06.02.2025
For some years now I have been a fan of this shipping sector favourite, but on what I see now I am taking the view that investors may well be missing massive opportunities elsewhere by not selling their shares in Braemar (LON:BMS).
The group, which is a leading provider of expert investment, chartering and risk management advice to the shipping and energy markets, has seen its shares up at 315p last July, then fall back to 234p on the last day of 2024, picking up to 280p a month later, before easing back to the current 259p.
On the face of it an excellent short-term trading stock, but we are in the business of identifying longer-term investments.
Despite having been a faithful follower of the group over the six years, through all of its ups and downs, investigations and four-month long share suspensions – I must say that unless a bidder pops up, its shares are not holding a lot of my interest.
I have to admit by having been somewhat switched off by the fidgeting antics of Group CEO James Gundy as he and his executives presented recent sets of results to investors – he looked as though he had other things to do and would have preferred to be elsewhere than concentrating on getting his group’s message across to those watching their screens.
I still like the £82m capitalised group and its various business activities, as a leading global shipbroker with offices in London, Singapore, Beijing, Geneva, Perth, Dubai, Athens, Hamburg, Melbourne, Madrid, Shanghai, and Houston.
It is considered to be well-positioned to serve key industry players across different time zones and cultures.
Its operations are diversified across Tankers, Dry Cargo, Sale & Purchase, Renewables, Financial and Offshore in order to generate a reliable, less cyclical income stream.
However, it does appear to be standing still.
A Brokers Note out earlier this week from Zeus Capital analyst Robin Byde rates the shares as a Buy, with a Target Price of 330p.
For a long time now, I have considered that to be a good price aim for the group’s shares, but looking at the Zeus estimates has made me slacken my positivity about the company.
Byde has expectations of the group reporting a slightly lower revenue for the year to the end of this month, some £150.9m (£152.8m) and with lower adjusted pre-tax profits at £15.3m (£16.1m) but still generating higher earnings per share of 31.2p (30.0p) whilst increasing its dividend to 14.5p (13.0p) per share.
For the year to end February 2026 his estimates are for £152.4m sales, £15.9m profits, 31.5p earnings and a 15.5p dividend.
Looking ahead to the 2027 year, he has £154.0m revenues, £16.4m profits, 32.6p earnings and a further increased dividend per share of 16.5p.
To be fair to Zeus, Byde does actually state that its estimates are cautious, especially for the year just ending, due to softer tanker markets.
He does note that the group’s fundamentals remain sound, with a small net cash position maintained, and with cash conversion helped by low working capital and capex intensity.
In conclusion, I back up my comments on this group by stating that although its valuation is undemanding, whilst also offering a useful dividend yield, its shares could well be trading water, a bit like its business, for a while to come yet.
Perhaps my opinion will change come the mid-March 2025 Trading Update.
My Target Price of 350p set in May last year remains but may well be a long-time coming.
(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)
(Asterisks * denote that Target Prices have been achieved since Profile publication)
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