Clarksons Securities is still backing Danish owner-operator Norden as a bulker bet, but says other companies are more attractive.
Norden booked net profit of $62m in the first quarter, down from $150m a year earlier, as its trading divisions lost $27m due a short position on dry bulk.
Excluding this unit, Clarksons analysts led by Frode Morkedal calculated Norden’s net asset value at DKK 310 ($44.5m) per share.
With the current share price at the same level, the downside risk is relatively limited, as long as the trading margin sees an improvement, they said.
“While there is an upside to earnings, it hinges on a very firm market throughout the year,” the analysts warned.
“We are positive about the dry bulk market, but find most other dry bulk equities more attractive than Norden in a scenario where the market greatly outperforms current expectations,” Morkedal and his team said.
They still have a “buy” rating on the stock, although the target price has been revised down to DKK 380 from DKK 400 previously.
Clarksons Securities believes the 2025 outlook is more open, and the optionality of the trading unit could once again be more valuable.
“However, in the short term, the upside could be more limited,” the investment bank added.
Norden has now neutralised the short bulk position, but expects only gradual margin improvements throughout the year.
Better investment value elsewhere?
“If the dry bulk market surpasses current forward market expectations, Norden should benefit. However, in this case, other dry bulk companies may provide better investment value,” the analysts reiterated.
But they do say Norden appears to be attractively valued in terms of asset values, as the stock market currently places no value on the trading unit.
Norden has maintained its 2024 net profit guidance at between $150m and $250m.
The company said “the majority” of the trading loss was in the first quarter, implying some will be carried into the second period.
The owner also increased its dry bulk fleet by 12% from the fourth quarter and reduced its product tanker fleet by 15%.
“Although it leverages the company further toward the dry bulk market, the chartering cost is likely relatively high considering the strong market,” the analysts said.
