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

<ul>
<li>The dry bulk segment registered a net profit of USD 37.4m in the first three quarters of 2018, while the tanker segment incurred a loss of USD 27.9m in the same period. The loss is propelled by both a decline in TCE revenues and hike in operating costs.</li>
<li> We expect the company to earn an operating loss of USD 11.8m from the chartering business  in 2019.</li>
<li>At the end of 3Q18, the outstanding bank debt amounted to USD 233m, while the cash balance amounted to USD 160.6m. The net debt to market adjusted fleet value ratio is very comfortable at 9%.</li>
<li>Factoring in company-specific and market-specific issues, we have applied a 10% discount to fleet market values and have downgraded the NAV per share of the stock from DKK 130 to DKK 115. The rating continues to be Attractive as we are upbeat on the dry bulk segment.</li>
</ul><figure class="editor-figure mceNonEditable"><img class="editor-image img-responsive" src="https://static-prod.smartkarma.com/images/media/000/080/212/original/DS%20Nord_valuation%20overview.PNG?1551177841" data-smartkarma-image-id="80212"></figure><div class="content-caption">Valuation overview</div>Source: S&amp;P Capital IQ, Drewry


The dry bulk segment registered a net profit of USD 37.4m in the first three quarters of 2018, while the tanker segment incurred a loss of USD 27.9m in the same period. The loss is propelled by both a decline in TCE revenues and hike in operating costs.
 We expect the company to earn an operating loss of USD 11.8m from the chartering business  in 2019.
At the end of 3Q18, the outstanding bank debt amounted to USD 233m, while the cash balance amounted to USD 160.6m. The net debt to market adjusted fleet value ratio is very comfortable at 9%.
Factoring in company-specific and market-specific issues, we have applied a 10% discount to fleet market values and have downgraded the NAV per share of the stock from DKK 130 to DKK 115. The rating continues to be Attractive as we are upbeat on the dry bulk segment.
Valuation overviewSource: S&amp;P Capital IQ, Drewry

DS Norden (CPSE:DNORD): Risk Upgraded as Tankers Erode Earnings

Lead Analyst, Drewry Maritime Financial Research

Victoria Saraglis

Lead Analyst

<ul>
<li>Earnings in the dry bulk segment remained strong on the back of robust trade of coal and minor bulk commodities. However, the story was very different for the tanker segment, where earnings went well into the negative territory with a negative margin of USD 10.2m in the second quarter of 2018. Although still positive, net profit contracted to USD 0.8m in the second quarter of 2018, much below the USD 18m in the first quarter of 2018.</li>
<li>Having opted to install scrubbers in its fleet, D/S Norden secured installation of 26 scrubbers with options for 5 more in 2018.</li>
<li>Amid lingering weakness in the product tanker market, the company lowered its adjusted result expectations for 2018 from USD 10-50m to USD 0-30m. The announcement created a negative impact on the stock price, which is trading at DKK 93.50 – close to its one-year low.</li>
</ul>


Earnings in the dry bulk segment remained strong on the back of robust trade of coal and minor bulk commodities. However, the story was very different for the tanker segment, where earnings went well into the negative territory with a negative margin of USD 10.2m in the second quarter of 2018. Although still positive, net profit contracted to USD 0.8m in the second quarter of 2018, much below the USD 18m in the first quarter of 2018.
Having opted to install scrubbers in its fleet, D/S Norden secured installation of 26 scrubbers with options for 5 more in 2018.
Amid lingering weakness in the product tanker market, the company lowered its adjusted result expectations for 2018 from USD 10-50m to USD 0-30m. The announcement created a negative impact on the stock price, which is trading at DKK 93.50 – close to its one-year low.


Tanker Earnings Weigh Down on Overall Picture

Earnings dip quarter-on-quarter, but stay well above levels reported in the same quarter last year; Tanker business manages to break-even: The dry bulk cargo segment contributed a net profit of USD 18m and an adjusted net profit of USD 8.8m in the first-quarter 2018, compared with a net loss of USD 9.4m in the first-quarter of 2017. Earnings in the dry bulk segment remained strong on the back of robust trade of coal and minor bulk commodities. On the other hand, the tanker business was off to a…

Earnings dip quarter-on-quarter, but stay well above levels reported in the same quarter last year; Tanker business manages to break-even: The dry bulk cargo segment contributed a net profit of USD 18m and an adjusted net profit of USD 8.8m in the first-quarter 2018, compared with a net loss of USD 9.4m in the first-quarter of 2017. Earnings in the dry bulk segment remained strong on the back of robust trade of coal and minor bulk commodities. On the other hand, the tanker business was off to a…

Can Dry-Bulk Earnings Offset the Losses from the Tanker Segment?

