A bigger than expected dividend announced by Okeanis Eco Tankers (OET) on Friday could be the last for some time as tanker markets head south.
This is according to Norwegian investment bank Cleaves Securities, whose head of research Joakim Hannisdahl called the dividend "very handsome" at $0.75 for the second quarter.
"We had expected the company to be conservative and pay out only 50% due to current market conditions. We forecast this to be the last dividend declared before the 4Q21 report," he said.
Fearnley Securities said the payout represents nearly 70% of earnings.
"We had expected a more modest number," analysts Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart said
Its estimate was for 20 cents, with the consensus at 25 cents.
More room to manoeuvre
"But with most of OET’s spot vessels being cash generative plus the added charter coverage on the two suezmax newbuildings, the liquidity manoeuvrability is greatly improved."
It is expecting earnings per share of around 50 cents in the third quarter, based on ship bookings and current spot rates.
Cleaves has nudged up its target price on the stock to NOK 34 ($3.81), from NOK 31 previously. It was trading up nearly 5% at NOK 67 in Oslo on Friday.
It is however reiterating its sell rating ahead of expected unfavourable market conditions until the middle of 2021.
Cleaves said Ebitda of $57m compared with OET's earlier guidance of $53-$54m, while net profit of $37m was far above guidance at $33-$34m.
"Noteworthy in the quarter was the increase in general and administrative [expenses] from $1,034 per fleet day in 1Q20 and $1,434 in 2Q19 to $2,497 for 2Q20 'due to the disbursement of bonuses to office and seafaring staff'," Hannisdahl added.
Guidance for the third quarter was also above Cleaves' forecast, adding NOK 1.5 per share.
Earnings to rise to end of 2020
The investment bank is forecasting tanker earnings to rise 20% on average by the fourth quarter of 2020, in concert with increasing OPEC+ production and the seasonal strong period from October to January.
But these factors will be offset by partly easing discharge delays in the Far East.
"We do however believe this respite will only be temporary, and see another 12% downside to asset prices and minus 30% to our oil tanker share index before the potential cyclical inflection point in mid-2021," Hannisdahl said.
"Okeanis is one of the most investor friendly companies within our coverage, with a clear dividend policy and intention of divesting assets from January 2021 if trading significantly below net asset value (NAV)."
Hannisdahl added: "Still, high financial leverage leaves NAV highly elastic towards falling asset prices."
OET's revenue from the 17 ships was up at $81m from $19.5m, and first-half profit was $78.2m.
The company said it beat its previous forecasts due to higher than expected profit share.
