DHT Holdings (Buy, TP: USD12.30) - 20%+ dividend yield potential
The DHT share price is down 15% from its March peak on OPEC cuts and the banking crisis, despite unchanged long-term fundamentals, in our view. However, current VLCC rates (eco and scrubber) at USD75k/day, versus DHT’s fleet-wide CBE of USD18.1k/day, mean the company is a solid cash generator with a 100% payout. We expect the dividend yield to increase from 10% today to 20% in 2025 on a 2.8% orderbook-to-fleet ratio, implying negative fleet growth in 2024–2025e. We believe this warrants better pricing than its current discount to steel values. We reiterate our BUY and have raised our target price to USD12.3 (11.7).
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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