Panamax/Supramax rates could outperform larger vessels: In 2017 so far, the Capesize segment has led the rally backed by a strong recovery in steel production and iron-ore imports by China. However, in view of the steel production cuts announced by the Chinese government during the fourth quarter, we expect Panamaxes and Supramaxes to lead the next leg of the rally in freight rates. Rates for these vessels will benefit from robust thermal coal imports by China and India in the fourth quarter…

Panamax/Supramax rates could outperform larger vessels: In 2017 so far, the Capesize segment has led the rally backed by a strong recovery in steel production and iron-ore imports by China. However, in view of the steel production cuts announced by the Chinese government during the fourth quarter, we expect Panamaxes and Supramaxes to lead the next leg of the rally in freight rates. Rates for these vessels will benefit from robust thermal coal imports by China and India in the fourth quarter…

DMFR – D/S NORDEN (DNORD) – Company Update – Product Tankers to Join the Dry Bulk Bandwagon?

D/S Norden (DNORD DC, Neutral, DKK 130)–1Q17 Results-Improvement in Dry Bulk Market Not Capitalised<ul><li>
Earnings return to the black assisted by sporadic increase in tanker earnings:D/S NORDEN’s (DNORD) reported TCE revenue of USD 211m in 1Q17, an increase of 12% q/q from USD 189m in 4Q16. The dry bulk segment contributed USD 158m (aided by an increase in vessel days) and the remaining USD 53m came from the tanker segment. The company returned to profit with adjusted net income of USD 0.9m compared…</li></ul>

D/S Norden (DNORD DC, Neutral, DKK 130)–1Q17 Results-Improvement in Dry Bulk Market Not Capitalised
Earnings return to the black assisted by sporadic increase in tanker earnings:D/S NORDEN’s (DNORD) reported TCE revenue of USD 211m in 1Q17, an increase of 12% q/q from USD 189m in 4Q16. The dry bulk segment contributed USD 158m (aided by an increase in vessel days) and the remaining USD 53m came from the tanker segment. The company returned to profit with adjusted net income of USD 0.9m compared…

D/S Norden (DNORD DC, Neutral, DKK 130)–1Q17 Results-Improvement in Dry Bulk Market Not Capitalised

Denmark

D/S Norden A/S is an international shipping company.  The Company operates a fleet of modern bulk vessels and tankers consisting of company owned vessels and long-term and short-term chartered cargo ships.  D/S Norden transports commodities such as coal, fertilizer, grain, sugar, and steels, as well as crude oil and other liquids.  The Company operates worldwide.

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D/S Norden (DNORD DC)

DS Norden (CPSE:DNORD): Risk Upgraded as Tankers Erode Earnings

The dry bulk segment registered a net profit of USD 37.4m in the first three quarters of 2018, while the tanker segment incurred a loss of USD...

Drewry Maritime Financial Research

Tanker Earnings Weigh Down on Overall Picture

Earnings in the dry bulk segment remained strong on the back of robust trade of coal and minor bulk commodities. However, the story was very...

Drewry Maritime Financial Research

Can Dry-Bulk Earnings Offset the Losses from the Tanker Segment?

Earnings dip quarter-on-quarter, but stay well above levels reported in the same quarter last year; Tanker business manages to break-even: The dry...

Drewry Maritime Financial Research

DMFR – D/S NORDEN (DNORD) – Company Update – Product Tankers to Join the Dry Bulk Bandwagon?

Panamax/Supramax rates could outperform larger vessels: In 2017 so far, the Capesize segment has led the rally backed by a strong recovery in steel...

Drewry Maritime Financial Research

D/S Norden (DNORD DC, Neutral, DKK 130)–1Q17 Results-Improvement in Dry Bulk Market Not Capitalised

D/S Norden (DNORD DC, Neutral, DKK 130)–1Q17 Results-Improvement in Dry Bulk Market Not Capitalised Earnings return to the black assisted by...

Drewry Maritime Financial Research

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