Berenberg starts coverage of Clarksons at ‘buy’, shares rally

It said Clarksons holds an unrivalled market position globally, with a top-two presence across all of its core markets.

"Its highly diversified model has seen revenues grow by a 10.5% compound annual growth rate since 2006, command-adjusted EBIT margins over 15% and benefit from high-cash conversion," Berenberg said.

"We do not believe that its market position, nor the growth catalysts at play, are sufficiently reflected in the current valuation."

Berenberg said global GDP growth acts as a long-term, structural tailwind.

"Sitting at the heart of global trade, with sea transportation accounting for circa 85% of all trade flows, Clarksons is benefiting from long-term growth drivers of rising global GDP and prosperity, driving commodity consumption, particularly in developing countries," it said.

"In the short term, movements in charter freight rates will more acutely dictate Clarkson’s broking revenues. Currently, commodity freight rates are all upwardly pointing, thus reflecting demand/supply imbalances which look set to remain, alongside an active vessel sale and purchase market."

It also said the decarbonisation trend should accelerate growth from here.

"The shipping industry is currently in the early stages of a decarbonisation evolution, despite being one of lowest polluting forms of transportation," Berenberg said.

"Shipping’s regulatory landscape is rapidly evolving, with ambitious targets to reduce emissions by at least 40% by 2030.

"For Clarksons, this presents an array of opportunities to advise clients, as well as servicing the booming growth in offshore wind. As 2030 approaches, these tailwinds should accelerate growth and present upside to our conservatively set 3.8% CAGR growth in forecast revenues."

At 1040 GMT, the shares were up 6.4% at 3,830p.