Stolt-Nielsen: Share jumped in mid-season, but the upside remains solid

Stolt-Nielsen begins OSE 3Q reporting season with figures to be released on October 5th. Somewhat softer market conditions were guided, yet, the company had some record-breaking quarters and this cannot last forever. During the mid-reporting season, Stolt-Nielsen issued NOK 1.2bn bond, and more importantly, had a change of CEO and after many years the surname of Stolt-Nielsen is written next to the position no more. We increased the WACC but keep the NOK 400/sh Target Price in our valuation. Buy is reiterated although the upside has reduced over the last couple of months following the strong share price growth.

2H23 guided slower

It was a record adjusted first half of the year for the company with high spot rates and improved contract conditions. The spot market has softened in the meantime and this was guided to happen due to an economic slowdown and fewer imports to China. The company, on the other hand, remains optimistic towards the longer term due to favourable supply/demand balance and the lowest orderbook since ’96. Even in the softer market both, we and consensus anticipate EBITDA of around USD 200m and USD 80m+ bottom line which would be more than solid.

Change of CEO

3Q results will be presented by a new person after more than 20 years. Mr. Niels G. Stolt-Nielsen decided to step down from his role of CEO and will resume as the Chairman. Udo Lange will take his place, very experienced leader, former FedEx segment leader and with a current position in the White House Supply Chain Disruptions Task Force.

NOK 1.2bn bond issued

On September 12th Stolt-Nielsen issued a NOK 1.2bn bond maturing in 2028 @ 3m NIBOR + 315bps and swapped it into USD obligations at a fixed interest rate of 7.8225%. This helped the company to refinance NOK 551m of SNI08 former bond and made us increase the WACC in DCF calculation. Slight overall adjustments to the model did not change our positive stance or NOK 400/sh TP. Buy is reiterated, even though the stock rallied over the last couple of months.

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Source: Norne Research