Torm gets ready for upsurge
Things are looking relatively bright for shipping company Torm, who is well positioned for the upsurge in the product tankers market, which could be right around the corner, according to stock analyst Lau Svenssen. Next year could be one with a higher demand for ships, which will increase the prices.
It is a combination of the need for a rise in shipping and a larger phasing out of ships due to the upcoming rules and regulations concerning bilge water and CO2 emission, which helps cause a lack of ships and makes the prices on shipping sky rocket, stock analyst Lau Svenssen and John Stilhøj from the Danish stock information company Aktieinfo Danmark have informed the newspaper Berlingske Business.
And Torm are well positioned within all of this.
"Last year, management went through with an offensive business move by selling five older ships, refinancing three others and put in an order of eight newbuild ships. The capacity is therefore extended to make an attractive price on these ships. As a shipping company, Torm normally has no "pricing power" but must accept the standard freight rates and seek to optimize operations with fewer days without revenue," the analysis stated in Berlingske Business.
Aktienfo estimates that the "The current negative run will go into overtime", and because of this, they foresee that freight rates will increase - and lower the prices on ships - when the bubble finally pops.
The current stock price on Torm shares is 45 Danish kroner, which is significantly below the value of the assessed equity and Aktieinfo encourages people to buy stocks in the Torm.
Source: Berlingske Business / Maritime Denmark