Joakim Hannisdahl is bowing out of equity research with some final pointers on what could be a busy period for tanker company mergers and acquisitions.
The head of research at Norwegian investment bank Cleaves Securities sees plenty of potential for activity in a generally undervalued crude sector.
In what could be his final webinar ahead of a move to run shipping hedge fund Cleaves Asset Management (CAM), the analyst told investors that questions about takeovers were always good, although "a bit challenging to answer".
"If you look at the price now of these companies, you see Frontline trading at a slight premium to net asset value (NAV); that's the only one," he added.
Fellow Oslo-listed owners Okeanis Eco Tankers and Hunter Group are trading at 70% and 83% of NAV, respectively.
Ships for shares?
US tanker owners Teekay Tankers and International Seaways are even lower at 54% and 62%, Cleaves figures show. This compares to Frontline at 103% of NAV.
"At this point in the cycle you would expect to see ships-for-shares kind of transactions," Hannisdahl said.
"Frontline is perfectly positioned to print shares at net asset value and buy vessels," he added.
Hannisdahl said the John Fredriksen company is not in the market now, but the shipowner has bought other companies at deep discounts to net asset value so many times in the past.
"I'm sure Frontline's board is looking at that opportunity and no doubt are contemplating how they should play their hand. I think that's the most obvious one," he told the webinar.
Frontline has already been on the expansion trail this year.
Adding VLCCs
Earlier this year, the company spent $180m on two 2019-built VLCCs from Okeanis and $566.8m on six VLCC resales believed to have been ordered by Greek shipowner Evangelos Pistiolis' Central Shipping.
Hannisdahl also said Belgium's Euronav and US owner DHT could soon rise above NAV as share prices climb.
The analyst added that once companies get to 110% of NAV, or more, they can print shares and buy ships.
"There's a lot of potential there, it's the dynamics of the market. There's going to be a lot of activity going forward," Hannisdahl added.
"I do think this is a bargain opportunity to buy the equities," he said.
The Cleaves analyst said the shipping fund move had been a long time coming and work has been underway since June last year to establish CAM, which will be marketed to "professional investors".
CAM's main investment instrument will be equities, but the portfolio will also include bonds and derivatives.
