Euronav (Buy, TP: USD10.70) - Stuffing the mattress
Q2 spot rates have led us to cut 2018e EBITDA by 22%, as the tankers steam through market headwinds of vessel oversupply. Euronav continues to position itself for a prolonged low-rate environment, adding another USD110m of liquidity, while the scrapping run rate in Q1 was twice our full-year forecast. NAV is up 3.2% as appreciating asset values more than offset the cash burn from low rates, supporting our investment case for tankers. Reiterate BUY and USD10.7 target price.Euronav is a provider of maritime shipping and offshore services engaged primarily in the transportation and storage of crude oil. As of Apr. 4, 2017, Co. owned and operated a modern fleet of 55 vessels (including four chartered-in vessels) with an aggregate carrying capacity of approximately 13.7 million deadweight tons, or dwt, consisting of 31 very large crude carriers, one ultra large crude carrier, 21 Suezmax vessels, and two floating, storage and offloading vessels. Co. has two operating segments: the operation of crude oil tankers on the international markets (tankers) and the floating production, storage and offloading operations.
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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