MIDAS SHARE TIPS UPDATE: Braemar up 50% in eight months

While most of the world continues to struggle with Covid-19, China is well on the road to recovery. World Bank forecasts suggest the Chinese economy will grow nearly 8 per cent this year, twice as fast as the UK, Europe and America. 

Industrial activity is already picking up fast in the People’s Republic, evidenced by rising imports of oil, coal, steel and other bulk commodities. 

The trend may seem frustrating to nations still facing lockdowns and other tight restrictions but it is good news for businesses involved in international trade, such as Braemar Shipping Services. 

Midas recommended the shipbroker in May last year, when Braemar shares were 99p. Last week, they closed at £1.49, following a robust performance in recent months and the appointment of a new chief executive, James Gundy. Braemar is chaired by turnaround specialist, Ron Series. When he joined in 2019, the group had rather lost its way and morale was low.

Since then, disposals have been made and the company has focused increasingly on shipbroking, where its real strengths lie. 

Gundy was formerly head of this division at Braemar so his appointment underlines the direction of travel and was welcomed by institutional investors. 

Under Gundy, Braemar’s shipbroking business has made significant advances. Once known primarily for its expertise in the oil tanker market, the division now covers a number of commodities, from wheat and soya to iron and coal. The company also provides broking services for renewable energy providers when they need to install or repair offshore wind turbines. 

Braemar helps shipowners and their customers when freight comes into port too. 

In the UK, this type of support is expected to become increasingly important, as firms adjust to new, post-Brexit regulations. 

Braemar’s financial year runs to the end of February and brokers expect profits for the current year to have fallen, as Covid-19 hit global trade for most of 2020. 

Looking ahead, however, results should bounce back, with profits of £10.5million forecast for the year to February 2022, up nearly 10 per cent on the current year. 

On the dividend front, Series suspended the final dividend last year as well as the interim dividend for the current year. 

However investors are hoping he will issue a 5p payout with the full-year results. This is expected to increase to 7.5p in 2022.

Midas verdict: Braemar shares have risen 50 per cent in the past eight months as sentiment towards the company has improved. Cautious shareholders may choose to bank some profits now and sell at £1.49. Longer-term investors should hold on. Braemar is well regarded in the global shipping market and Series and Gundy are keen to expand the broking business. 

Traded on: Main market Ticker: BMS Contact: braemar.com or 020 3142 4368