Nomura Securities on Cruise Line: Higher Fuel Cost from Low-Sulfur Fuels - Yields May Need to Increase to Offset
Tweet
Share
E-mailGet Alerts RCL Hot Sheet
Price: $302.10 +0.70%
Rating Summary:
24 Buy, 14 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 10 | Down: 9 | New: 13
Rating Summary:
24 Buy, 14 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 10 | Down: 9 | New: 13
Join SI Premium – FREE
Nomura Securities on Cruise Line: Higher Fuel Cost from Low-Sulfur Fuels - Yields May Need to Increase 2%-3% Per Year to Offset
After hosting a conference call on the outlook for bunker fuel costs, analyst, Harry C. Curtis, said, "Environmental Control Area (ECA) emission regulation, effective on 8/1/2012, will require ships to burn low-sulfur fuels within 200 miles of the U.S. (ex. the Bahamas and western Alaska), Canada, and France. Additional ECAs around Puerto Rico and the U.S. Virgin Islands will follow in 1/1/2014. Mr. Meech expects higher demand for low-sulfur fuels to increase bunker costs by $100 per metric ton (pmt) in 2012 as ships alter their fuel mix to meet with emissions regulations."
Curtis notes that Royal Caribbean (NYSE: RCL) should see not material impact from the changes, citing RCL 50%+ hedge positions in fuel. Carnival (NYSE: CCL), however, expects $35-45 mln in additional costs. Although, Curtis is positive on the sector and thinks at current valuation, CCL & RCL are attractive. He sees the stocks trading on European news, but use any pullbacks to add to positions.
After hosting a conference call on the outlook for bunker fuel costs, analyst, Harry C. Curtis, said, "Environmental Control Area (ECA) emission regulation, effective on 8/1/2012, will require ships to burn low-sulfur fuels within 200 miles of the U.S. (ex. the Bahamas and western Alaska), Canada, and France. Additional ECAs around Puerto Rico and the U.S. Virgin Islands will follow in 1/1/2014. Mr. Meech expects higher demand for low-sulfur fuels to increase bunker costs by $100 per metric ton (pmt) in 2012 as ships alter their fuel mix to meet with emissions regulations."
Curtis notes that Royal Caribbean (NYSE: RCL) should see not material impact from the changes, citing RCL 50%+ hedge positions in fuel. Carnival (NYSE: CCL), however, expects $35-45 mln in additional costs. Although, Curtis is positive on the sector and thinks at current valuation, CCL & RCL are attractive. He sees the stocks trading on European news, but use any pullbacks to add to positions.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Baidu (BIDU) PT Lowered to $150 at Benchmark on Near-Term Margin Concerns
- Kingsoft Cloud (KC) PT Raised to $17.70 at Jefferies
- Avita Medical Ltd. (RCEL) PT Raised to $14 at TD Cowen
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
NomuraSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
