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On Friday, a BTIG analyst maintained a Buy rating on shares of Hafnia Ltd. (NYSE:HAFN) with a steady price target of $10.00. Hafnia reported its second-quarter earnings before the market opened, revealing an EBITDA of approximately $317 million, surpassing the consensus estimate of around $307 million by roughly 3%. This outperformance was attributed to stronger than anticipated spot fleet bookings.
The company's Medium Range (MR) tankers earned about $38,000 per day in the first quarter, while the Long Range 1 (LR1) tankers earned approximately $47,000 per day. Hafnia decided to keep its dividend consistent with the previous sequence, declaring a $0.40 per share dividend for the quarter, which translates to an annualized yield of about 21%. The dividend payout represents around 66% of the operating cash flow.
Looking forward to the third quarter, Hafnia has reported solid forward bookings. About 74% of MR days are already booked at roughly $33,000, and 56% of LR1 days at approximately $39,000. These figures suggest a third-quarter EBITDA of around $261 million, which aligns with consensus estimates and is 33% higher than the previous estimate of about $196 million.
Consequently, the firm has raised its third-quarter EBITDA forecast to approximately $228 million to reflect the better-than-expected bookings, despite the traditionally softer third-quarter market.
Historically, MR rates have seen an average decrease of about 12% from the second to the third quarter, followed by a rebound of roughly 18% from the third to the fourth quarter. Hafnia has successfully fixed around 72% of its overall third-quarter days at favorable rates, setting the stage for strong dividends as the company heads into the winter months, which are typically stronger for the industry. The analyst reiterated the Buy rating based on these observations.
InvestingPro Insights
Recent data from InvestingPro highlights several key metrics for Hafnia Ltd. (NYSE:HAFN) that underscore the company's financial health and market position. The company's attractive Price/Earnings (P/E) ratio stands at 5.17, indicating that its shares could be undervalued compared to earnings. This is further supported by a Price/Book ratio of 1.71, which suggests that the market is pricing the company's assets reasonably. Moreover, Hafnia has shown a robust Revenue Growth of 24.79% over the last twelve months as of Q1 2024, signaling strong business performance.
InvestingPro Tips also shed light on Hafnia's shareholder appeal. The company not only pays a significant dividend to shareholders, with a high dividend yield of 21.1%, but also has been profitable over the last twelve months. Moreover, two analysts have revised their earnings upwards for the upcoming period, reflecting potential confidence in Hafnia's future profitability. For investors seeking further insights, there are additional InvestingPro Tips available, which could provide a deeper understanding of Hafnia's investment potential.
These financial indicators, combined with the analyst's positive outlook and Hafnia's solid forward bookings, suggest that the company is well-positioned for the upcoming quarters. Investors interested in Hafnia Ltd. can explore more detailed analysis and tips by visiting InvestingPro for a comprehensive investment perspective.
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