Analysts have praised Golden Ocean Group’s first-quarter results and have higher hopes for the months ahead.
Jefferies shipping equities analyst Omar Nokta foresees similarly strong results for the second quarter, with potentially another 30-cent dividend, the same as for the first three months of the year.
He said Golden Ocean’s forward bookings are lower than Jefferies had expected, so the investment bank is lowering its estimates accordingly.
Golden Ocean has covered about 77% of its available capesize days at $27,200 per day for the second quarter on average.
Jefferies was expecting $30,000 per day and so has lowered its earnings estimates to 28 cents per share for the second quarter, down from 37 cents. The analyst consensus estimate is 30 cents per share
Jefferies has downgraded its rating of the stock from “buy” to “hold” due to its “strong share performance”, Nokta said.
Golden Ocean filed profitable results for the first quarter on the back of counter-seasonally strong freight markets.
Net profit for the quarter was $65.4m, equivalent to 33 cents in earnings per share.
This is up from a loss of $8.8m during the same period last year or a loss per share of $0.04.
The shipowner, which owns a fleet of capesize and panamax bulk carriers, will pay out 30 cents per share in dividends, the same as last quarter.
Its capesize vessels earned an average net time charter equivalent rate of $27,200 per day, while its panamaxes earned $15,000 per day.
Its shares have risen by around 40% this year to date, taking its market capitalisation up to NOK 27.8bn ($2.6bn). This has made it the best-performing stock in the Oslo Shipping Index so far this year.
“We see Golden Ocean as a solid platform to benefit from a firm dry bulk market outlook,” Nokta wrote in the note on Wednesday.
“The sector has come a long way since the first half of last year, when spot rates were hovering at just above breakeven levels.
“Golden Ocean’s high quality fleet with an average age of just 7.7 years positions it well to capture outsized earnings, while its fleet-wide breakeven of $14,100 per day gives it plenty of optionality.”
Fearnleys Securities still has Golden Ocean’s stock rated as a “buy” and said the first-quarter results were “overall, a sound report”.
Analyst Fredrik Dybwad said Golden Ocean’s third-quarter panamax bookings and available capesize days were the biggest positive takeaways from the quarterly report.
Around 40% of panamax days during the third quarter have been booked at $20,500 per day on average.
The third quarter is one of the seasonally strongest periods of the year for capesizes and Golden Ocean has a low level of forward bookings — just 24% of capesize — covered at an average daily rate of $25,200.
Dybwad said this would leave Golden Ocean “with ample juice heading into what we expect to be a strong [third quarter] in the capesize segment”.
Jorgen Lian from DNB Markets said Golden Ocean’s first-quarter report warranted a “neutral” share price reaction and limited revisions to the bank’s estimates.
The stock was trading at NOK 158.80 as of 3pm in Oslo, down by just under 4% since the market opened.
DNB sees a little more upside for the second-quarter — up to 4% over current consensus estimates — but, like other analysts, Lian and his team have “high expectations” for the third quarter.
But this would depend on markets improving in the coming months, beyond those indicated in Golden Ocean’s “strong” forward bookings for panamaxes.
