The newly simplified operational structure at bulker owner Belships makes it an “easier” takeover target, Clarksons Securities believes.
The Oslo-listed supramax and ultramax company said on Monday it had bought a bigger stake in the Norwegian branch of its operating arm, Lighthouse Navigation, while selling off a sister business in Asia.
The shipowner raised its holding from 50% to 67% in Norway, while divesting its 50.1% slice of the Singapore division to its employees.
“This divestment reduces the contribution to Belships’ net asset value but streamlines the company and makes it easier to understand and potentially acquire,” analysts led by Frode Morkedal said.
Clarksons Securities valued Lighthouse Navigation at $130m, with a contribution to NAV of $65m.
This will fall to $60m based on the midway point of Belships’ estimate of quarterly Ebitda from the unit of between $2m and $5m.
But other factors are at play, the analysts pointed out.
“The full value of Lighthouse Navigation has likely never been priced in by the equity market. Assessing the value of the fleet is relatively straightforward as values are provided by brokers, while the valuation of an operator is more difficult to assess due to earnings volatility,” they pointed out.
The Singapore company also has multiple subsidiaries that there is no public information about, increasing the complexity of the company, the team added.
“Simplifying the company and reducing the exposure to the operating business should make things easier and lessen the discussion around the ‘actual’ NAV,” the analysts said.
“The streamlining of the company makes Belships an easier takeover candidate. Although the Oslo-based operator company remains, it has a simple structure and, according to management, has a highly sought-after staff,” the Clarksons Securities team added.
Net asset value to rise
Clarksons Securities has a “buy” rating on the stock.
The Lighthouse transaction and newbuilding expansion, combined with rising asset values, has led to Belships’ NAV reaching NOK 30 ($2.72) per share, against a trading price of NOK 24.85 on Tuesday, the investment bank calculated.
A strong market and solid cash flows are expected to lift this further to NOK 32 by the end of the year, assuming supramax rates average $15,700 per day for the remainder of 2024, the investment bank argued.
“Overall, we continue to find Belships appealing and think the latest developments are positive for the company,” the company concluded.
