

"In time, we believe Cadeler could become a consolidator in the market for offshore wind turbine installation and maintenance."

Swire Group controls just short of 50%, while Singapore's BW Group has 20%.

Singapore-based BW Group has been an active consolidator in its core product tanker and LPG carrier markets in recent years.

Despite a strong market outlook, Clarksons Platou said the Cadeler stock price equates to rates of €145,000 per day from 2024 and 2027, rather than current levels of €200,000 ($243,000) per day for high-spec units.

"We believe rates will strengthen further, rising to €250,000 per day by 2024, which drives our positive view of the stock at current levels," the analysts said.

Big upside for the stock

Clarksons Platou's target price is NOK 50 ($5.90) — a 52% upside from current trading levels.

Cadeler has two wind-turbine installation vessels (WTIVs) in operation — the 24,586-gt Pacific Osprey and Pacific Orca (both built 2012).

Both are due to be upgraded with new, larger cranes as offshore wind turbines continue to scale up.

The company is also planning to order a next-generation WTIV, with delivery in mid-2024. Several yards have been shortlisted.

The investment bank is expecting Cadeler to line up a charter contract for this ship in 2021.

The analysts forecast that annual turbine installation will rise 129% by 2024 compared with 2021 levels.

"Moreover, increasing turbine sizes are restricting the fleet of ships that can install next-generation turbines and foundations efficiently, leading to a potential undersupply situation," they said.

"While there are many companies that would like to build ships to meet the growing demand, the large equity cheque required [$100m in equity per WTIV] is limiting fleet growth."

The analysts said Cadeler has no obvious need for further equity financing, with the IPO providing sufficient cash to cover the equity portion of the newbuilding.