Norwegian chemical tanker owner Odjfell is “attractively valued”, according to DNB Markets.
The Norwegian bank lifted the target price to NOK 179 from NOK 168 and kept its buy recommendation for the Oslo-listed company.
“The Red Sea disruptions, with chemical tanker transits down [about] 35% since mid-December, and with product tanker rates poised to react as additional rerouting has recently been announced, should provide further upside potential to current rate levels, in our view,” DNB equity research analyst Jorgen Lian said in a note.
DNB view is that Odfjell’s “solid earnings” could last.
The bank said: “In our view, the record-high Chemical Tanker rates, [about] 75% above the 10-year average, supported by a still-low orderbook-to-fleet ratio of [about] 8%, could establish a new normal for rates, and should in tandem with a solid [about] 20% average increase on COA rates renewals LTM result in strong earnings for Odfjell.”
The company will report results for the fourth quarter on 8 February 8.
DNB said its estimate for fourth quarter Ebitda is largely in line with consensus. The bank forecast an Ebitda of $116m, 2% above consensus.
“We expect to see a slight increase in rates [quarter over quarter] for Chemical Tankers, and remain focused on COA renewals’ average rate increases and volumes,” Lian said.
