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Odfjell: No significant differences QoQ anticipated

Odfjell reports its 4Q20 results on February 11th and we do not anticipate large differences in figures QoQ. Odfjell’s main competitor showed solid results backing up the positive situation in the market, while the company itself guided a flat development in 3Q20 presentation. During the quarter Odfjell agreed to acquire LG’s stake of Korean Terminal, but had a temporary pause in Houston Terminal following a quickly extinguished fire in its utility area. Still, we have made limited changes to our estimates prior to the report and keep Buy recommendation and TP of NOK 40/sh intact.

Market still positive for the Chemical Tankers

We do not expect any considerable difference in QoQ numbers following the flattish guidance and seeing the Chemical Tankers still as one of the winners in the time of pandemic. Even if a decline in one cargo type is currently offset by a growth in another, crew changes remain a problem in many countries and this should increase a deviation in costs.

LG’s stake in Korean terminal acquired

Odfjell reached an agreement with Lindsay Goldberg to acquire their 24.5% shareholding in Odfjell Terminals Korea for USD 19m. This would give a 50% control of the Terminal to Odfjell. It was not unexpected, as in our view at least one large terminal in Asia should benefit the company and we anticipate that the remaining terminal China, in Tianjin, will be sold rather soon.

We stick to Buy and an unchanged NOK 40/sh TP

There was an incident in Houston Terminal’s utility area – the fire, which was quickly extinguished, temporarily suspended operations, but only minor negative impact for results is expected. Furthermore, Odfjell successfully completed a new sustainability-linked senior unsecured bond issue of NOK 850m that would allow to repay NOK 700m bond maturing in 1Q21. Overall, we made limited changes to our estimates and stick to Buy recommendation for the stock at an unchanged NOK 40/sh Target Price.
Source: Norne Research

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