Odfjell shares rallied following news of its “blow-out” first quarter.
The Norwegian chemical tanker owner’s series A shares jumped NOK 16.80 ($1.54) to NOK 191.60 in midday trading on Wednesday after the reporting of a record $67.8m profit late on Tuesday and a bullish conference call from chief executive Harald Fotland in the morning.
“Notably, the report provides a rare instance of bullishness from the CEO (who’s normally conservative in wording),” Fearnley Securities analyst Fredrik Dybwad said, adding that chemical tanker spot and one-year time charter rates are up recently.
“Hence, the current rate environment is supportive of equity pricing in the sector.”
Dybwad said the performance — in which revenue hit $195m and time charter equivalent rates $33,005 per day despite volume falling by 200,000 tonnes —would lead to positive revisions.
He has a hold rating on the stock and a target price of NOK 155.
Norne’s Mindaugas Cekanavicius said the results beat his and consensus expectations.
He said last week that flat freight rates indicated the chemical tanker rally could be running out of steam, though he still expected the sector to be strong.
Cekanavicius said the 14% jump in rates with 22% of contracts renewed was a positive sign, even if he still expects a dip longer-term.
“This just adds to a promising short-term outlook — the issues in the Red Sea do not seem to end any time soon, the full normalisation in Panama this year seems unlikely, the product tanker market continues to show strength with the swing capacity not returning to chemical market,” he said.
During the call, Fotland said the performance came amid tightening in the market, as vessels leave the Red Sea to dodge attacks by Houthi militants.
But that tightening was not as extensive as the company had expected.
“The decrease has been less than what we anticipated when we started to reroute vessels away from the Gulf of Aden and the Suez Canal,” he said.
“That takes away 6%, 7% of the total capacity. But we haven’t seen that high a reduction in total volumes lifted. That indicates that we have become even better in using the capacity of our ships.”
The company’s terminal segment brought in $21.8m in revenue and $2.9m in profit as its Antwerp facility was sold out during the quarter and occupancy at its Ulsan terminal grew.
