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Stolt-Nielsen: Somewhat slower 1Q21 projected, but the long-term prognosis remains promising

Stolt-Nielsen as usual is the first company to report quarterly results on Oslo Stock Exchange – December-February figures are to be announced this Thursday. First quarter is usually seasonally slower, while the company even used the word “challenging” addressing the Tanker segment. Nevertheless, medium and long-term prognosis remain promising seeing low newbuilding numbers and high activity in other segments. Thus, our Buy recommendation stays with a slightly upped NOK 160/sh Target Price.

1Q21 might be somewhat slower

We might argue that the vaccines against Covid-19 are being delivered too slow and that it is hard to predict the economic situation in 2021, but Stolt-Nielsen has declared in the last presentation to have limited downside by securing contracts across all operating segments. Still, the first quarter is seasonally slower due to Christmas and Chinese NY holidays falling into it. December and January were called “challenging” by Stolt-Nielsen and we also expect to find EBIT below the fifty-million line.

2021 outlook

Stolt-Nielsen supported our view of a promising medium to long-term future for the company in its annual report and provided the 2021 outlook for each of the segments

Stolt Tankers expects an ongoing uplift in the chemical tanker market due to the low number of newbuildings in the coming years. The bunker costs are increasing, but are anticipated to be managed well. The plans for IPO remain but this needs right industry and equity market conditions
Stolt Terminals sees a healthy demand in most regions in 2021 and are currently working on environmental innovations
Tank Containers are opening a new depot in Scotland in mid-21 and a new facility in Singapore some time during 2021 and are expecting to combat margin pressure with cost optimization programes
Sea Farm expects both sole and turbot markets to bounce back in 2H21, while the planning for a possible IPO should continue during the year

As we share the positive view for the chemical tanker segment to finally start showing better results on higher shipping rates in the medium to long-term future, our Buy recommendation for the stock remains at NOK 160/sh TP.
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Source: Norne Securities AS

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