An IPO of Hafnia Tankers in 2015 is a potential price trigger in the Danish product tanker carrier ahead of a beginning recovery in 2015 and 2016, says Norwegian Pareto Securities in a comment on Hafnia's 2014 annual report, released Tuesday.
Hafnia Tankers is currently only listed on the OTC list in Oslo, where trade is very limited or even non-existent because there are no sellers of the share, just as the current share price, for similar reasons, supposedly does not reflect the actual market value of the company.
According to Pareto Securities, which along with Danske Bank Markets and American Global Hunter Securities has initiated coverage of Hafnia Tankers from the beginning of 2015, the share in Hafnia currently trades significantly below the net asset value (NAV) - and with a potential IPO as a trigger this year, as well as an experienced organization, Hafnia is well positioned in an improved product tanker market, notes Pareto.
The Norwegian broker house recently rated the share 'buy' at a price of USD 10.7 per share - the same level as Global Hunter Securities, which corresponds to a price potential of about 47 percent.
The share in Hafnia Tankers trades at a "theoretical" USD 6.7 per share today.
Hafnia Tankers made an operating profit of USD 11 million in 2014, compared to USD 10.7 million in the previous year. The net result came to USD 2.3 million, compared to a profit in 2013 of USD 8.6 million.
The annual report does not include numbers for the fourth quarter, where earnings in product tanker for MR vessels grew by more than 100 percent, but Pareto estimates that Hafnia, in the last three months of the year, achieved operational results, (EBITDA), of USD 15.2 million.
Hafnia does not release TCE numbers either, but Pareto estimates that Hafnia achieved an average profit for the company's own vessels of USD 16,900 per day. In that case, the numbers would be better than what several other product tanker carriers have released. However the comparison of TCE numbers should be applied very cautiously in an evaluation of the companies' capability to earn money.
Danske Bank Markets also sees a potential IPO of Hafnia Tankers as a price trigger, and the bank rates the share at "buy" with a target price of USD 11.4 over the next 12 months, which corresponds to a potential upside of 69 percent under the condition of an IPO on one of the large exchanges.
Danske Bank Markets has rated Hafnia Tankers' current market value at USD 337 million, primarily compared to the current rate on the OTC, while the NAV of the company presumably is between USD 500-550 million.
What the three assessments of Hafnia Tankers have in common is - besides expectations of an improved product tanker market in 2015 and 2016 - newer and larger refineries in for example the Middle East and Asia, longer distances, higher ship values and Hafnia's exposure in the spot market for Handy and MR vessels as well as six large LR1 ships.
Meanwhile, Pareto and Danske Bank Markets point to the executives' level of experience and results over the years at Torm, just as Pareto notes that Hafnia's organization with the operational in-house platform Hafnia Management counts around 30 experienced former employees of companies such as Maersk, Torm, J.Lauritzen, Trafigura and Norden.
Backing Hafnia Tankers are British Barclays, the equity funds Blackstone and Tufton Oceanic, as well as smaller shareholders such as J.Lauritzen and others.
Mikael Skov, CEO of Hafnia Tankers, declines to comment on the speculations of a potential IPO of the company.
The OTC list (Over The Counter) counts a number of shipping companies, such as Navig8 Chemical Tankers Inc, Navig8 Crude Tankers Inc and Navig8 Product Tankers Inc, as well as companies controlled by the Norwegian shipowner John Fredriksen, including Frontline 2012.