Scorpio Tankers (Buy, TP: USD96.00) - Focus shifting to capital returns
We expect the ongoing strength in product tanker freight markets and Scorpio Tankers’ reduced cash breakeven after the latest USD223.6m unscheduled debt prepayment to support cash flows going forward, which we believe will be increasingly directed to shareholders as the indicated debt targets are reached. Hence, focus will be on the Q3 outlook and capital allocation in its Q2 report due pre-market on 30 July. We reiterate our BUY and have raised our target price to USD96 (92).
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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