Scorpio Tankers (Buy, TP: USD75.90) - Higher shareholder return visibility
Scorpio Tankers is flexing the muscles of its modern, scrubber-fitted eco fleet, beating Q3 consensus and, in our view, ensuring even stronger earnings for Q4. Management has mapped out a debt repayment runway, which we believe could see Scorpio Tankers’ churning out a ~20% FCFE yield at current TC rates. However, with the fleet’s constrained delivery schedule, high shipyard utilisation, low shipyard capacity, and still-significant fleet replacement potential, we continue to see upside potential. We reiterate our BUY and have raised our target price to USD75.9 (73.1).
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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