HAFN Stock Projected to Hit Record Highs in 2025
Analysts may be bullish on stocks in 2025, but that doesn’t mean Wall Street won’t face periods of volatility. Whether it’s a slowdown of the economy, an unexpected rise in inflation, President-elect Trump’s proposed tariffs, sky-high valuations, or a Black Swan event, there are more than enough reasons to be somewhat cautious on stocks.
Fortunately, one of the best ways to temper potential volatility is with a reliable, ultra-high-yield dividend stock…and that’s what you get with Hafnia Ltd (NYSE:HAFN).
With a fleet of over 200 vessels, Singapore-based Hafnia Ltd is the largest operator of product and chemical tankers in the world. The majority of its vessels operate in the spot market, primarily through pools of similarly sized vessels, allowing Hafnia to maximize fleet utilization, fleet revenues, and cyclical freight rate recovery. (Source: “About,” Hafnia Ltd, last accessed January 6, 2025.)
The company transports “dirty” and “clean” petroleum products, refined oil products, vegetable oil, and “easy” chemicals to oil, chemical, trading, and utility companies.
If you’re not familiar with Hafnia, you’re not alone; HAFN stock has only been trading on the New York Stock Exchange (NYSE) since April 2024. However, it has been trading on the Oslo Stock Exchange (OSE) since November 2020.
Best Nine-Month Performance in its History
For the third quarter ended September 30, 2024, Hafnia reported a net profit of $215.6 million, or $0.42 per share. That’s up from $146.9 million, or $0.29 per share, in the same prior-year period.
The commercially managed pool business generated income of $7.8 million, which was up slightly from $7.5 million in the third quarter of 2023. (Source: “Q3 2024 Investor Presentation,” Hafnia Ltd, November 27, 2024.)
Hafnia’s time charter equivalent (TCE) earnings were $361.6 million, resulting in a daily TCE average of $33,549. In the third quarter of 2023, its TCE earnings were $310.3 million.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) advanced to $257.0 million, from $220.8 million in the third quarter of 2023.
As of November 18, 2024, 71% of the total earning days of Hafnia’s fleet was covered for the fourth quarter at $24,004 per day.
For the first nine months of 2024, the company’s net profit climbed to $694.4 million, or $1.36 per share, from $616.8 million, or $1.22 per share, in the first nine months of 2023. TCE earnings jumped to $1.2 billion for a daily TCE average of $36,330 per day. Adjusted EBITDA, meanwhile, rallied to $861.1 million, compared to $778.4 million in the same prior-year period.
Commenting on the solid third-quarter results, Mikael Skov, the company’s chief executive officer, said, “After a strong second quarter, the product tanker market softened seasonally in the third quarter, due to refinery maintenance, lower refinery margins, and increased cannibalization from the crude sector.”
“Despite these challenges, Hafnia has continued to perform well, delivering solid earnings. I am pleased to announce that we achieved a net profit of $215.6 million in Q3, bringing our year-to-date net profit to $694.4 million – the best nine-month performance in our company’s history.”
$100.0-Million Share Repurchase Program
There are three ways that companies can return value to shareholders: a rising share price, dividends, and share repurchases.
On the dividend front, Hafnia Ltd recently raised its dividend payout ratio (the percentage of earnings paid to shareholders as dividends) from 70% to 80%, with its net loan-to-value (LTV) being between 20% and 30%. Going forward, when the net LTV falls below 20%, the company will raise the dividend payout ratio to 90%.
At the end of the third quarter, the LTV ratio decreased to 19.1%, allowing Hafnia to reach a new milestone in its dividend policy and announce a dividend payout ratio of 90%. This resulted in a third-quarter distribution of $0.3790 per share, or $1.52 per share on an annual basis, for a massive forward yield of 26.88%. (Source: “Dividend History,” Hafnia Ltd, last accessed January 6, 2025.)
Now, shareholders tend to ignore share buyback policies, because they don’t overtly put cash into their pockets like a dividend does. However, share buybacks are important because they decrease the number of outstanding shares, thereby increasing the holdings of a company’s shareholders. Moreover, buybacks can only happen when a company is making lots of money.
And Hafnia is making a lot of money. In 2023, it had free cash flow (FCF) of $876,414. Over the trailing 12 months, its FCF was $938,553.
The company’s strong financial position allowed it to announce a share buyback program of up to $100.0 million from December 2, 2024 through January 27, 2025.
HAFN Stock Has 79% Upside Potential
For the most part, Hafnia stock has been doing well since its dual listing on the NYSE. This includes hitting an all-time record high of $8.99 per share on May 31, 2024. HAFN has trailed off a little since then, currently trading hands at $5.57 per share.
Along with the broader marine shipping industry, the stock took a tumble in October after it was announced that U.S. dockworkers had struck a deal to extend their expired contract.
Investors looking for a short-term rebound in freight charges, which were already in a bit of a downtrend, sold when the strike ended, sending marine shipping stocks considerably lower. Even stocks that weren’t impacted by the strike took a dive.
As of January 6, 2025, HAFN is down 22.6% over the last six months and 4.1% on an annual basis.
The outlook for Hafnia Ltd remains solid though. Looking ahead, seasonal strengthening in the crude sector and the technical challenges of transporting products on crude carrier are factors that are expected to help juice the company’s bottom line. Additionally, seasonal demand increases and geopolitical tensions are expected to further support product demand and tonne-miles.
This positive outlook is why Wall Street is so bullish on HAFN, with analysts providing a 12-month share price range of $6.50 to $10.00. This points to potential gains of approximately 16.6% to 79.5%. The high target would also put the stock in record territory.
Chart courtesy of StockCharts.com
The Lowdown on Hafnia Ltd
To summarize, Hafnia Ltd is a marine shipping stock with the largest fleet of product and chemical tankers. It reported solid third-quarter results and its best nine-month earnings period ever. In the third quarter, the company announced a dividend of $0.379 per share, the second highest in its history and just behind its record $0.4049 per share paid out in the previous quarter.
Hafnia continues to have potential for further upside, too, as it strengthens its balance sheet in this strong freight economy.
The strong outlook for HAFN stock and its strong dividend payout is great news for common shareholders, especially the 206 institutions that hold 29.78% of Hafnia shares. An even larger percentage of shares—48.86%—is held by insiders. The high insider interest pushes Hafnia Ltd to deliver strong results. (Source: “Hafnia Limited (HAFN),” Yahoo! Finance, last accessed January 6, 2025.)