Golden Ocean Group is ready to reap the rewards of an expanded fleet thanks to healthy forward coverage, Clarksons Platou Securities has said.
The Oslo-listed bulker owner acquired 18 modern vessels earlier this year from major shareholder John Fredriksen's private Hemen Holding.
This "proved to be a timely acquisition which has benefited the company" in the third quarter and into the final three months of the year, Clarksons Platou managing director Frode Morkedal said.
Seven new kamsarmaxes are also on order in a fleet-rejuvenation process costing $237.8m, with early delivery in 2023.
The company has sold two of its oldest panamax vessels this year, freeing $22m, and has signalled further sales could be on the cards.
However, Golden Ocean bosses have told Clarksons Platou that they are not looking to order more bulkers.
The owner has one of the youngest fleets among the listed owners and is thus well-positioned for upcoming carbon regulations, the executives believe.
Fleet capacity to shrink?
Management is also bullish on the effects of the IMO's new energy efficiency regulations coming into force in 2023.
The bosses think a reduction in the effective fleet capacity of between 2% and 4% could be realistic as owners adjust to the new rules.
"Sentiment in the capesize market is on the mend," Morkedal said.
He added that Golden Ocean is hoping for a mini-rally at the end of the quarter, then expects a seasonal slump in the first three months of 2022.
But the group has already secured good coverage for this period, Clarksons Platou said.
The investment bank expects "significant cash flows" from forward fixing, as 30% of the 56 capeizes are booked at $33,000 per day in the first quarter of next year.
"This could secure at least another NOK 3 ($0.33) per share in dividends based on the low forward freight agreements (FFA) market indications of $16,000 per day," Morkedal said.
Optimism shared
"While investor sentiment for dry bulk is currently soft, we share the company's optimistic market view based on the low fleet growth, continued operational inefficiencies and the likelihood of a cold winter supporting coal trades," the analyst said.
For the fourth quarter, Golden Ocean has booked 83% of capesize days at $41,900 per day, based on load-to-discharge accounting.
This means any unpaid ballast days at the end of the quarter are not included, typically reducing actual earnings below the headline rates.
"However, when we talked to management, we got the impression that this factor might not be very large this quarter; hence we believe achieved capesize earnings could come in at around $39,000 per day," Morkedal revealed.
Panamax markets are looking better for the first quarter, supported by grains and with a lot of coal flows likely to benefit the vessel class, management told the investment bank.
In the medium term, Golden Ocean said it is positive due to the global economic recovery expected to extend throughout 2022.
Clarksons Platou has a "buy" rating on the stock.
