Friday, August 7, 2020

Genco Shipping & Trading Limited (GNK)

Is the Dry Bulk Market Weakness in the Rear View Mirror?

Genco Shipping & Trading Limited, incorporated on September 27, 2004, transports iron ore, coal, grain, steel products and other drybulk cargoes along shipping routes through the ownership and operation of drybulk carrier vessels. The Company is engaged in the ocean transportation of drybulk cargoes around the world through the ownership and operation of drybulk carrier vessels. As of December 31, 2016, its fleet consisted of 61 drybulk carriers, including 13 Capesize, six Panamax, four Ultramax, 21 Supramax, two Handymax and 15 Handysize drybulk carriers, with an aggregate carrying capacity of approximately 4,735,000 deadweight tons (dwt). Of the vessels in its fleet, 15 are on spot market-related time charters, and 27 are on fixed-rate time charter contracts. As of December 31, 2016, additionally, 19 of the vessels in its fleet were operating in vessel pools.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Adjusted 2Q2020 EBITDA of $3.3 million was below our estimate of $6.3 million, mainly due to lower than expected TCE rates of $6.7k/day, or ~$900 below our estimate. In contrast to 1Q2020, operating results were not insulated from weak market conditions with forward cover of 62% of 2Q2020 days booked at TCE rates of only $6.8k/day, and market rates were weaker-than-expected over the remainder of the quarter. Lower TCE rates more than offset lower opex and G&A expenses.

Lowering 2020 EBITDA estimate to $73.7 million from $83.4 million based on softer 2Q2020 results, lower TCE rate assumptions and a smaller fleet. Forward cover is more attractive this quarter with 62% of 3Q2020 days booked at $11.6k/day, and both 3Q2020 and 4Q2020 EBITDA is likely to be ...

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report.  NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.