Hafnia Limited HAFNIA NO
April 30, 2020 - 11:03am EST by
Biffins
2020 2021
Price: 22.30 EPS 0 0
Shares Out. (in M): 370 P/E 0 0
Market Cap (in $M): 772 P/FCF 0 0
Net Debt (in $M): 1,356 EBIT 0 0
TEV ($): 2,134 TEV/EBIT 0 0

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Description

Hafnia is the world's second largest product tanker company behind Scorpio Tankers and the largest operator of product tankers in its fully owned commercial pool with a market cap of $800m.

 

 

Product tanker order book remains weak and fundamentals are strong

 

Huge part of crude fleet is moving to storage, pushing up crude as well as product tanker rates. 

 

All tanker rates always move together due to substitution between LR2s and Aframaxes. 

 


MR time charter rates have exploded and are expected to remain high due to the tight supply/demand situation.

 

Hafnia happened to have significant spot exposure in the current bull market and is taking full advantage. Before the recent moves in MR values, you could easily see a NAV of 34 NOK which is now adjusted using recent data to easily be north of 40 NOK. 

Hafnia is something of a broken IPO story. They tried to IPO in Nov 2019 at closer to NAV price but couldn't get that through as STNG was trading below NAV. They eliminated the secondary and did only a smaller primary and came at a steep discount at 26 NOK. The smaller primary meant the stock wasn't very liquid and collapsed with the tanker sell-off in January to 14 NOK and became the cheapest tanker stock on the market. It has since recovered slightly on the back of historically high tanker rates but remains well below NAV as well as IPO price. NOK itself has depreciated 15% since the IPO so the discount is starter in USD. 

Hafnia is majority owned and operated by the BW Group which is a well know and respected shipping organization in Norway. They also own BW LPG (the largest LPG tanker business) and that was IPO'd in 2014. BW LPG paid out very high dividends during 2014-2016 during the LPG tanker boom and is starting to pay high divs again when LPG tanker rates were high last year. BWLPG IPO'd at 48 NOK and has paid out 30 NOK in dividends in volatile markets already. It gives indication of the philosophy of the business and they will likely pay out a decent amount of divs from current product tanker boom. 

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.

Catalyst

Product tanker rates

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