Hafnia Ltd (NYSE: HAFN)

Sector: Industrials Industry: Marine Shipping CIK: 0001815779
Market Cap 3.35 Bn
P/B 1.44
P/E 10.82
P/S 1.51
ROIC (Qtr) 10.64
Div Yield % 13.71
Rev 1y % (Qtr) -18.46
Total Debt (Qtr) 894.52 Mn
Debt/Equity (Qtr) 0.38
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About

Investment thesis

Bull case

  • Strong operating cash flow of 640.32M provides robust 0.72x coverage of total debt 894.52M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 640.32M provides strong 222.57x coverage of stock compensation 2.88M, indicating sustainable incentive practices.
  • Operating cash flow of 640.32M provides exceptional 13.35x coverage of interest expenses 47.95M, showing strong debt service capability.
  • Strong tangible asset base of 3.55B provides 3.97x coverage of total debt 894.52M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 561.40M exceeds capital expenditure of 78.92M by 7.11x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 640.32M barely covers its investment activities of (57.20M), with a coverage ratio of -11.19, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 640.32M provides thin coverage of dividend payments of (318.80M) with a -2.01 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 500.31M relative to inventory of 78.23M (6.40 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 362.32M show weak coverage of depreciation charges of 205.30M, with a 1.76 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 561.40M represents just -2.55x of debt issuance (220.31M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Marine Shipping
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KEX Kirby Corp 7.05 Bn 19.89 2.10 1.13 Bn
2 MATX Matson, Inc. 6.79 Bn 74.01 4.43 0.72 Bn
3 ZIM ZIM Integrated Shipping Services Ltd. 3.36 Bn 3.35 0.44 5.66 Bn
4 HAFN Hafnia Ltd 3.35 Bn 10.82 1.51 0.89 Bn
5 BWLP BW LPG Ltd 2.38 Bn 10.97 0.67 1.09 Bn
6 SBLK Star Bulk Carriers Corp. 2.37 Bn 245.30 3.42 1.23 Bn
7 CMRE Costamare Inc. 2.05 Bn 6.81 1.69 1.58 Bn
8 DAC Danaos Corp 1.99 Bn 4.27 1.93 0.75 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.14 0.60
EV to Cash from Ops. EV/CFO 6.35 6.07
EV to Debt EV to Debt 4.54 60.45
EV to EBIT EV/EBIT 11.22 4.74
EV to EBITDA EV/EBITDA 7.30 5.76
EV to Free Cash Flow [EV/FCF] EV/FCF 7.24 5.00
EV to Market Cap EV to Market Cap 1.21 29.59
EV to Revenue EV/Rev 1.83 2.00
Price to Book Value [P/B] P/B 1.44 1.07
Price to Earnings [P/E] P/E 10.82 13.80
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.97 2.47
Dividend Payout Ratio % Div Payout % (Qtr) 148.10 68.67
Dividend per Basic Share Div per Share (Qtr) 0.92 1.18
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 81.46 105.16
Interest Coverage Int. cover (Qtr) 7.56 -7.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -45.56 -33.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -28.36 25.96
Dividend Growth (1y) % Dividend Growth (1y) % 126.67 9.12
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -60.90 -27.24
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -49.89 -36.36
EBIT Growth (1y) % EBIT 1y % (Qtr) -60.59 -26.39
EBT Growth (1y) % EBT 1y % (Qtr) -64.16 -36.07
EPS Growth (1y) % EPS 1y % (Qtr) -63.74 -30.68
FCF Growth (1y) % FCF 1y % (Qtr) -41.93 14.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -48.26 -7.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.62 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.44 0.08
Cash Ratio Cash Ratio (Qtr) 0.36 1.33
Current Ratio Curr Ratio (Qtr) 1.52 2.15
Debt to Equity Ratio Debt/Equity (Qtr) 0.38 0.73
Interest Cover Ratio Int Coverage (Qtr) 7.56 -7.10
Times Interest Earned Times Interest Earned (Qtr) 7.56 -7.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 25.50 27.36
EBIT Margin % EBIT Margin % (Qtr) 16.31 17.95
EBT Margin % EBT Margin % (Qtr) 14.15 10.77
Gross Margin % Gross Margin % (Qtr) 26.50 37.00
Net Profit Margin % Net Margin % (Qtr) 13.90 9.28