It could prove to be excellent timing for the latest declared buyer of equity in my favourite shipping services group Braemar (LON:BMS).
Later this week its larger competitor, the £1.23bn capitalised Clarkson (LON:CKN), will be holding its AGM, so we will, no doubt, get an update on life within the sector.
Second Shipping Sector Group Buys In
I noticed that another shipping services group has recently been putting together a declared stake in Braemar’s equity.
On Friday afternoon last week, it was declared that Minna Invest GmbH from Hamburg, Germany had put together a 992,398 shareholding in BMS.
There is scant information available about Minna Invest to tell us immediately who is behind the stake.
However, I have found out that Jan Peter Döhle and Jost Döhle are the two Managing Directors of Minna Invest.
The Döhle Group covers all parts and aspects of the modern shipping business:
“We offer a wide range of services including financial, commercial, and technical support, as well as insurance and crew management.
Apart from our complementary activities provided by the companies within the Group, our core competencies lie in chartering as well as sale and purchase.
With its numerous offices, subsidiaries, and partner companies located worldwide Peter Döhle Group offers tailor-made solutions for the whole shipping industry.”
The Döhle Group controls the world’s largest tramp-owned fleet of containerships, comprising a total of around 415 highly modern vessels.
The fleet ranges from small feeder vessels of around 300 TEU up to ships of 13,000 TEU capacity (a TEU is a 20ft long equivalent unit container).
All the fleet’s ships fulfill today’s market requirements such as super-slow steaming and high reefer capacity.
Many are equipped with their own cargo gear, making the fleet versatile as well as technically and commercially competitive in all areas of the world.
The Döhle group, which has more than $8bn assets under its management, offers a wide range of services: sale & purchase; technical management; crew management; insurance; commercial management; bunker trading; financial restructuring; corporate services; shipping software; and shipping agency & logistics.
That Now Makes Two Competitors Recently Into The Equity
Readers may well remember that on 10th January this year I noted that another player in the shipping sector had bought into the BMS equity.
I revealed that an ambitious Geneva-based shipbroking company had been putting together a ‘major shareholding’ in the group’s equity.
Lightship SA had bought some 1m shares representing 3.04% of the issued stock.
Lightship Chartering, is 51.5% owned by Danish founder and chairman Morten Have.
Sune Fladberg, the private company’s CEO, was reported as stating that:
“It’s quite simple, we believe strongly in shipping in the near future and are looking for opportunities to invest further in the industry.
We think the valuation in Braemar is very attractive at the moment.”
What Did The New Buyers Pay?
In early January I assessed that Lightship must have paid up to 290p a share for its holding.
Whereas Minna could have been paying around 250p to 275p a share for its position.
Last week the Braemar shares hit 284p before closing on Friday night at 277p, valuing the whole group at just £79m.
The company’s results for the year to end February 2024 should be declared within the next three weeks or so.
In its 20th March issued Trading Update the group declared that it had achieved another strong performance, with revenue and underlying operating profit for FY24 in line with market expectations – at £150m and £18m respectively.
Understandably the net cash position had dropped from £7m in the bank to just £1m at the year end, but last year it had covered the costs of the internal independent investigation conducted and concluded in 2023, as well as certain tax payments and share buy-backs during the period.
However, impressively it announced that it had an Order Book of $83m, which was 47% ahead of the 2023 figure of $56m.
Why Invest In Braemar?
When asked ‘why invest in Braemar?’ the group responds:
“We are one of only two publicly traded shipbroking companies on the London Stock Exchange, offering an attractive opportunity to invest in the shipping industry without needing to invest directly in ships.
As a leading global shipbroker with offices in London, Singapore, Beijing, Geneva, Perth, Dubai, Athens, Hamburg, Melbourne, Madrid, Shanghai, and Houston, we’re well-positioned to serve key industry players across different time zones and cultures.
Our operations are diversified across Tankers, Dry Cargo, Sale & Purchase, Renewables, Financial and Offshore in order to generate a reliable, less cyclical income stream.”
Broker’s Estimates
Estimates for the current year to end February 2025 are for around £150m of revenues and £15.8m pre-tax profits, worth 46.6p per share in earnings and more than three times covering a 14.0p per share dividend.
Analyst Price Objectives for the shares range from 385p to 505p, against Friday night’s closing 277p.
Results Due Before End May
In late March I wrote that:
“The May figures could well see upgrades helping to pinpoint just how undervalued this group’s shares are at last night’s closing price of 256p.
I still find it hard to understand why these shares are so lowly valued, they are destined to rise above the 300p level fairly soon.”
The above estimates show that the shares of Braemar are an extremely attractive proposition, which is more than likely to be the reasoning behind two of its competitors buying into the group’s equity.
On 5.9 times current year prospective price-to-earnings ratio and yielding 5.05% – the shares are almost a giveaway, in fact, I now set a new Target Price for Braemar’s shares at 350p.
(Profile 05.12.19 @ 185p set a Target Price of 250p*)
(Profile 20.05.20 @ 99p set a Target Price of 150p*)
(Profile 07.05.24 @ 277p set a new Target Price of 350p)
(Asterisks * denote that Target Prices have been achieved since Profile publication)