Riyadh-Mubasher: Al Rajhi Capital stated that Bahri’s key profit metrics (gross, operating and net profits) were ahead of its estimates in Q4, for the second consecutive quarter.
“While we have factored in strong performance in crude oil segment, led by better TCE (Time Charter Equivalent) rates compared with the previous year, the beat on estimates was led by continuing strength in cargo segment (despite weak global spot rates in Q4) and higher profitability at Petredec (LNG carrier, 30.3% held by Bahri),” the research firm said.
Al Rajhi Capital believes bunker fuel prices may also have trended lower than its estimates leading to a better-than-expected operating margin.
While low oil prices will help day rates in crude oil transport segment remain high over the medium term, the research firm expects some softening of rates starting late 2017 when new supply of VLCCs is expected to hit the market.
Al Rajhi Capital continues to remain ‘Overweight’ on Bahri, with a revised target price of SAR 47.6 (upside potential of 29.6%).
