Teekay Tankers (Buy, TP: USD57.00) - ~50% upside potential to 1.0x NAV
Teekay Tankers is trading at 0.68x its current NAV and 0.62x its 1-year forward NAV at unchanged asset values. This suggests a favourable risk/reward in light of the company’s high operating leverage from its ~14-year old fleet of mid-size tankers (the prime beneficiary of the embargo-driven trade disruptions), and low cash-break-even from zero market-adjusted leverage, during the early innings of what we foresee will be a multi-year upcycle with <4% of the fleet on order. We reiterate our BUY and have raised our target price to USD57.0 (56.2).
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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