Golden Ocean Group

Stock: GOLG

Rating: Strong Buy

Author: Waleed M. Tariq

Overview

  • Bermuda-based Norwegian shipping business Golden Ocean Group. The company runs dry bulk ships that transport ore, coal, and grain.
  • The company’s 100 vessels can carry approximately 12,000,000 DWT.
  • Their broad fleet enables flexibility.¬†On December 12, the company was worth $1.7 billion.

Bullish

  • GOGL will benefit on the burgeoning marine shipping business.
  • As the global economy recovers, demand is expected to rise.
  • Following a positive business environment, the company’s earnings growth is predicted to accelerate.

Bearish

  • The corporation may become bearish if the rate of ship growth slows in the coming years.

Marine Shipping Market

  • There are various explanations for the current rise in dry bulk freight.
  • Few ships-August 2021 predictions say new boats will add 53.9m DWT to global bulk transport. This is substantially lower than 2020’s 71.6m DWT and 2019’s 97.8m DWT.
  • Supply Chain-Supply chain concerns have also increased demand for dry bulk freight. Recent problems have caused port congestion and longer ship ties.
  • Covid-19-Covid-19 destroyed industry. GOGL earned $607m in 2020. Covid’s slowing demand lowered this. This slowed GOGL and shipping income. Company grew with demand.

GOGL’s Position

  • If it doesn’t help GOGL, the above info is meaningless. Let’s examine some investment measures.
  • Regarding Charter Rates-Capsize ships break even at $12,800 per day, Panamax at $8,400. According to the last quarterly data, each Capsize ship earns over $20,000 per day and each Panamax ship earns over $15,000.
  • Golden Ocean Group’s TCE rate averaged $24,920 per day in Q2 2021. It was $15,886 per day last year.
  • Slow shipbuilding-GOGL’s large fleet can benefit from slower new vessel arrivals. GOGL has the world’s largest Capesize fleet. The ships have a 6.5-year lifespan, and the company won’t buy any.

Conclusion

  • The pandemic will boost demand for commodities. Supply chain problems are increasing dry bulk freight demand. These factors make GOGL a great investment in a booming market.