Analysts are getting excited about Himalaya Shipping again as the shipowner’s investment story shifts from one of rising asset values to bigger monthly dividends.
Fearnley Securities thinks Tor Olav Troim’s company is one of the best potential long-term investments in the dry cargo sector and has sized up its target price.
Shipping equities analyst Fredrik Dybwad expects the bulker owner’s shares to create greater yields for shareholders from July.
“With a future-proof fleet … and potentially rising benefits from LNG DF [dual fuel] and lowered emissions, we continue to argue [Himalaya] is one of the best long-term plays in the dry bulk space,” Dybwad said in a note on Tuesday.
“Moreover, it is one of the bulker opportunities left still priced below net asset value, with little to no reason for it, we argue.”
The Norwegian investment bank has set a new target price of NOK 130 for Himalaya’s Oslo-listed shares, up from NOK 100. The shares are also listed on the New York Stock Exchange.
Given the stock’s present trading levels, Dybwad said the long-term story is yet to be priced in by investors.
Himalaya’s final two newcastlemaxes are due to be delivered in June from China’s New Times Shipbuilding, which will bring the fleet to 12 vessels.
The company began paying out monthly dividends in January, with modest successive increases.
It will pay out $0.04 per share for April, which is $0.01 more than was paid out for February and March, and $0.03 more than January.
Fearnleys thinks the dividend — and overall yields for shareholders — will really take off in July, when the Himalaya fleet is fully delivered.
“July should be the first month where the [Himalaya] platform is fully leveraged towards the cape market,” Dybwad noted.
All 12 vessels already have contracts with major charterers.
By the end of this year, 11 vessels will be on long-term, index-linked employment, fixed at an average of a 42% premium to the Baltic Capesize Index, plus cost benefits generated by scrubbers.
“[Himalaya] has the option to convert index charters to fixed for specified periods, where the company currently has done this with five ships through 2Q and one through 4Q, at impressive rates,” Dybwad said.
Himalaya last week reported net profit of $2.5m for the first quarter, down from $4.6m in the final three months of last year.
It did not publicly publish 2023 first-quarter results last year.
Operating revenue grew quarter on quarter to $23.6m from $18.3m.
