Norway’s DNB Markets has come out with a very positive view of chemical tanker markets in a preview of Odfjell’s first-quarter earnings.
In a note to clients, the investment bank sees recently renewed momentum for MR and chemical carrier rates as supporting upcoming contract of affreightment (COA) renewals, with Odfjell still having “ample volumes” waiting to be signed.
However, analysts Jorgen Lian, Sander Borgli and Nicolai Sivertsen said expectations had softened for Odfjell’s chemical tankers in the first quarter as spot earnings weakened.
This has not stopped them from upping the 2023 Ebitda forecast by 3% to $497m, 30% more than in 2022.
Estimates for 2024 have also been hiked by 9% to $497m, and 10% for 2025 to $478m.
The analysts said revisions were made due to “longer-term tailwinds for the sector despite a somewhat softer start to 2023”.
First-quarter Ebitda should come in at $118m, 4% above the consensus, DNB Markets said. Net earnings are estimated at $56m, 7% above consensus.
“Overall, we forecast somewhat weaker revenues quarter-on-quarter for chemical tankers but believe focus on COA renewals should support earnings for the remainder of 2023,” the analysts said.
They expect the Oslo-listed shipowner to deliver on its strong earnings potential, supported by the Russian oil trade displacement, which should continue to attract swing clean tanker tonnage away from chemical trades.
“Also, the tanker sector is seeing an unprecedented tight supply outlook for product and chemical tonnage, supportive of a long-lasting bull cycle,” the analysts said.
Clients willing to do deals
“In addition, the recent resurgence in momentum for MR and chemical rates should see customer willingness to transact on COAs in our opinion, as overall market rates continue to inch up,” they said.
The investment bank has a “buy” rating on the shares and has raised its target price to NOK 153 ($14.84), from NOK 138 previously.
The stock closed at NOK 93.76 in Oslo on Thursday.
Odfjell’s first-quarter results are due on 3 May.
