Odfjell reports 3Q23 results next Thursday. Figures are guided seasonally lower QoQ. Yet, we find even more reaction for the stock price after the main competitor’s result announcements, just like this time when Odfjell’s share rode the positive wave created by Stolt-Nielsen’s promising outlook. Thus, even with the significantly increased Target Price to NOK 125/sh from NOK 105/sh we stick to Hold recommendation as the upside seems limited after the stock basically doubling over the last year.

Summer months are usually slower

We anticipate solid results to be released by the company, yet, seasonally weaker, just as guided. The summer months are usually slower and the company expects TCE results to be marginally below 2Q23, but stable Terminals. Both we and consensus predict EBITDA above USD 100m, albeit lower than USD 50m net profit.

Future expectations boosted by SNI

Odfjell has previously communicated that the future is unclear with possibly switching swing tonnage competitors and disappointing Chinese economic activity lowering the demand for chemicals. On the other hand, the orderbook remains historically low for chemical tankers while we found much more optimistic rhetoric in Stolt-Nielsen’s report couple of weeks ago, naming swing tonnage to remain limited and rates picking up after a recent weakness.

Increased estimates and TP, Hold reiterated

We increased our estimates going forward somewhat and this, together with Peer valuation, led to higher NOK 125/sh Target Price. However, we believe that if the company repeats similar positive messages like Stolt-Nielsen, the share reaction should be minimal with those being already priced-in. With limited upside we stick to Hold recommendation.
Source: Norne Research