Stolt-Nielsen posts its 3Q (June-August) report next Wednesday and both we and consensus predict very solid figures from the company following the previous guidance. Somewhat stronger NOK and reduced value of the stocks owned led to a lower TP of NOK 480/sh, but the stock continued to decline during the quarter and with the continuous upside seen we reiterate Buy recommendation.
Remaining steady at the top should be valued positively
Stolt-Nielsen is again the early bird in the reporting season closing the quarter on the last day of summer. Both we and consensus follow the company’s previously announced guidance and estimate very solid figures to be reported with around NOK 220m EBITDA and NOK 140-145m EBIT. Stolt-Nielsen guided the average TCE earnings to increase by 2-4% in 3Q24 so we estimate a middle number of +3%. In its 1Q presentation SNI also mentioned that the Terminals should have a short need of freeing up the tanks to accommodate new business, which will impact the results negatively in the short term but is anticipated to improve performance in the long run. In the same long run, we might see the Tank Containers gaining from the new Chinese stimulus and possibly improved exports.
We think that being green pays off eventually
There were two announcements from the company recently regarding the sustainability. One of the barges, Stolt Main, bunkered 100% renewable fuel for the first time. The fuel, HVO100, is the purest form of hydrotreated vegetable oil. For more than three years, Stolt Main – and several other Stolt Tankers vessels – has been successfully running on HVO20, which is a 20:80 blend of HVO. Now, by switching to HVO100 it will reduce its CO2 emissions by approximately 90%. Furthermore, Stolthaven Terminals, in co-operation with Global Energy Storage, has been selected as the only ‘potential operator’ to plan, design, build and operate a green ammonia terminal in Pecém, in the State of Ceará, Brazil with more details to be announced later. Although both these news would not directly translate into revenues, but should definitely pay off in the future. In the meantime, we see the stock dropping and keep the Buy recomendation unchanged ahead of projected solid results. TP was reduced mostly due to FX moves and owned share value in SOTP.
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Source: Norne Research