Ahead of the Chinese New Year, Cleaves Securities with a new head of research, has published a 246-page report on the markets with a bullish tone on tankers in particular. The report was helmed by Joakim Hannisdahl who joined the investment bank last October when his company, Gersemi Research, was bought out.
Crude tankers were picked as the best performer for 2019 with Cleaves suggesting the cyclical expansion for this sector has only just begun. Five-year-old VLCCs should appreciate in price by 44% by the end of next year with Oslo-listed Okeanis Eco Tankers from Greece the top pick among listed tanker entities.
VLCC earnings are set to average $29,000 a day this year, Cleaves predicted, up 88% year-on-year, suezmaxes to average $21,000, up 30%, and MRs to hold steady on $12,000, up 37% over 2018’s average performance.
On dry bulk, the report suggested capes could see one-year time charters jump by 53% over the next two years with a concurrent 32% vessel asset appreciation. The tpop pick by Cleaves among listed bulker concerns was Genco.
On LNG, while Cleaves remained bullish the report admitted concern at the flurry of orders seen late last year which could bring the market down by the end of 2020. The top pick was Flex LNG. The sector was the most advanced along the cycle of the sectors covered by Cleaves (see graph below).
For LPG, following share slumps this sector offers an attractive entry point for opportunistic investors, Cleaves suggested, with three-year-old VLGCs forecast to appreciate in price by 31% by the end of 2020. The top pick for this sector was Singapore’s BW LPG.
Commenting on the report, Hannisdahl told Splash: “With oil tanker spot earnings booming this winter market and a consequential rise in vessel values, share prices have yet to respond accordingly. Factoring in the recent rise in FFAs and time charter rates, the market sentiment has undoubtedly turned positive during the last six months. We believe oil tanker shares offer the highest return in shipping, and highlight DHT and Okeanis Eco Tankers as our top picks in the segment.”