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Sep 15, 2022

SB:NYSE
Investment Type
Small-Cap
Risk Level
Action
Rec. Price ($)

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Safe Bulkers, Inc. is a holding company. The Company's principal business is the acquisition, ownership, and operation of dry bulk vessels. The Company's vessels operate across the world, carrying dry bulk cargo for the consumers of marine dry bulk transportation services. The Company is an international provider of marine dry bulk transportation services, transporting bulk cargoes, particularly coal, grain, and iron ore, along shipping routes across the world.

1.2 The Key Positives, Negatives, and Investment summary

1.3  Key Metrics:

From the graph below, SB margins in Q2FY22 were above the industry median across all the segments showing robust business performance and healthy growth as compared to industry standards. Additionally, SB is having a healthy short-term liquidity position as compared to the industry median, with the liquidity ratio in place the company is more likely to be approved for credit and raise money in the future. SB over the last five years has been in an upward trending momentum in its revenues and gross profits, the primary contributor being an increase in the number of vessels as well as the average daily charter rate which also improved on a YoY basis. SB has grown its revenues and gross margin at a 5-year CAGR of 24.54% and 31.26% respectively. Furthermore, the higher CAGR for gross profit means increased efficiency in managing the cost of revenues by the company over the last five years.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~55.95% of the total shareholding, signifying concentrated shareholding. Vorini Holdings, Inc. and Acadian Asset Management LLC are the biggest shareholders, holding the maximum stake in the company at ~39.77% and ~3.76%, respectively.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q2FY22:

Section 3: Key Risks

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 3: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.


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