Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Equity Bottom-Up

Earnings to expand with recovery in tanker market: Euronav (EURN) has realised spot rate of USD 34,959pd for VLCCs and USD 20,553pd for Suezmaxes in 4Q18 as freight rates improved on major trading routes due to firm seasonal demand. Elevated scrapping activity in 2018 also lead to a sharp surge in freight rates across vessel classes in the latter months of the year. EURN reported TCE revenue of USD 192.9m for 4Q18, which is in line with our estimate of USD 196m. TCE revenue for 4Q18 surged 84% y/y primarily on the back of improved vessel earnings and an expanded fleet after the acquisition of Gener8. TCE revenue is estimated to grow by 54.9% to USD 717.7m in 2019, as a result of the acquisition of Gener8 and improved vessel earnings, whereas EBITDA is expected to surge 117.7% to USD 392.3m. The company is expected to report net income of USD 7.5m in 2019, which would increase further to USD 173.8m in 2021. The pay-out is expected to increase from a minimum of USD 0.12 per share to USD 0.47 in 2021. Accordingly, we maintain our Attractive stance on the company’s stock and assign a fair value of USD 9.75 per share

Earnings to expand with recovery in tanker market: Euronav (EURN) has realised spot rate of USD 34,959pd for VLCCs and USD 20,553pd for Suezmaxes in 4Q18 as freight rates improved on major trading routes due to firm seasonal demand. Elevated scrapping activity in 2018 also lead to a sharp surge in freight rates across vessel classes in the latter months of the year. EURN reported TCE revenue of USD 192.9m for 4Q18, which is in line with our estimate of USD 196m. TCE revenue for 4Q18 surged 84% y/y primarily on the back of improved vessel earnings and an expanded fleet after the acquisition of Gener8. TCE revenue is estimated to grow by 54.9% to USD 717.7m in 2019, as a result of the acquisition of Gener8 and improved vessel earnings, whereas EBITDA is expected to surge 117.7% to USD 392.3m. The company is expected to report net income of USD 7.5m in 2019, which would increase further to USD 173.8m in 2021. The pay-out is expected to increase from a minimum of USD 0.12 per share to USD 0.47 in 2021. Accordingly, we maintain our Attractive stance on the company’s stock and assign a fair value of USD 9.75 per share

Euronav NV - Ready to Reap the Rewards of Gener8 Acquisition