UBS maintains 'Sell' rating on GE Shipping
UBS maintains `Sell’ rating on GE Shipping and raises price target to Rs 250. The stock has underperformed the broader market over the past five months by 15% because of the downward trend in freight rates in the tanker segment.
By ET Bureau |
RESEARCH: UBS INVESTMENT
RATING: SELL
CMP: RS 278
UBS maintains `Sell��� rating on GE Shipping and raises price target to Rs 250. The stock has underperformed the broader market over the past five months by 15% because of the downward trend in freight rates in the tanker segment. The weak fundamentals of supply and demand in the tanker segment are likely to continue and thus the stock is fully valued at FY10E/11E P/BV of 0.75/0.71.
The current order book in the tanker segment across various classes is in the range of 20 to 40% of the fleet. The expected growth in the tanker fleet across various segments is likely to keep freight rates under pressure. Deliveries in the tanker segment have been happening as per schedule.
UBS now accounts for the profit on the sale of four ships in FY10 and thus raises EPS estimate from Rs 20.9 to Rs 28.2. The assumptions in the tanker segment are above current freight rates and thus they believe may have some downside risk. UBS expects forward RoEs in the shipping business to be in the range of 8.4-6 .5%.
RATING: SELL
CMP: RS 278
UBS maintains `Sell��� rating on GE Shipping and raises price target to Rs 250. The stock has underperformed the broader market over the past five months by 15% because of the downward trend in freight rates in the tanker segment. The weak fundamentals of supply and demand in the tanker segment are likely to continue and thus the stock is fully valued at FY10E/11E P/BV of 0.75/0.71.
The current order book in the tanker segment across various classes is in the range of 20 to 40% of the fleet. The expected growth in the tanker fleet across various segments is likely to keep freight rates under pressure. Deliveries in the tanker segment have been happening as per schedule.
UBS now accounts for the profit on the sale of four ships in FY10 and thus raises EPS estimate from Rs 20.9 to Rs 28.2. The assumptions in the tanker segment are above current freight rates and thus they believe may have some downside risk. UBS expects forward RoEs in the shipping business to be in the range of 8.4-6 .5%.
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