Stolt-Nielsen reported second-highest EBITDA figure in the company’s history on October 5th, although this was just as we expected. Strong results were overshadowed by the positive outlook, as previously the company had been a bit more cautious towards the future. With a clearer guidance promised with 4Q results, we increased our estimates somewhat and reiterate Buy at NOK 430/sh (NOK 400/sh previously) Target Price.
Udo Lange taking the lead at a very favourable period
A new CEO Udo Lange with an extensive background became the first non-family CEO of Stolt-Nielsen in 60 years. And he did come to the company at the very top, as he said himself, to a “fantastic company”. Results tend to agree with him, although very much in line with what we expected. The spot market for the tankers came off the peak early in the quarter but has stabilized. Stolthaven Terminals continues to enjoy high utilisation, which has allowed for renewed contracts at higher rates. Tank Containers managed to increase shipment volumes, though at lower margins and Sea Farm benefited from seasonally strong demand in the summer months with prices reaching new record highs.
Positive outlook
While the chemical industry experienced declines in output during late 2022-1H23, the company expects this negative trend to reverse. It was communicated that the pickup in rates was already experienced in September, while the company guides a sailed-in revenues to increase by 1-3% in 4Q23. More thorough guidance for 2024 was promised later, likely with 4Q report. Overall, the chemical tanker segment remains to be supported by historically low orderbook and limited swing tonnage.
Liquid logistics leader
As the IPO market was said to be soft, the IPO of Stolt Tankers is unlikely in foreseeable future and we should value the company not as the “tanker company” only, but a liquid logistics leader. Agreeing with this, we increased our estimates going forward and reiterate Buy under a higher NOK 430/sh Target Price.
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Source: Norne Research