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Stolt-Nielsen: Going for a three-peat

Stolt-Nielsen posts its 4Q (September-November) report next Thursday. After two consecutive very solid quarters, we anticipate the company not to take a pause and continue with very strong figures. The fourth quarter is usually the contract renewal period, and we think the inflationary environment has adjusted the figures in favour of Stolt-Nielsen. We also note the increased interim dividend and expect this level to be reiterated not only for 2022. Overall, Buy is reiterated under a symbolic NOK 300/sh Target Price.

Tankers should shine in 4Q report

We expect no less than similar figures to 2Q and 3Q to be reported by Stolt-Nielsen in the company’s 4Q results announcement next Thursday. Although this is a seasonally weaker quarter for Sea Farm and Tank Containers, we anticipate the main Tanker segment to stay on top for yet another quarter. We project it to deliver strong enough results to bring the total level to a record territory even having in mind that 4Q holds less shipping days than 3Q.

4Q is a contract renewing period

Stolt-Nielsen should benefit from strong momentum and high chemical tanker rates, as 4Q is the usual period for contract renewing. The updated terms should, in our view, reflect the inflationary environment and end up with the higher rates signed.

Interim dividend of USD 1/sh proposed

Dividends are usually paid twice a year by the company, following 3Q and 4Q. After 3Q22 Stolt-Nielsen increased dividends to USD 1/sh from the previous USD 0.5/sh level and we anticipate this to be maintained not only for 4Q22, but in the upcoming few years as well indicating around 8% yield.

Buy reiterated

We still see chemical volumes being resilient to economic downturns and a very limited fleet growth. Thus, Buy for the stock is reiterated under a symbolic NOK 300/sh Target Price.

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Source: Norne Research

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