DHT Holdings - Despite robust performance DHT’s stock price continues to underperform the broader sector index
The crude tanker market remained volatile in 2022 YTD. The year began on a sluggish note amid the Omicron-led demand concerns and high oil prices, which limited seaborne trade. However, the market dynamics turned favourable for shipowners after the Russia-Ukraine conflict led to high spot TCE rates of mid-sized crude carriers. This supported the uptrend in the Drewry crude tanker equity index that registered a gain of 29.9% between the last week of February and the first week of June. However, DHT’s stock inched up by only 2.9% over the same period. The index declined between the second week of June and the first half of July due to seasonal weakness and normalising spot earnings of mid-sized tankers, especially in the Black Sea and Med before trending upwards again from the second week of July on the back of strong and rising vessel earnings in the spot market. Cumulatively, the index registered a hefty growth of 76.2% YTD. On the other hand, DHT Holdings’ (DHT’s) stock jumped 43.4% YTD primarily on account of the rally in the company’s stock over the past two months, as prospects of a potential recovery in the crude tanker market and surge in VLCC spot TCE rates in the latter half of 3Q22 underpinned a rally in the company’s stocks. Both DHT and the Drewry crude tanker equity index outperformed the S&P 500, which dropped 23.6% since the beginning of the year.Although the company’s stock has generated a high return of 43.4% YTD, it has underperformed the broader sector index as spot earnings of VLCCs largely remained unaffected by the conflict, and DHT owns and operates a fleet of VLCCs only. The news of political uncertainty in China coupled with fears of a potential recession led to some correction in DHT’s stock price over the past three weeks, but we expect it to trend upwards again in 4Q22 on the back of elevated VLCC earnings and robust seasonal demand. However, a potential global economic
slowdown or recession could be a downside risk for the company.
Drewry, since 1970, has been providing research and advisory services on the global Maritime and Shipping industries and has established itself as a firm with long history of credibility and expertise on various aspects of the maritime industry. Leveraging this in-depth market knowledge and understanding, we have extended our offering to deliver a unique, independent investment research service on globally listed companies operating in the maritime industry. Under the brand Drewry Maritime Equity Research and in accordance with the FCA, DMER led by Rahul Kapoor and his team, offers fundamental analysis on listed companies. DMER analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. By combining these market-leading resources with seasoned sector expertise and commercial awareness, we are able to offer a highly differentiated and comprehensive investment research service to prospective investors in listed maritime companies. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.
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