Edison initiates on Braemar Shipping Services

RNS Number : 6234M

Braemar Shipping Services PLC

24 May 2022

 

London, UK, 24 May 2022

Edison initiates on Braemar Shipping Services (BMS)

Braemar recently completed a corporate transformation that will see it move away from being a widely spread shipping services company, to grow into a clearly focused shipbroking operation. Allied to the transformation is the company's growth strategy, supported by growing global trade, and shipping's status as the most energy-efficient and lowest carbon method of freight transport, that has management focused on doubling the business inside four years. We value the shares at 400p, a c 40% premium to the current price, but see greater upside as evidence of success is delivered over the next two to three years.

Braemar is trading on a P/E of 10.1x in FY23e, a material discount to the only other quoted shipbroker, Clarkson, which trades on c 18x in FY22e. We believe such a large differential is unjustified as it gives no credit for the growth ambition and proven ability to execute, suggesting upside in Braemar's rating. We value Braemar at 400p/share based on a dividend discount model with a 7.25% cost of capital and a growth rate of 5.5%. This valuation implies a P/E of c 17x, a c 5% discount to Clarkson, and a terminal growth rate of c -5% in our DCF model. Furthermore, we believe there is upside to earnings forecasts and the potential for a re-rating of the shares, which would suggest a higher valuation than 400p is possible if management can successfully deliver the growth strategy.

Click here to view the full report or here to sign up to receive research as it is published.

All reports published by Edison are available to download free of charge from its website

www.edisongroup.com

About Edison: E dison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings.

Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney.

Edison is authorised and regulated by the Financial Conduct Authority .

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

For more information, please contact Edison:

Andy Murphy [phone] [e-mail]

Learn more at www.edisongroup.com and connect with Edison on: 

LinkedIn  www.linkedin.com/company/edison-group-/

Twitter    www.twitter.com/Edison_Inv_Res

YouTube  www.youtube.com/edisonitv

 

END

 

 

NRAUSSRRURUVUAR