Belships: Supramax rates breaching USD 30k/d

It is said that everything that you have done previously leads you to this present moment in life. All Belships’ decisions after a hundred-year anniversary, that reshaped the company, lead it to this period where the fruits of bold decisions can finally be bore. Five new vessels starting operations in 3Q should help the company to benefit from extreme shipping rates, while the recent 1-2 year contracts further bolster the case. We have increased our estimates for the upcoming 2 years significantly seeing the Supramax rates comfortably staying above the USD 30k/d level and reiterate Buy recommendation for the stock under increased NOK 16/sh (NOK 12/sh previously) Target Price.

Supramax rates stand out even from great Drybulk performance

Drybulk rates have been very solid YTD overall, but Supramax rates are extremely high, recently breaching the USD 30,000/d level. Belships should benefit from its Supramax/Ultramax fleet and distinctive cargo (grains, agricultural & minerals mostly), let alone the diverse shipping patterns, being not dependent on a single country like China. The rates are expected to stay in elevated levels at least for the remaining part of this year, while in the longer period, high rates are supported by the historically low orderbook for Supra/Ultramax segment, which is below 5%, the lowest growth in 30 years.

Solid contracts and new vessels coming

Belships has recently purchased an Ultramax bulk carrier built in 2015 for USD 22.9m, making it a number 27 in the expanded fleet. Five of those will be delivered within August and September 2021. Furthermore, five extremely solid contracts were announced: from USD 22k/d to USD 27k/d for the next one to two years.

Quarterly dividends should not be forgotten

Belships aims to distribute quarterly cash dividends targeting about 50% of net result adjusted for non-recurring items. Commencement and first payout expected to occur after 2Q21. Following our increased estimates, the next year’s dividend yield might breach 10%, while the overall levels are solid.

We still see the solid upside for the stock in this strong environment for the Supra/Ultramaxes and reiterate Buy recommendation for the share with increased estimates and the target price.
Source: Norne Research