Clarksons shares shoot up after selldown

Shipbroker's stock enjoys best three-day climb in more than a decade after ex-Platou shareholders offloaded stock.

Clarksons shares have enjoyed their hottest streak since the turn of the millennium after a selldown of stock by former RS Platou investors took more shares into the market.

London-listed Clarksons is up by one tenth today, continuing a three-day march that has seen the stock rise more sharply than at any time since 2000, according to Bloomberg data.

Analysts are attributing the trend to the combined impact of the sale of just over two million shares previously held by one-time RS Platou investors and a week-long roadshow undertaken by management following the company’s annual results.

Former Platou investors were free to sell almost 3.2 million shares following the end of a lock-in period, but chose to keep more skin in the game despite strong demand for the stock, one analyst tells TradeWinds. This, he says, tells you that there is a high desire by the staff to remain invested in the business.

Earlier this month, Clarksons reported an underlying profit of £50.5m, a fraction more than the company had guided in consecutive updates to the City.

Its numbers included a 45% jump in shipbroking revenue and a 229% upturn in income from financial activities in a year that included an 11-month contribution for the merged Clarksons Platou.

Confidence boost

The results were followed by a roadshow in the UK and the US. In a research note, Robert Joynson of Nomura, one of Clarksons’ two corporate brokers, said he came away from the roadshow with increased confidence that shipping markets were now at trough levels, with improvements likely in the next two to three years.

In a presentation given during the roadshow, Clarksons estimates its forward orderbook will grow from $110m at the end of 2015 to $151m in 2016. It also states the merger has led to annual cost savings of £4m.

A second analyst explains the rise in the stock suggests Clarksons executives have communicated that the company is using the present conditions to strengthen its position, including the hiring of new people.

Financial strength

Another part of the message, he suggests, is the finance business that “effectively ground to a halt” in the second half of last year will benefit from a reopening of activity, although some will be of a different nature.

“It’s reasonable to assume it will take a while for positive equity issuance to emerge,” he said. “But there is probably quite a lot of restructuring that will be required, some of which will involve equity deals.”

Data in the presentation showed that global shipping equity issues raised $17.3bn between 2013 and the present day, with Clarksons Platou Securities having a 48% market share over that period.

At the time of writing, Clarksons shares were changing hands at £23.20 each, up from the £18.40 per share at which the former Platou investors sold this week.

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