What are the implications of the reported charter rates and fleet utilization for future cash flow and dividend sustainability?

Fundamentals: The Q2 2025 release shows that Havila’s average charter rates have risen to ≈ $21 k/d (up ~30 % YoY) while fleet utilization has held steady at ≈ 93 %, well above the industry‑average 85 % for offshore supply vessels. At these levels the company is generating an adjusted EBITDA of ~ $120 m, which translates into a free‑cash‑flow conversion of roughly 75 %. Given the current cost base, this cash generation comfortably covers the €0.30 per‑share dividend paid in H1, leaving a dividend‑coverage ratio of ≈ 3.5×. Barring a sharp drop in rates or a utilization dip below 85 %, the cash‑flow profile suggests that the current dividend is sustainable through at least FY26, especially as the forward curve for 2025‑2026 remains in a modest up‑trend (+5‑7 % over the next 12 months).

Market & Technical Outlook: The surge in charter rates is driven by tighter supply (limited newbuild deliveries) and a rebound in offshore drilling activity in the North Sea and Gulf of Mexico. If this supply‑demand imbalance persists, rates could stay in the $20‑$23 k/d band, further bolstering cash flow. However, watch for two risk catalysts: (1) a potential slowdown in drilling rigs after the upcoming Q3 earnings season, which could shave 5‑8 % off utilization, and (2) the upcoming 6‑month charter renewals that may reset rates lower if operators negotiate aggressively. Technically, HAVIL shares have broken above the 50‑day SMA (~ NOK 5.20) and are testing the descending trend‑line resistance at NOK 5.80. A close above NOK 5.80 on volume would signal momentum to push the stock toward the next resistance near NOK 6.30, while a break back below NOK 5.20 would flag a short‑term re‑evaluation of dividend expectations.

Actionable Insight: Maintain a buy‑on‑dip stance for HAVIL around NOK 5.20‑5.40, targeting the NOK 5.80‑6.30 upside corridor, as the current charter‑rate/ utilization mix underpins strong cash flow and dividend coverage. Keep a stop‑loss just below the 50‑day SMA (≈ NOK 5.10) to guard against a rapid utilization decline. Monitor the Q3 charter renewal window and any macro‑drilling activity reports; a material downgrade in either metric would merit a defensive shift to a neutral or short position.