Shares of Belgian tanker giant Euronav saw a modest uptick in New York trading on Thursday as investors had something other than merger talk to chew over: a surprisingly strong earnings report for the fourth quarter of 2022.
The stock bounced up to $16.40 per share in morning trading on the New York Stock Exchange, a gain of more than 2% from the previous close of $15.96, in the hours after Euronav reported results. Trading volume was about average.
Stifel analyst Ben Nolan said Euronav’s quarterly profit of $0.85 per share trumped his estimate of $0.84 while significantly beating the Wall Street consensus expectation of $0.70 per share.
Net time charter revenue of $328m also topped the consensus estimate of $309m.
“The beat was driven by higher revenues when adjusting for a reduction in vessels chartered in. More importantly the company reported first quarter 2023 bookings that came in much better than we were expecting,” Nolan told clients.
Euronav reported first-quarter bookings averaging $55,000 per day for its VLCCs, ahead of Stifel’s estimates of $50,000. Suezmaxes earned $54,000 for suezmaxes, which was well above Stifel’s $45,000 bet.
The results also were praised by Jefferies’ lead shipping analyst Omar Nokta.
“It has been an eventful few months for Euronav as two prominent shipowners have taken sizable positions with seemingly opposite strategies, and both in conflict with the Euronav management team,” Nokta told clients, referring to 25% positions taken by CMB and merger hopeful Frontline.
“Lost in all the drama has been the fact that the company is performing well in a tanker market that is fundamentally stronger than in years past.”
Nokta had told TradeWinds earlier this week than his recent discussions with investors regarding Euronav had not been with typical shipping or energy-oriented investors but rather with specialists in merger-like situations, demonstrating the huge shadow combination talks had cast over the company.
Euronav’s first-quarter bookings guidance leads Jefferies to expect a final outcome of $50,000 per day for its VLCCs, and $55,000 for suezmaxes, yielding to a first-quarter earnings estimate of $0.62 per share.
“While future uncertainty on Euronav’s strategy may keep an overhang, we see good value with tanker rates supported and its [net asset value] assessed at $19.30 per share,” Nokta wrote.
Nokta reckons that it is unlikely that CMB’s attempt to replace the Euronav board will succeed without support from Frontline.
The analyst also notes “the idea of a carve-out of a portion of Euronav’s fleet [is] increasingly being discussed in shipping/investor circles as a potential outcome of their ownership”.
