TORM: Some Positive Developments And Cheap Valuation
Summary
- TORM plc's stock is upgraded to "buy" due to stabilizing TCE rates, cooling trade tensions, and an aging fleet poised for retirement.
- The TCE rates, which were earlier declining continuously in 2024, have finally stabilized, indicating positive development for the shipping industry.
- European diesel demand rise and fleet dynamics favor TRMD, with vessel switching to dirty trade, reducing clean trade competition.
- Moreover, many of the worldwide vessels are near retirement, which should partially offset vessel supply.
- TRMD's valuation is attractive, trading at a forward PE ratio of ~6.02x and a price-to-book ratio of ~0.75x, signaling market undervaluation.
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