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NAV per share (vessel values)
What it is
Net asset value per share values a shipping company on the market price of its vessels less debt, rather than on earnings. Second-hand vessel prices move with freight rates and newbuild costs
Shipping equities habitually trade at discounts or premiums to NAV through the cycle
Impact on industries
- Provides an asset-backed valuation floor that earnings-based measures cannot, since vessels are liquid, tradeable assets with observable prices
- Buying vessels below replacement cost in a trough and selling above it in a peak is a legitimate profit source distinct from operating them
- Vessel values are procyclical - they peak with freight rates, so NAV is highest exactly when the earnings outlook is worst
- Asset play and operating performance can diverge entirely, so a shipowner may create value through timing rather than through operations