Himalaya Shipping

HSHP

Market cap $730M

Himalaya Shipping Ltd. (HSHP) Q1 2026 Earnings Call Transcript

Himalaya Shipping NYSE: HSHP reported a first-quarter profit as higher charter earnings lifted revenue and operating cash flow, while management said it remains positioned for strength in the Capesize and Newcastlemax dry bulk markets.

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Himalaya's fleet of 12 Newcastlemax dual-fuel ships with scrubbers ensures competitive performance, with index-linked charters outperforming market rates. For 3Q24 HSHP reported rising revenue, EBITDA, and EPS YoY and QoQ. A catalyst event on the horizon is the Simandou Project in Guinea. The first iron ore shipment is expected in 2025.

Himalaya Shipping, a newcomer in the dry bulk sector, operates 12 new Newcastlemax vessels, focusing on dual fuel with liquid natural gas and pays variable monthly dividends. Himalaya Shipping's commitment to returning excess cash flow to shareholders and potential for increased dry bulk demand positions it as a promising investment for income-focused investors. Despite recent lows due to weak charter rates, Himalaya Shipping's price/book ratio of 1.32 is notably lower than the sector median of 2.91, indicating potential value.

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Himalaya Shipping delivered strong 2Q24 results with increased revenue, and operating income. HSHP's fleet, consisting of 12 Newcastlemax vessels with dual-fuel LNG propulsion, ensures higher TCE rates and compliance with environmental regulations. Despite a highly leveraged balance sheet, HSHP's valuation is attractive at 82% PNAV, making it a speculative yet promising investment in the dry bulk segment.

Himalaya Shipping also needs time to build a new good base.

Himalaya Shipping is a top pick for shipping growth stocks. The company owns a top-notch fleet of Newcastlemax bulk carriers built in 2023/2024 with dual-fuel LNG propulsion plants. The bulk carriers market is getting stronger, with increasing demand for Capesize/Newcastlemax vessels due to growing exports of iron ore and coal. HSHP has a leveraged balance sheet, which is expected given its new fleet. The company's liquidity will improve with stronger day rates, mitigating the financial risk.

Himalaya is a new player in the dry bulk industry with high leverage and potential for exceptional returns in a bull market. Having taken delivery of a majority of its fleet of 12 newly-built Newcastlemaxes, the company will soon start paying a dividend. Himalaya's strategy is to keep its vessels on index-linked charters to maximize earnings and to pay out essentially all of its free cash flow to shareholders.