Bulker owner Golden Ocean Group beat analysts’ estimates for the fourth quarter comfortably, but now all eyes are on the weak immediate outlook for dry bulk freight markets.
Equities analysts are revising their estimates for Golden Ocean for the first half of 2023, in light of dry-cargo markets’ failure to launch after the seasonal lull of the Lunar New Year holidays in Asia. But all is not lost, as most analysts expect a rebound before the end of the year.
The Oslo- and Nasdaq-listed shipowner reported net income of $68.2m and earnings per share of 34 cents for the fourth quarter, dipping below the $100m level for the first time in almost two years.
Analysts from DNB Markets on Thursday praised Golden Ocean’s adjusted Ebitda for the fourth quarter, which smashed consensus estimates by 15%, “driven by a solid top-line for the quarter”.
“However, the company guides for a weaker first quarter 2023 and would imply an Ebitda in the low $30s versus consensus of $58m and we expect the report to see full-year 2023 negative revision of about 5%,” DNB said in the note.
“This should be partly expected considering the spot market development in recent weeks.”
The bank said that the shipowner’s forward coverage for capesizes during the first three months of 2023 fell below its estimates.
Golden Ocean capesizes are earning $13,150 per day on average, with 63% of its available capesize days covered this quarter to date. It has 73% of its panamax days covered at an average daily rate of $14,900.
DNB had estimated $16,400 per day for capesizes and $14,800 per day for panamaxes during the first quarter.
Fearnleys Securities has also made a downwards revision to its estimates for Golden Ocean’s first-quarter Ebitda, which it has put at below $45m. The consensus estimate is $59m.
“The market remains stuck in the basement due to low Brazil iron ore volumes as well as low coal demand from China and India. The latter should eventually change due to the fundamental outlook as well as iron imports to China picking up with a revamp of the construction sector,” the team said in a note.
“While first quarter 2023 earnings will be low, we expect the market to have turned ahead of the report.”
Jefferies said it will maintain its Hold rating of Golden Ocean’s stock.
“Current spot rates are soft but Golden Ocean’s higher quality fleet and strong commercial platform are insulating it from the extreme pressures,” equities analyst Omar Nokta said in a note on Thursday.
The investment bank has set a target price of $9.50 for the stock.
“Golden Ocean continues to trade in-line or at a premium to NAV [net asset value], as it has historically,” Nokta wrote.
“The company is on the higher end of the peer group range in terms leverage with its net LTV [loan to value ratio] at 45%. This is not a high figure, but we prefer companies with lower debt in the current market. We reiterate our Hold rating and $9.50 price target.”
Golden Ocean’s fourth-quarter results were respectable but failed to stir up much excitement in the stock market.
The shipowner’s share price closed at NOK 96.60 in Oslo on Thursday, up by just 0.75% since the open.
Its Nasdaq-listed stock rose by 0.5% since the market opened and was trading at $9.40 in late-morning trading in New York.
