Stolt-Nielsen’s March-May figures were higher QoQ, following the seasonally worst and blizzard-impacted first quarter and the main metrics were in line with our and consensus expectations. Stronger 2H21 is still expected, while seeing the improved demand for Tank Containers that set new shipment records, Stolt-Nielsen decided to strengthen the segment by purchasing more containers to be delivered in 2021 and 2022. We will make limited changes to our estimates following the report and our Buy recommendation is likely to be reiterated.
Some negative impact from 1Q21 caught up
Stolt-Nielsen reported stronger figures QoQ, in line with our and consensus estimates. For the Stolt Tankers, the increase in overall volume was seen following the delivery of five CTG ships, but the higher bunker prices led to almost the same EBIT QoQ of USD 12.6m (USD 12.9m in 1Q21). Notably, some reduction in contract volumes resulting from the Houston freeze in February required the company to fill capacity with lower spot market, which resulted in a slightly lower time-charter equivalent. However, both the Terminals and Tank Containers showed a solid improvement QoQ due to a continued strong increase in utilization and shipments respectively.
Ready for a recovery
Outlook for Stolt Tankers remains positive, as the company communicated of a recovery in COA volumes. At Stolthaven Terminals utilization was said to improve steadily over recent months, with an expectation that rates will follow. Stolt Tank Containers continue to set new shipment records monthly driven by strong demand across several regions. At Stolt Sea Farm, the new Cervo and Tocha farms started operations and the growth is stronger than firstly anticipated. To benefit from the aforementioned increased shipments for Stolt Tank Containers and seeing the rapidly growing demand, the company decided to widen the segment and after the recent lease of 2,600 tank containers, placed and order to purchase 1,000 more for USD 18m. Those will be delivered later in 2021 and into 2022.
We will make only limited changes to our estimates following the in-line figures and unchanged outlook. The other-than-tanker segments seem to be performing very well and also strengthen the case, therefore, Buy recommendation for the share is likely to be reiterated.
Source: Norne Research