Very solid reported figures, but weakish future

Stolt-Nielsen posted its 4Q (September-November) report last week with the results beating our and the consensus expectations, but with a cautious view ahead. Daily average TCE earnings in 1Q25 are guided to fall 7.5%-10%, partially offset by increasing fleet and we estimate a midpoint of a drop. The situation in the Red Sea also seems to be stabilizing, which would result in somewhat lower rates, thus, with some negative adjustments to our estimates we lower the Target Price for the stock to NOK 410/sh, but reiterate Buy as the upside remains substantial.

Once again, very similar figures QoQ reported

Tanker markets remained favourable in September-November last year and this led to Stolt-Nielsen beating our and consensus expectations. Average TCE earnings for 4Q24 were USD 30,185/d, although somewhat lower QoQ but still at elevated level. Both we and the street were looking at EBIT to land at around USD 120m, while it was reported at USD 130m+, which should be viewed very positively in the uncertain times and might lead to another portion of solid dividends.

Outlook: drop in rates expected

Further decline in the daily average TCE earnings are guided for 1Q25 of between 7.5%-10%. The acquisition of the remaining 50% of the Hassel Shipping 4 joint venture would partially offset this impact by bringing 8 ships to the balance sheet. Geopolitical reasons were said to be closely watched, including the recent Red Sea development, which, in our view, should put a further pressure on the shipping sector. Fleet sanctions, potential tariffs could also impact trade flows, volumes and freight rates in either direction. Terminals are guided to remain stable, Tank Containers more volatile, while the Sea Farm had a strong performance in the pre-Christmas season but should encounter sluggish first months of the new year.

Rate reduction should be offset by growing fleet

Stolt-Nielsen announced that it has entered into a share purchase agreement to acquire all the shares of Avenir LNG Limited owned by Golar LNG Limited and Aequitas Limited for USD 79.6m. This is included in the CapEx guidance which we also use in our model. Overall, we see the situation as a reduction in rates covered by growing fleet in the upcoming years and keep Buy at a lower NOK 410/sh Target Price.
Source: Norne Research