Clarksons Securities believes Greek owner Star Bulk Carriers’ shares could spike as the stage is set for a dry cargo upcycle.
The investment bank said bulker stocks continue to have a tough time, with the sector now trading at a 30% discount to net asset value (NAV) on average.
This has historically been the trough, analysts Frode Morkedal and Even Kolsgaard said.
They view New York-listed Star Bulk as one of the largest and most liquid owners.
Shares can now be bought at a significant discount, a “compelling opportunity”, the analysts added.
While China’s rebound has been slower than anticipated, the vessel supply side remains the most promising in years, boosting market prospects, Clarksons Securities said.
“Even if the demand side should be delayed, a cash-breakeven of $13,000 per day is a low hurdle to beat, and when everything above that level is distributed, there is plenty of upside,” Morkedal and Kolsgaard said.
They estimate rates at $20,300 per day for the remainder of the year, with Star Bulk expected to yield 13%.
“Therefore, we think the current stock price is a steal,“ they added.
The company runs 125 bulkers.
‘Generous’ dividends to come
The stock was trading at $18.07, while Clarksons Securities’ NAV estimate is $25.37.
“We anticipate generous dividends even if rates remain subdued,” the analysts said.
Star Bulk saw profit slide to its lowest level in almost two years in the first quarter, dragged down by falling earnings for its 127 scrubber-fitted bulkers.
The shipowner posted net income of $45.9m to 31 March, down 73% from the same period of 2022 and the lowest profit reading since the second quarter of 2021.
