golden ocean group

Golden Ocean Group is Pareto’s Top Dry Bulk Pick, Hits Two-Year High

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June 19, 2013

golden ocean groupJune 19 (Bloomberg) — Golden Ocean Group Ltd., a shipowner led by billionaire John Fredriksen, climbed to the highest level in more than two years in Oslo trading as investors bet on a rebound in rates to haul coal and iron ore.

Golden Ocean rose as much as 2.5 percent to 6.89 kroner, the highest intraday price since April 13, 2011, and the biggest gain on the Oslo stock exchange’s OSEBX benchmark index today.

The company, in which Fredriksen owns 41 percent, is expanding its fleet to benefit from historically low purchase prices as it bets on a recovery in hire rates. The Baltic Dry Index, a measure of shipping costs, averaged 920 last year, the lowest since 1986, Baltic Exchange data show. It advanced 4 percent to 962 points yesterday, capping nine straight gains.

Golden Ocean said last week it ordered three new supramax vessels from China and agreed on options for another three. The board “obtained favorable terms, attractive pricing and considers the risk-reward as attractive from a historical perspective,” the Hamilton, Bermuda-based company said June 14.

Golden Ocean’s stock rose 1.8 percent to 6.84 kroner as of 11:25 a.m. Oslo time. Trading volumes already exceed the three- month daily average.

“The company has definitely put words into action,” Eirik Haavaldsen, an analyst at Pareto Securities AS in Oslo, said in a note dated June 17. “The dry-bulk market is set for a turn, and with current historical low asset prices this acquisition by Golden Ocean is a favorable move.”

Top Pick

Golden Ocean is Pareto’s top pick in the dry-bulk industry, according to the broker, which has a buy recommendation and 7.5- kroner price estimate on the stock.

The company is curbing long-term charters in anticipation of a recovery in rates, it said May 28. Golden Ocean has 37 percent of its largest Capesize vessels available for single- cargo charters this year and 38 percent of its Panamaxes. That share will gain at the expense of longer-term bookings starting 2014, allowing it to benefit as the market improves, it said.

D/S Norden A/S, Europe’s largest publicly traded owner of the vessels, said May 15 that it booked fewer Panamax cargoes than ships, its first bet since 2010 that rates for the vessels will rise. Greek shipowners ordered the most new Capesizes since 2008 in the first quarter.

– Alastair Reed and Rob Sheridan, Copyright 2013 Bloomberg.

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