Oslo-listed chemical tanker owner Stolt-Nielsen is heading for a second quarter loss, but prospects are good long-term.
This is according to Norway's Norne Securities, which is expecting the full effect of coronavirus lockdowns to be reflected in the results, due to the reporting period of March to May falling slap-bang in the middle of the peak of the crisis.
"While the first quarter figures had very little impact from Covid-19 and were hit by other mostly one-offs, the company must have experienced the worst of the virus in Q2," said analyst Mindaugas Cekanavicius.
"We anticipate the Covid-19 impact to be harsher and forecast Ebitda to land at a $87m level, Ebit to be at around $17m and the net results way in the negative territory."
He is predicting a larger hit to all its operations.
Delays to tanker operations are said to be minimal, however, with significantly weaker results expected at the tank containers and fish farm divisions.
The result from its terminals is expected to be stable.
"Nevertheless, the future looks bright for the company and the chemical tanker segment overall, with even decreased demand growth surpassing the vessel supply growth expectations," Cekanavicius added.
Still a 'buy'
Norne has reiterated its buy rating and said the stock still seems undervalued at the current level of NOK 81.40 ($8.37).
It has a target price of NOK 110 on the shares.
Stolt had previously said it was hoping for the best but preparing for the worst.
In addition to an already low vessel orderbook, the pandemic caused more delays and uncertainty, while owners are considering scrapping ships because of investments needed because of new fuel regulations, the analyst said.
Cekanavicius added: "Therefore, despite a challenging ongoing period, we anticipate the situation to improve."
Stolt-Nielsen is due to report earnings next Thursday.
The net loss in the three months to 29 February was $20.2m, against a $6.6m profit in the same period of 2019.
Revenue dipped to $499m, from $502m, and it was hit by higher costs and depreciation.
