Klaveness Combination Carriers is poised to ride a “perfect storm … with product and dry markets gathering steam”, says Fearnley Securities.
The broker, which keeps its “buy” recommendation, increased the target price for the Norwegian shipowner to NOK 105 ($10.15) from NOK 95, saying that “strong seasonal performance means rising estimates”.
KCC shares were trading at NOK 91.80 in Oslo on Thursday morning.
Fearnley raised its fourth-quarter and first-quarter estimates by 5% and 20%, respectively, saying in its latest equity research note that it expects “the street to follow suit”.
“Moreover, given our optimistic view on both segments, 2024 earnings should be yet another year with [year-on-year] improvements,” analysts Fredrik Dybwad and Oystein Vaagen said.
Fearnley argues that the prolonged strength and long-term fundamentals in the sector provide comfort despite product tanker earnings coming somewhat off highs.
“Adding to this, increasingly sound fundamentals in dry bulk provide KCC with an ‘extra gear’, as strengthening dry freight rates is added to already firm product tanker earnings,” the analysts said.
“Considering the quality of business and strong ESG metrics, we argue dividend yields in KCC should equal that of higher trading peers.”
