Shipping company SFL beats Q2 profit estimates, cuts dividend

Overview

• SFL Q2 net income of $1.5 mln beats analyst expectations, per LSEG data

• Adjusted EBITDA of $104 mln misses analyst estimates, per LSEG data

• Company says sold older vessels, increasing capital but reducing near-term cash flow

• SFL lowers dividend to $0.20 per share, from $0.27 per share in Q1, reflecting cash flow changes

Outlook

• Company sees market uncertainty impacting near-term results due to oil price volatility

• SFL optimistic about future employment for legacy drilling rig Hercules

• Company increasing capital for new investments by selling vessels

Result Drivers

• FLEET RENEWAL - SFL sold and redelivered older vessels, increasing available capital but reducing near-term cash flow

• CHARTER EXTENSIONS - Five-year time charter extension for three container vessels added $225 mln to backlog

• DRILLING RIG CHALLENGES - Market uncertainty and oil price volatility delayed new employment opportunities for the Hercules rig

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the oil & gas transportation services peer group is "buy"

• Wall Street's median 12-month price target for SFL Corporation Ltd is $11.40, about 19.9% above its August 18 closing price of $9.13

• The stock recently traded at 100 times the next 12-month earnings vs. a P/E of 88 three months ago

Press Release: ID:nGNE2tc4wH