2020e asset values in focus
DHT HOLDINGS 2020e asset values in focus We are slightly below Bloomberg consensus (3%) on EBITDA for the Q3 results (due after market close on 1 November). The crude tanker market has improved faster than we had anticipated, and we now look to our 2020 asset value forecasts for our NAV valuation. Thus, we have raised our target price to USD7.60 (USD6.30) and reiterate our BUY recommendation.
Q3 rate forecasts lowered 2018e EBITDA by 3%. We have reduced our 2018e EBITDA estimates by 3% due to downward revisions to Q3 rates, while 2019–2020e are unchanged.
7% below consensus EBITDA. Our USD22.3m forecast is 7% below Bloomberg consensus of USD23.9m on Q3 EBITDA ahead of the results. Our forecasts are based on Q3 sailed-in VLCC spot rates of USD19.7k/day, resulting in a net loss of USD15.4m (7% below consensus of USD-14.5m).
Twice our 2018e scrapping rate sets tankers up for a better winter than last year. Since our March sector report, crude tanker scrapping has surprised on the upside and looks to end at nearly twice our full-year estimates. In addition, US long-haul export volumes have outpaced our 1.5mbpd forecast for 2018, YTD averaging 1.8mbpd and September–October seeing 2.2mbpd (in line with our 2019 estimate). These results, combined with increased potential for Iranian floating storage and an oil price curve moving closer to contango in the past few days, have led us to believe that this winter is shaping up to be very promising for tankers.
We now apply a USD107m resale price. In our March tanker sector report, we forecast VLCC resale prices of USD92m by start-2019 (up from the current USD90m (USD84m in March)) and USD107m by the start of 2020 based on our VLCC forecasts of USD29k/day for 2019 and USD41k/day for 2020. With 2020 now just over a year away, we have shifted our valuation one year forward to incorporate a USD107m resale price.
BUY reiterated; target price raised to USD7.60 (USD6.30), now based on 0.90x (unchanged) our 1-year forward NAV/share of USD8.50 with our forecast for tanker asset values by 2020 (35% upside potential to the value of a 5-year old VLCC). We calculate a USD4.80/share current NAV (previously USD4.68/share).
Q3 rate forecasts lowered 2018e EBITDA by 3%. We have reduced our 2018e EBITDA estimates by 3% due to downward revisions to Q3 rates, while 2019–2020e are unchanged.
7% below consensus EBITDA. Our USD22.3m forecast is 7% below Bloomberg consensus of USD23.9m on Q3 EBITDA ahead of the results. Our forecasts are based on Q3 sailed-in VLCC spot rates of USD19.7k/day, resulting in a net loss of USD15.4m (7% below consensus of USD-14.5m).
Twice our 2018e scrapping rate sets tankers up for a better winter than last year. Since our March sector report, crude tanker scrapping has surprised on the upside and looks to end at nearly twice our full-year estimates. In addition, US long-haul export volumes have outpaced our 1.5mbpd forecast for 2018, YTD averaging 1.8mbpd and September–October seeing 2.2mbpd (in line with our 2019 estimate). These results, combined with increased potential for Iranian floating storage and an oil price curve moving closer to contango in the past few days, have led us to believe that this winter is shaping up to be very promising for tankers.
We now apply a USD107m resale price. In our March tanker sector report, we forecast VLCC resale prices of USD92m by start-2019 (up from the current USD90m (USD84m in March)) and USD107m by the start of 2020 based on our VLCC forecasts of USD29k/day for 2019 and USD41k/day for 2020. With 2020 now just over a year away, we have shifted our valuation one year forward to incorporate a USD107m resale price.
BUY reiterated; target price raised to USD7.60 (USD6.30), now based on 0.90x (unchanged) our 1-year forward NAV/share of USD8.50 with our forecast for tanker asset values by 2020 (35% upside potential to the value of a 5-year old VLCC). We calculate a USD4.80/share current NAV (previously USD4.68/share).