Shipowners raised $7.9bn from the debt and equity markets in 2018, which proved a difficult year for the industry and global stock markets, according to analysts at Fearnley Securities.
With the implementation of IMO 2020 rules only 12 months away, and most stocks trading below net asset value, the Norwegian shipping house believes there are fortunes to be made in shipping in 2019.
Of the fresh capital raised last year, $3.1bn came from the equity market. This marked a 30% decline on 2017 levels but was in line with the activity seen in 2015 and 2016, analysts Espen Landmark Fjermestad and Peder Nicolai Jarlsby said in a report today.
“Despite an active start to the year the shaky macro environment was in many ways a show stopper for new issues in the second half of the year,” the pair explained.
Tanker owners were the most active with the amount of equity they raised climbed by $250m to $820m, including $300m for Scorpio Tankers and $100m from the initial OTC offering of Okeanis Eco Tankers.
Tankers were also the top performing stocks in a year which saw shipping equities drop by 24% overall.
The 17% fall among tanker owners, compared with the 20% dip in container stocks, a 22% slide in dry bulk shares and a 24% drop in LNG stocks.
“Importantly, being at the doorstep of 2019 means we are only 12 months away from IMO 2020 implementation,” said Fjermestad and Jarlsby.
“This is in our view the biggest change in shipping since the China boom- and the single hull phase out in the early 2000’s.
“The implications will become evident already this summer as fuel trade patterns shifts whilst vessels exists the market either for scrubber installation, tank cleaning or simply scrapping due to being obsolete in the new fuel environment.”
The analysts added: “Clearly there are fortunes to be made in shipping in 2019.
“Within our coverage universe most equities trade well below intrinsic values, some as much as 50 cents on the dollar.
“Earnings are definitely supporting higher valuation as well, with for example fourth quarter levels for tankers, gas and dry bulk all at or above levels required for a 10% return on a newbuilding.”
The $4.7bn raised from the bond market, was down by one quarter on 2017 levels. Chembulk, Navigator Holdings and MPC Container Ships were among the owners to raise money here.
