Odfjell – Keeping solid results in a challenging market

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Odfjell posted its 3Q report this morning with all the main figures unchanged QoQ, while we were expecting them to lower a bit due to difficult conditions in chemical tanker market and reducing rates. Details about the sale of Oman terminal and new contracts for super segregators were communicated, however we had them already included in our model. Slower 4Q16 for Chemical Tankers was guided, but only minor changes will be made to our estimates and our positive view will stay.

Odfjell managed to keep all the figures at the same level QoQ
Odfjell posted 3Q16 report this morning. The main figures came just as in the previous quarter, beating our estimates. The company previously guided chemical tanker business to become slower in 3Q and we saw rates going down, but Odfjell managed to keep the segment stable. The main driver for this development was said to be an oversupplied CPP market and continued efficiency gains from project Moneyball.

No additional details on Oman’s terminal sale communicated
As Odfjell previously announced selling its ownership in a terminal in Oman for around USD 130m (51% goes to Odfjell SE), we valued the sale at an attractive EV/EBITDA level of 12 (comparing to EV/EBITDA of 6.5 for the whole company). Odfjell’s CEO was satisfied as well telling that “The sale of the Oman terminal at an attractive valuation shows some of the underlying value in company’s terminal business”.

4Q16 guided slower again for Chemical Tankers; Terminals to stay stable
Odfjell guides a slight reduction in revenues from Chemical Tanker segment in 4Q16 due to a softer market and a stable quarter for Terminals. Following this and having already included Oman’s sale and contracts for new super segregators in our model, we will make only minor changes to our model and our positive view will stay.
Source: Norne Research