RCS - Braemar Shipping - Edison initiates on Braemar Shipping Services

BraemarAnnouncement

24/05/2022 11:45

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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.

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www.edisongroup.com (http://www.edisongroup.com)

About Edison: Edison 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
(https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000000MfYL6AAN) .

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 +44 (0)20 3077 5700 industrials@edisongroup.com
(mailto:industrials@edisongroup.com)

Learn more at www.edisongroup.com (http://www.edisongroup.com) and connect
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