Outlook for Hafnia Ltd Turns Bullish
The outlook for shipping companies has turned bullish after Israel bombed Iranian nuclear and military facilities, leading to Iran launching retaliatory missile attacks. After years of simmering tensions, this could be just the start of a larger conflict.
An escalation of military action in the Middle East has forced shipping companies to be extra careful as marine vessels travel through the Strait of Hormuz, the world’s primary oil chokepoint.
The broader marine shipping industry fears a major disruption to oil supply from the Middle East should the escalation continue for a prolonged period of time or even escalate further.
The worst thing that could happen would be Iran closing off the narrow Straight of Hormuz, the most critical shipping lane in the world. Every day, 25% of global oil and 20% of global liquefied natural gas (LNG) pass through the channel.
Don’t forget there are still tensions in the Red Sea, too, with the Iran-backed Houthis choking off shipping in the Red Sea and Suez Canal, two vital trade routes for oil and gas between Asia, Europe, and North America.
This broader uncertainty in the Middle East should result in continued strong time charter rates for marine shipping companies like Hafnia Ltd (NYSE:HAFN).
Operating a fleet of over 200 vessels, Singapore-based Hafnia Ltd is the largest operator of product and chemical tankers in the world. (Source: “About,” Hafnia Ltd, last accessed June 13, 2025.)
The majority of its vessels operate in the spot market, primarily through pools of similarly sized vessels, allowing Hafnia to maximize fleet utilization and revenues, and cyclical freight rate recoveries.
Hafnia transports everything from clean and dirty, refined oil products, vegetable oil, and easy chemicals to oil companies and chemical companies, as well as trading and utility companies.
If you’re not familiar with Hafnia, you’re not alone. HAFN stock only began trading on the New York Stock Exchange in April 2024, though it has been trading on the Oslo Stock Exchange (OSE) since November 2020.
Solid Q1 Results for Hafnia Ltd
During the first quarter, Hafnia experienced an increase in trade volumes and tonne-miles, supported by strong global demand resulting in an improved spot market. Management noted that industry sentiment has improved further in the second quarter, setting the stage for a “robust remainder of 2025.” (Source: “Q1 2025 Investor Presentation,” Hafnia Ltd, May 15, 2025.)
Hafnia reported net profit of $63.2 million, or $0.13 per share, down from $219.6 million, or $0.43 per share, in the same prior-year period.
The company’s time charter equivalent (TCE) earnings were $218.8 million, compared to $378.8 million in the first quarter of 2024, resulting in an average TCE of $22,992 per day.
Hafnia’s first-quarter results were negatively impacted by a significant number of vessels undergoing scheduled drydocking or repairs. This led to approximately 500 off-hire days during the quarter.
The company said that, with a significant portion of its fleet built in 2015, it anticipates a similar level of drydocking and repairs in the second quarter, resulting in approximately 630 off-hire days.
As of May 1, 2025, 57% of Hafnia’s second-quarter earning days were covered at an average of $24,839 per day and 27% of them were covered at $24,902 per day for the second quarter through to the fourth quarter.
Commenting on Hafnia’s first quarter results, Chief Executive Officer Mikael Skov said, “As we conclude the first quarter of 2025, and while market dynamics remain complex, I am optimistic about Hafnia’s ability to build on this positive momentum. Our proven track record of operational excellence and financial discipline positions us strongly to create long-term value.”
Increases First-Quarter Dividend to $0.1015/Share
On the dividend front, Hafnia Ltd announced that it had 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) between 20% and 30%. When the net LTV falls below 20%, it will raise the dividend payout ratio to 90%. At the end of the first quarter, the company’s net LTV ratio was 24.1%.
This resulted in Hafnia distributing a total of $50.6 million, which represents $0.1015 per share in quarterly dividends or $0.91 per share on an annual basis for a forward dividend yield of 17.1%. (Source: “Dividend History,” Hafnia Ltd, last accessed June 13, 2025.)
HAFN Stock Up 50%+ Since April
Since being listed on the NYSE, HAFN stock has done, for the most part, quite well; hitting an all-time high of $8.99 per share on May 31, 2024. Shipping stocks hit some rough water in the last quarter on geopolitical tensions and weak demand from China.
The broader market hit further turbulence in early 2025 after President Donald Trump announced tariffs on Canada and Mexico, and then again in early April, when he unveiled his global tariffs.
HAFN stock has rebounded from those April lows, currently trading up 10% over the last month and 33% over the last three months at around $5.54 per share. Big gains, but Wall Street thinks more moves to the upside are in store for HAFN stock.
Analysts have provided a 12-month share price target range of $8.00 to $10.00 per share. This points to potential upside of 44% to 80%. The latter price, of course, would put HAFN stock in record territory.
Chart courtesy of StockCharts.com
The Lowdown on Hafnia Ltd
Hafnia Ltd is a marine shipping stock with the largest fleet of product and chemical tankers in the world. It reported solid 2024 results with TCE rates of $22,992 per day higher than they were in the fourth quarter of 2024.
While the company will face the same kind of temporary drydocking and repair challenges in the second quarter that it did in the first quarter, the back half of the year looks solid.
That’s good news for HAFN stock and its reliable dividend. It’s also encouraging for the 194 institutions that hold 22.35% of Hafnia shares. (Source: “Hafnia Limited (HAFN),” Yahoo! Finance, last accessed June 13, 2025.)
Some of the biggest institutional holders are Acadian Asset Management, The Vanguard Group, and JPMorgan Chase & Co. An even larger 45.12% of shares is held by insiders. The high insider ownership encourages company management to deliver stronger results.