In a note, Norne Research said; “We see a continuous struggle in chemical tanker rates that are now testing the lowest bounds in the post-crisis period and expect this to be reflected in the results.”
The mid-reporting season was rather slow with no updated information on the separation of tanker segment, which led to a share price rally instead of the addition of two gas vessels by the end of 2018.
“Our estimates were lowered somewhat and we reiterate ‘Hold’ recommendation at a lower TP of NOK130 per share from NOK145 per share,” the analyst said.
“We anticipate seasonally stronger figures quarter on quarter,, plus three new vessels were scheduled to start operations in 2Q17, however, we see the negative effect of rather low rates somewhat offsetting the fleet improvement.
“Overall, revenues including JVs are expected to slightly overstep the $500 mill bar ($496 mill excluding JVs), while guided general expenses and depreciation lead us to $54 mill EBIT expectations,” Norne said.
SNI said during the last presentation that 2018 was expected to become the recovery year, while 2017 was seen as the year rates bottomed out together with fleet expansion. Three new vessels have joined the fleet, while there are four more to come in 2017 and one in 1Q18. Furthermore, the company announced a contract with a Chinese yard to build two 7,500 cu m LNGCs with options to purchase an additional three. They are valued at $80 mill with deliveries scheduled in 2Q19 and 3Q19, respectively.
The Board has approved the tanker segment split, but there is no rush to proceed with an IPO, especially if SNI fails to find a partner.