Scorpio Tankers (Buy, TP: USD95.00) - Appealing value accretion
Despite slightly soft Q3 guidance, we see ongoing strength in the product tanker market, with average rates 61% above the 5-year average for the current month. Scorpio Tankers’ reduced cash breakeven following USD399m in debt repayments in Q2, and its reloaded share buyback programme of USD400m, should leave ample room for continued accretive capital returns through share repurchases at its current discount to NAV (we calculate P/NAV of 0.85x). We reiterate our BUY, but have trimmed our target price to USD95 (96).
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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