Innovative shipowner Klaveness Combination Carriers (KCC) has been tipped to enjoy the best of both worlds through vessels that can trade in dry bulk and tanker cargoes.
Fearnley Securities has started coverage of the Oslo-listed owner with a “strong buy” rating on its stock.
The analysts’ target price is NOK 100 ($9.59) per share, against NOK 72.60 in Oslo on Tuesday, up more than 3% from the close.
The vessel’s ability to switch between dry and wet cargo not only limits ballast days, but it also leaves KCC with the optionality to continuously play the best market at any given time, analysts Fredrik Dybwad and Oystein Vaagen said.
And both wet and dry markets have a solid outlook, they added.
“Strong clean product and dry bulk market fundamentals coupled with historically low orderbooks provide visibility and support for strong fundamentals for years to come,” the analysts said.
The vessels can take laden voyages in both directions, effectively more than halving the number of ballast days.
This also means effective earnings days are drastically higher, Fearnley Securities said.
There is also the flexibility to cushion a fall in rates in one market or the other.
The analysts point to the orderbook for panamax/kamsarmax ships as standing at 8% of the fleet, with 4.2% scheduled for delivery this year and 3.3% in 2024.
Longer trade lanes here to stay
China reopening post-Covid has added significant demand and forward freight agreements (FFAs) have already begun to firm, they added.
Solid demand fundamentals coupled with low orderbooks provide visibility through 2025, the analysts said.
On the product tanker side, the total orderbook stands at 7% of the fleet, with deliveries mainly hitting the water in 2023 and 2024.
Sanctions have created new and longer trade lanes, and these are here to stay, Fearnley Securities believes.
The investment bank is estimating KCC’s earnings per share at between NOK 16 to 18 ($1.72) for 2023 and 2024, against $1.16 in 2022.
