Scorpio Tankers (Buy, TP: USD92.00) - Set to pivot from debt to distributions
We see ongoing support for the product tanker markets from geopolitics and a fundamentally strong supply and demand outlook even though the orderbook is creeping up. We would expect Scorpio Tankers to redirect cash flows to shareholder returns when it hits its debt target. We estimate current rates leave more than USD4/share in quarterly firepower (23% yield), with the stock now trading at a P/NAV of 0.9x. We reiterate our BUY, and have raised our target price to USD92 (83).
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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