Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Star Bulk Carriers Corp is a Greece-based global shipping company. It owns and operates a fleet of dry bulk carrier vessels. The Company’s vessels transport major bulks, which include iron ore, coal, and grain, and minor bulks, which include bauxite, fertilizers, and steel products. Its fleet consists of 128 vessels with carrying capacities between 52,247 and 209,537 dwt. The Company's fleet includes Newcastlemax, Capesize, Panamax, Post Panamax, Kamsarmax, Ultramax, and Supramax vessels with an aggregate capacity of more than 14 million deadweight tonnage (dwt) and an average age of approximately 10 years.

 

1.2 The Key Positives, Negatives, and Investment summary

1.3 Key Metrics:

The graph below demonstrates that SBLK's revenues and gross profits have increased over the previous five years with an impressive 5 –year CAGR of 45.09% for revenue and 75.94% for Gross profits depicting increased demand for products and controlled cost of revenue.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~45.40% of the total shareholding, signifying diverse shareholding. Oaktree Capital Management, L.P., and AllianceBernstein L.P. are the biggest shareholders, holding the maximum stake in the company at ~25.34% and ~6.38%, respectively.

1.5 Dividend History

SBLK has been paying dividends since 2008 but between the period of 2013 to 2019 the company reinvested the surplus money in the business and started distributing dividends again from 2020, SBLK has a track record of consistent dividend payments over the last 2-years with a current dividend yield of 25.10% higher than the US treasury yield of ~3.6%. Board of Directors has approved a dividend distribution of USD 1.20 / share, in Q3FY22 consistent with the company’s stated capital allocation strategy. This dividend will be the seventh consecutive quarterly distribution and the ninth since the company established this policy.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q3FY22:

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 issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is December 06, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: 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.

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 against further losses in case of unfavorable movement in the stock prices.