Tsakos Energy Navigation - Discount to NAV offers an attractive opportunity

Tsakos Energy Navigation (TNP) owns and operates a fleet of 66 vessels which includes two VLCCs, 14 Suezmaxes, three DP2 Suezmax shuttles, 22 Aframaxes, 11 Panamaxes, six MRs, six Handysizes and two LNG carriers. Nearly 54% of TNP’s operating days are locked on time charter at healthy rates. With the provision of profit sharing on 11 vessels, nearly 66% of operating days have exposure to the potential upside in the tanker market as oil consumption and trade are expected to improve over the next 18 months. Although TNP’s leverage (101.9%) is higher than the peer average (72.1%) and is expected to increase further to ~111% over the next 15 months, we believe greater charter coverage at healthy rates will provide revenue visibility and ensure that TNP will sail through the rough patch of increased uncertainty in the post-pandemic world. TNP’s shares are trading at a deep discount to its NAV and we therefore see an upside of 121% in the company’s stock price. Accordingly, we assign an Attractive view with Medium risk.