The company is fairly priced on steel and has a high elasticity towards changes in asset prices at an opportune moment in the cycle. Additional attractiveness comes from a low cash break-even, although somewhat offset buy a steep fee structure and outstanding preferred shares. Thus, we initiate coverage of Safe Bulkers with a Neutral recommendation and target price of USD 2.4.
Valuation: Our target price of USD 2.4/sh is based on a weighted average of current (USD 1.9/sh) and future NAV, in combination with a mid-cycle EV/EBITDA in 2018/19E, after a 10% discount.
Disclaimer: The publisher currently has no investments in the company