Braemar Shipping Services: Fighting The Waves
Edison | Oct 25, 2016 06:36AM ET
Braemar Shipping Services' (LON:BRMS) management action in response to a tough trading climate and falling profits should contribute to a sound recovery in profits next year. Following share price weakness, the group is valued at a substantial discount to both the broking market leader Clarkson and to other peers. Meanwhile, if the dividend can be held, the shares offer a well above-average yield, pending an eventual improvement in trading conditions.
Challenging half year
Interim results reflect the extremely tough trading climate cited in the group’s August trading update – deep sea tanker spot rates fell back, as anticipated, but the impact of cutbacks in oil exploration, especially in South-East Asia, were more severe than initially expected. H1 revenue was down by 12% y-o-y to £70.2m, while adjusted PBT, before restructuring costs of £1.8m, fell sharply from £7.0m to £3.0m. There should be some recovery in H2 as the restructuring takes effect, but we have further reduced our FY17 estimate from £8.8m to £8.5m.
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