AERM

They see risk of asset price correction, making also HSHP an outlier in 1yr forward P/NAV basis, while CMBT favors due to lower rel val and diversified exposure. See attachment pages 4-5 for more details. See page 11 for company valuations.
Potential long CMBT / SBLK VS short HSHP.

“Based on our freight rate outlook one year forward (from Q1 2027), we forecast ~20% downside
risk to dry bulk vessel values on average, with the most downside risk for Capesize and older
vessels. For Capesize, we estimate average downside risk of 26%, reflecting our Q1 2027 one
year TC rate proxy of USD21.5k/day compared to the current USD26.6k/day and the 2026 FFA
at USD24.0k/day. We value a 5-year-old eco-type Capesize at USD53.7m one year ahead,
compared to the most recent quote of USD67.0m and the ~USD59m implied by our model on
current 12-month TC rates. We see 19% downside risk on average for Panamax vessels, 21%
downside risk on average for the Supramaxes and 19% downside risk for Handysize vessels. “
COMPANY RECOMMS:
Dry bulk equities mostly reflect a lukewarm market outlook
Our lowered rate forecasts cut our estimates for the companies we cover, while our updated
asset value forecasts, also reflecting sustained tight capacity among the shipbuilders and a
supportive supply outlook long-term, leave downside risk to current valuations. In sum, we
believe most of the equities are pricing in a sensible market outlook that reflects fair downside
risk to asset values, and we reiterate our HOLDs for most of our coverage, with some revisions
to our target prices. However, Himalaya Shipping stands out with an EV/GAV of 0.96x versus
peers at 0.82x, prompting us to downgrade to SELL (Hold), with 19% downside potential to our
target price. Among the companies, 2020 Bulkers is in the process of selling its ships and
should be largely unaffected by the sector outlook, while CMB.TECH should benefit from
favourable tanker fundamentals in its diversified fleet, in our view.