Braemar – Poor results, short-term uncertainty, lower order book, all give disappointing background, shares looking very toppy at 255p, despite brokers lowered TP of 320p

29.05.2025

Regular readers will know just how bullish I have been over the years about the prospects for Braemar (LON:BMS) the shipping services group.

However, I have to say that I am now bearish about the investment rating for this globally operating business, which provides expert advice in shipping investment, chartering, and risk management to enable its clients to secure sustainable returns and mitigate risk in the volatile world of shipping.

The Latest Results

The year to end-February 2025 reported revenues down 7% at £141.9m (£152.8m), while its pre-tax profits were down 8% at £13.4m (£14.6m), with underlying earnings per share falling 15% to 31.30p (36.62p), bringing about the declaration of a 46% lower total dividend for the year of just 7.0p (13.0p) per share.

And what is worse – now the group is intending to set up a £2.0m share buyback programme, because that would reflect the Board's belief that the company's share price undervalues the business and confidence in the cash generation capabilities of the group, also providing a positive enhancement to future EPS.

So, it ended the year having switched from a net cash position to being some £2.0m in debt, and now they want to borrow more money to buyback group shares, to improve earnings per share.

Management Comment

CEO James Gundy stated that:

"Our solid overall performance shows our strategy is working.

As market conditions became more challenging in the second half, we have seen the benefits of the work we have done in recent years to build a business with a more diversified revenue base.

This underpins our confidence in producing sustainable returns through the shipping cycle and our future growth targets.

Strong performances in our Investment Advisory and Risk Advisory segments partially offset the fall in Chartering revenues, helping generate underlying operating profits (before acquisition related costs) of £16.7 million, 88% higher than FY21 when we last set our medium-term targets.

We continue to develop our growth platform, by driving our three key strategic pillars of operational excellence, diversification and consolidation.

To this end, we made further investments in our teams and infrastructure while maintaining strict discipline with a clear focus on shareholder value when evaluating opportunities.

This included the launch of a new office in South Korea and a Container Chartering desk; shortly after year end, we obtained regulatory approval for our Securities business to operate a UK Organised Trading Facility (UK OTF).

Looking ahead, amid current market challenges comes opportunity. While there is clearly short-term uncertainty around the global economic outlook and currency volatility, I believe that this will present us with further opportunities to hire talent, make strategically suitable acquisitions and grow our market share.

The medium to long-term fundamentals continue to look favourable and we will seize the opportunity to make investments that will drive shareholder value.”

Broker’s View

Despite reducing his estimates and dropping his Target Price from 350p to 320p, analyst Damian Brewer, at Canaccord Genuity Capital Markets, still rates the shares as a Buy.

For the current year, to end-February 2026, he estimates £133.2m sales and just £11.5m adjusted pre-tax profits, worth 23.1p per share in earnings, but covering thrice its 7.0p dividend per share.

In My View

This group’s shares fell to 195p on Monday 7th April this year, when the market generally was just a bit mucky.

However, that price could well be matched again after this morning’s poor results and against broker estimates.

PS - They closed last night at 255p and, as I write, have dropped to 238p this morning.

(Profile 05.12.19 @ 185p set a Target Price of 250p*)

(Profile 20.05.20 @ 99p set a Target Price of 150p*)

(Profile 27.05.24 @ 277p set a Target Price of 350p)

(Profile 06.02.25 @ 259p is Braemar a Sell?)

Asterisks * denote that Target Prices have been achieved since Profile publication.