EURONAV Order book casting shadows

25.01.2019 kl 09:54 255

Sakset fra DNB engelske analyser.

EURONAV Order book casting shadows We have trimmed our EBITDA forecasts by 4% for 2019–2020 following Euronav’s Q4 results and lowering our near-term rate forecasts. We believe crude spot rates are set to come under further pressure in the coming weeks and months, and that tanker stocks will follow suit. VLCC rates have halved over the past seven weeks, while our crude peer group has dropped 12% on average, and nine VLCCs have been delivered YTD (23% of total deliveries for 2018). With another five in January, according to latest Clarksons data, we reiterate our HOLD while lifting our target price slightly to USD12.1 (USD11.9).
Sale of vessel and Q1 2019 rate forecasts updated. We have updated our model following the Q4 results, reflecting the sale of LR1 Companion and our latest rate outlook for Q1 2019. Hence, we have revised TCE revenue down 5% for 2019e, and 2% for 2020e, while EBITDA has been cut by 7% for 2019e and 2% for 2020e. Steep delivery schedule entering 2019 set to magnify OPEC effects on rates. We are moving into what we believe is set to be a difficult H1 for crude tanker rates in light of OPEC production cuts and increasing vessel deliveries, and we remain muted on the outlook for tanker stocks near-term. Clarksons reported nine VLCCs delivered YTD, and another five set to deliver this month, from a total order book of 65 for the year and versus 39 delivered in 2018. The pressure is on VLCC rates, which have more than halved in seven weeks, as the inflow of newbuilds queue up for cargoes.
Reiterate HOLD recommendation; target price tweaked to USD12.1 (11.9), based on 0.8x (unchanged) our 1-year forward NAV/share of USD15.2 (USD14.9), reflecting our 2020 VLCC resale forecast of USD107m. We calculate a current NAV/share of USD11.4 (USD10.3), and applying a 15% decline in asset values indicates a 1-year forward NAV of USD9.7/share. We calculate market-adjusted leverage of 39%, and that a 10% change in asset values would equate to a USD1.7/share, or 15%, change in our NAV.