Scorpio Group-backed wind power player Eneti continued to gain ground with investors on Thursday after buying back 5.9% of its outstanding shares on Tuesday.
The $17m splash for roughly 2.3m shares announced on Tuesday sent the stock up more than 15% during the day, followed by a further 4% gain in morning trading on Wednesday.
Eneti’s buy took out the remaining position of Innovation Network Corp of Japan (INCJ), a state-backed Japanese fund that had been paid in shares when Eneti acquired the operations of wind-power company Seajacks in 2021.
New York-listed Eneti was formerly known as Scorpio Bulkers before it shifted gears in August 2020, electing to sell its entire dry fleet piecemeal to transition to an owner of wind turbine installation vessels (WTIVs).
Its buyback initiative this week drew strong support from Clarksons Securities analyst Turner Holm, who said the company’s net asset value (NAV) immediately improves by about $0.50 per share.
Even after Tuesday’s strong close at $8.37 per share, Eneti was still trading at a 57% discount to NAV, Holm told clients in a research note.
“The deal is both accretive to NAV while also providing another powerful signal that the company intends to close the valuation gap by optimizing the balance sheet and fleet,” Holm wrote.
The discount presents “a rare opportunity”, Holm said as he raised Eneti’s price target from $12 to $16 per share, or about level with NAV.
The analyst referenced other recent actions by management of the Emanuele Lauro-led company, including the sale of a legacy shareholding in sister listing Scorpio Tankers for $83m in August, and Eneti's announcement that it will sell three non-core vessels.
“Given recent actions, the discount to NAV looks increasingly unjustified,” Holm argued.
Eneti raised its profile in the wind game with the $600m acquisition of Seajacks in August 2021.
UK-based Seajacks was owned by three Japanese entities: 50% by Marubeni, 45% by INCJ and 5% by Mitsui OSK Lines .
Eneti paid for the acquisition with 8.13m shares, $299m of assumed net debt, $74m of newly issued redeemable notes and $12m of cash. The shares include 7.4m common shares and 700,000 preferential shares.
“INCJ had been gradually reducing its holding in the market, so the ‘cleanup’ of the INCJ block could lessen daily selling pressure in the stock,” Clarksons Securities told clients.
Eneti has traded between a 52-week high of $18.69 reached last August and a low of $4.81 seen in July.
