Hafnia Limited

Hafnia Limited (NYSE: HAFN) is a tanker company specializing in the transportation of oil, oil products, and chemicals for major national and international oil and chemical firms, as well as trading and utility companies. The Company provides a comprehensive shipping platform that includes technical management, commercial and chartering services, pool management, and a large bunker procurement operation. Its segments consist of Long Range II (LR2), Long Range I (LR1), Medium Range (MR), Handy size (Handy), and Specialized vessels.

Recent Business and Financial Updates

• Continued Growth in Managed Operations: Hafnia's commercially managed pool and bunker procurement business generated income of USD 10.7 million in Q2 2024, slightly up from USD 10.1 million in Q2 2023. The first half of 2024 saw Hafnia producing a record net profit of USD 478.8 million, or USD 0.94 per share, compared to USD 469.9 million, or USD 0.93 per share, during the same period in 2023.
• Adjusted EBITDA Improvement: The company's adjusted EBITDA for Q2 2024 reached USD 317.1 million, compared to USD 261.6 million in Q2 2023. Hafnia's financial indicators reflect robust performance, supported by a total income of USD 1,084.9 million for the first half of the year.
• Financial Performance: In the second quarter of 2024, Hafnia reported a net profit of USD 259.2 million, equating to USD 0.51 per share. This represents an increase from the USD 213.3 million or USD 0.42 per share recorded in Q2 2023. The company achieved a Time Charter Equivalent (TCE) income of USD 417.4 million, marking a substantial rise from USD 349.3 million in the same period of the previous year. As a result, the average TCE earnings reached USD 39,244 per day.
• Dividend Payout and Shareholder Returns: Hafnia’s Board of Directors approved an increase in the dividend payout ratio from 70% to 80% when the net loan-to-value (LTV) ratio is between 20% and 30%. Should the net LTV ratio fall to 20% or below, the payout ratio will rise to 90%. Consequently, Hafnia plans to distribute USD 207.4 million, translating to a dividend of USD 0.4049 per share.
• Fleet Expansion and Sales: As of the end of Q2 2024, Hafnia’s fleet comprised 117 owned vessels and 16 chartered-in vessels. The company recently sold the LR1 vessel, Hafnia Thames, on July 16, 2024, and the MR vessel, Hafnia Pegasus, on August 20, 2024. These strategic decisions reflect Hafnia’s ongoing efforts to optimize its fleet and capitalize on rising vessel values.
• Market Outlook: The product tanker market exhibited strong performance in Q2 2024, driven by longer average sailing distances and disruptions in traditional routes such as the Suez Canal. Geopolitical tensions and logistical challenges have resulted in increased product tonne-mile demand. Hafnia’s management anticipates elevated tanker rates to persist due to low global stockpiles and increased refinery throughput.
• Geopolitical and Environmental Factors: The ongoing geopolitical landscape, including disruptions in the Red Sea and droughts affecting the Panama Canal, contributed to a robust market for clean petroleum products. Despite a slowdown in global oil demand growth, driven by factors such as a contraction in Chinese consumption, the overall outlook for the product tanker market remains optimistic, bolstered by new refinery operations and increased cargo flow.
• Fleet Valuation and Financial Position: Hafnia reported a net asset value (NAV) of approximately USD 4.5 billion at the end of Q2 2024, corresponding to around USD 8.77 per share. The increase in NAV is attributed to rising vessel values, which bolster the company’s financial standing and future growth prospects. Hafnia continues to maintain a strong equity ratio of 62.1% and a net LTV ratio of 21.3%.
• Redomiciliation Announcement: On September 20, 2024, Hafnia Limited announced that the Supreme Court of Bermuda sanctioned a scheme of arrangement allowing the Company to discontinue in Bermuda and transition to Singapore. This redomiciliation process has been officially filed with the Registrar of Companies in Bermuda, and Hafnia has received final approval from the Singapore Accounting and Corporate Regulatory Authority to proceed.

Technical Observation (on the daily chart):

HAFN's stock price has faced resistance at key levels and has subsequently declined, showing strong momentum that indicates a potential for consolidation with a bearish bias. The 14-day Relative Strength Index (RSI) is currently in the oversold territory, which further supports this pessimistic outlook. Additionally, the stock price is situated below both its short-term and medium-term moving averages, suggesting that these averages may act as significant resistance in the near term. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given to Hafnia Limited (NYSE: HAFN) at the current market price of USD 6.19 as of October 24,2024 at 08:00 AM PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is October 24,2024 at 08:00 AM PDT. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.