Nomura remains positive on the long-term potential of major cruise ship operators despite Coronavirus outbreak.
Japan.- The main casino cruise operators have a low risk of bankruptcy despite the Covid-19 pandemic, analysts at Nomura have revealed in a recent report.
Cruise lines such as Royal Caribbean, Carnival Corp and Norwegian Cruise Line Holdings, all of which operate on board casinos, have enough liquidity and or borrowing capacity to last them through near-zero revenue through to Q1 next year.
There is likely to be a modest recovery in the second half, with revenue down 80 per cent in Q3 and 70 per cent in Q4, with a 50 per cent drop seen for Q1 2021, the report noted.
“In our view, while a peak in new domestic Covid cases/deaths reverses investors’ bunker mentality, the key reversals for cash from operations is accelerating new bookings and the cash that comes with it. 1Q21E could be the turning point,” the Nomura report said.
“There may be 70 per cent-90 per cent upside in the shares over a three year horizon, which is why we continue to recommend operators with the strongest brands: RCL and NCLH.”