Norway’s Klaveness Combination Carriers (KCC) is “solidifying its solid distribution potential” as it is “set to report another quarter of strong earnings”, according to DNB.
KCC’s target price was raised to NOK 127 ($12) from NOK 100. The bank maintained a “buy” recommendation.
The shares rose as much as 3.7% to NOK 112 in early Monday trading on Oslo Stock Exchange.
“We believe tanker market fundamentals facilitate a multi-year upcycle even if Red Sea tensions ease,” analyst Jorgen Lian said in a note.
“Product tanker rates were trending above historical averages before the Red Sea diversions, but have risen to exceptional levels as already-high utilisation coincides with continued volume displacements, waterway disruption and vessel diversions in light of rising oil demand, limited fleet deliveries and high renewal requirements.”
DNB said “healthy” dry bulk rates will also strengthen earnings but still expects the 17% earnings yield the bank forecasts for the next four quarters “to be driven by strong tanker trading, helped by 2024 caustic soda contract renewals”.
KCC pre-announced fourth-quarter time charter equivalent earnings in January. The fleet average TCE earnings were $36,823 per day — about $3,050 above the mid-point in the company’s guidance range.
DNB said the pre-announced earnings imply an Ebitda of $37.4m and a dividend per share of $0.29.
“With Q4 largely pre-announced, we believe focus will be on Q1 fixtures, given recent strong product tanker rates and healthy dry bulk earnings,” Lian said.
DNB forecast first-quarter Ebitda of $44.4m, which is 10% above consensus.
KCC will report full results on 16 February.
