Dry bulk equities have taken a hit lately due to weaker rates.
But Arctic Securities says the long-term story has not changed and maintains a buy recommendation for most bulker owners.
“We believe the discount to NAV provides an attractive ticket to enter,” analysts Kristoffer Barth Skeie and Lars Moen Eide said in a note.
In Arctic’s coverage space, the dry bulk equities are trading at an average price of net asset value of 0.63x compared with 0.81x in 2023.
The Norwegian investment bank said supply fundamentals are intact with an orderbook at 9.2% and moderate growth ahead.
In terms of demand, Arctic sees volumes to grow by 2.2% and tonne-mile growth of 3.0% in 2025, “the disparity being due to new volumes coming from ton-mile intensive regions.”
The analysts cut fourth-quarter rate estimates for conventional capesize to $19,700/day (previously $31,500/day), panamax to $10,400/day ($18,000/day), supramax to $13,100/day ($17,000/day) and handysize to $11,600/day ($15,000/day) to reflect the softness seen and the FFA market.
“Second half of 2024 has been soft, but 2025 is looking bright,” the analysts said.
For 2025 it keeps the rate estimate for conventional capes at $29,000/day while lowering panamax 19% to $19,500/day and supramax 14% to $19,400/day.
Arctic kept buy recommendations for 2020 Bulkers, Belships, Golden Ocean, Himalaya Shipping, Star Bulk Carriers and Western Bulk. It downgraded Diana Shipping to hold from buy.
Share target prices were on average adjusted down.
According to Arctic, Golden Ocean has an “abnormal upside to NAV”.
“In our view, the long-term story is more-or-less unchanged and, seeing that GOGL [Golden Ocean] currently trades at a P/NAV of 0.74x whilst trading at a premium to NAV prior to the summer, we argue that current pricing should provide an attractive entry point to the stock,” the analyst said.
Arctic keeps its assumption that the company will distribute 100% of adjusted earnings per share.
“Capital discipline continues to be of focus for the listed owners and we see 21% average yield on our figures.
“That said, we don’t see any near-term triggers for re-rating, and we believe this is now a 2025 story,” the analysts said.
