Lighthouse Navigation taking it to the next level

This was the quarter full of records and all-time highs for Belships and while we could have expected strong Own Ships performance in advance, tremendous figures from Lighthouse Navigation put the cherry on top. Strong results led to NOK 0.4/sh dividends, doubling our predictions. Very solid outlook remains as well, rates are breaching the ceiling almost every day, signalling that it is far from over, thus Buy is reiterated for the stock at NOK 17/sh TP (NOK 16/sh previously)

What a performance from Lighthouse Navigation

Seeing the extreme Supramax rates, but keeping the lag in mind, we projected almost USD 30m in operating income for the ships and USD 19m in EBITDA, but the results beat our expectations and came in at USD 32.6m and USD 22.7m respectively. The lag from rates to revenues is still there, also meaning that when the spot markets fall, the outperformance should commence. However, this story is far from over, as the Supramax rates are continuously growing, above USD 35k/d at the moment, while the preliminary estimates for Supramax shipment volumes in July are showing another all-time record. However, this could have been predicted, but the Lighthouse Navigation – the commercial operations – brought the results to the next level with NOK 14.5m in EBITDA. Such results brought the quarterly dividends to NOK 0.4/sh, in line with the previously stated policy of 50% of the net result.

2/5 vessels of 3Q21 already delivered

To benefit from elevated rates, Belships had planned the delivery of five Ultramax vessels in 3Q21: two have already been delivered in August, one should be delivered in the next two weeks and two more in September, thus, as planned. In addition to this, there will be two newbuilds coming in 4Q21 and 4Q22: Beltokyo and Belyamato (both Ultramaxes), those will replace Belcargo and Belfri (both Supramaxes), which will be sold and delivered to the buyer in end-3Q or 4Q21, thus the total number of operated vessels would remain the same at 27, when all delivered.

Outlook remains strong, estimates slightly upped

The demand growth has been strong across almost all commodities and regions through 2Q21 while we can already see the winter restocking season ahead. The vessel deliveries, on the other hand, are on track to be the lowest since 2007 in number of vessels and in relative terms it is approaching the lowest level in several decades.

As for Lighthouse Navigation segment, it is more volatile and more difficult to predict, but it seems that fabulous 2Q21 figures should not repeat and for 2H21 the company guided around half result of what was achieved in 1H21. Still, our estimates were somewhat increased and we keep Buy recommendation for the stock at a tad higher NOK 17/sh Target Price.
Source: Norne Research