BMS shares "are almost a giveaway" -part 28 May 2024 09:29
Lightship Chartering, is 51.5% owned by Danish founder and chairman Morten Have. Sune Fladberg, the private company’s CEO, was reported as stating that:
“It’s quite simple, we believe strongly in shipping in the near future and are looking for opportunities to invest further in the industry. We think the valuation in Braemar is very attractive at the moment.”
In early January I assessed that Lightship must have paid up to 290p a share for its holding. Whereas Minna could have been paying around 250p to 275p a share for its position.
Last week the Braemar shares hit 284p before closing on Friday night at 277p, valuing the whole group at just £79m. The company’s results for the year to end February 2024 should be declared within the next three weeks or so.
In its 20th March issued Trading Update the group declared that it had achieved another strong performance, with revenue and underlying operating profit?for FY24 in line with market expectations – at £150m and £18m respectively.
However, impressively it announced that it had an Order Book of $83m, which was 47% ahead of the 2023 figure of $56m.
When asked ‘why invest in Braemar?’ the group responds:
“We are one of only two publicly traded shipbroking companies on the London Stock Exchange, offering an attractive opportunity to invest in the shipping industry without needing to invest directly in ships.
As a leading global shipbroker with offices in London, Singapore, Beijing, Geneva, Perth, Dubai, Athens, Hamburg, Melbourne, Madrid, Shanghai, and Houston, we’re well-positioned to serve key industry players across different time zones and cultures.
Our operations are diversified across Tankers, Dry Cargo, Sale & Purchase, Renewables, Financial and Offshore in order to generate a reliable, less cyclical income stream.”
Broker’s Estimates
Estimates for the current year to end February 2025 are for around £150m of revenues and £15.8m pre-tax profits, worth 46.6p per share in earnings and more than three times covering a 14.0p per share dividend. Analyst Price Objectives for the shares range from 385p to 505p, against Friday night’s closing 277p.
In late March I wrote that:
“The May figures could well see upgrades helping to pinpoint just how undervalued this group’s shares are at last night’s closing price of 256p.
I still find it hard to understand why these shares are so lowly valued, they are destined to rise above the 300p level fairly soon.”
The above estimates show that the shares of Braemar are an extremely attractive proposition, which is more than likely to be the reasoning behind two of its competitors buying into the group’s equity.
On 5.9 times current year prospective price-to-earnings ratio and yielding 5.05% – the shares are almost a giveaway, in fact, I now set a new Target Price for Braemar’s shares at 350p."