LONDON, ENGLAND – Ardmore Shipping Corporation (NYSE: ASC) has shown resilience in the face of market challenges, with a 10% return since April of last year, when the company was identified as well-positioned to benefit from improving spot rates for refined products and chemical tankers. The company operates a fleet of 26 mid-sized refined products and chemical tankers, with an average vessel age of about 9.6 years. Of its vessels, it owns 20, leases two, and has four vessels under time charter-in contracts. The company recently reported a 26% decrease in revenue for the quarter, despite recording an adjusted EPS of 63 cents, topping the consensus by 2 cents.

Despite difficult year-over-year comparisons, ASC experienced an increase in spot rates for its vessels for the second consecutive quarter. It continues to focus on adding scrubbers and upgrading its fleet, demonstrating a commitment to smart asset management and sustainability in the shipping industry.

CEO Anthony Gurnee addressed the current state of the market on the company’s Q4 earnings call, highlighting disruptions in the Red Sea and the Panama Canal as contributing factors to increased tonne-mile demand and reduced effective supply of ships. Gurnee also emphasized the compelling demand fundamentals and the limited scheduled new building deliveries for the next few years, which are expected to restrain fleet growth.

ASC’s current valuation places it at the lower end of other marine shipping companies. Analysts project a continued strengthening of the product tanker market, leading to expectations of a higher share price for ASC in the future.

Looking ahead, ASC has fixed approximately 60% of its total MR tanker revenue days for Q1 at an average TCE rate of approximately $34,400 per day, with its chemical tankers around 70% booked at a rate of $26,700 per day.

With disruptions in key shipping routes due to geopolitical events, ASC is anticipated to continue benefiting from the current favorable conditions in the spot market. However, potential risks for the company include a sudden drop in day rates or an influx of new build orders that could lead to market oversupply.

In conclusion, ASC remains a strong buy with continuous strength in the shipping market, and a revised target price of $19 reflects an even better outlook for the company.