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Surgeon general's warning: tanker content could be hazardous to your wealth.
$DHT
Interesting conference call.
Paraphrasing:
16/27 ships on time charter, fading the market (bearish).
Said they cannot do more TCs in a spot business (even more bearish).
Will continue to delever.
$DHT
Interesting conference call.
Paraphrasing:
16/27 ships on time charter, fading the market (bearish).
Said they cannot do more TCs in a spot business (even more bearish).
Will continue to delever.
Dividend has been 60% of net income, but the rule is a minimum of 60%. They could do more, but prefer to delever. 40% of net income, plus depreciation is the current rate of debt repayment, which amounts to rapid delevering.
May go to zero debt, market permitting.
May go to zero debt, market permitting.
Pre-paying debt aggressively. Why hold cash and pay interest? Banks will be there.
Not buying ships. Three reasons. Uncertainty about demand (bearish freight), prices still too high, propulsion system undecided.
Playing defence.
Will only buy VLCCs. They make more money.
Not buying ships. Three reasons. Uncertainty about demand (bearish freight), prices still too high, propulsion system undecided.
Playing defence.
Will only buy VLCCs. They make more money.
VLCC rates are more volatile, so you can add more value by creative chartering: spot & TC, timing, etc.
Not interested in old tonnage. Will be young eco second hand, resales, or newbuilds.
Not in active discussions with yards or sellers. May not buy for some time.
Not interested in old tonnage. Will be young eco second hand, resales, or newbuilds.
Not in active discussions with yards or sellers. May not buy for some time.
Can run the company for years without fleet rejuvenation, by selling older vessels, if acquisitions and market conditions do not meet their criteria.
Like their size. Big enough to serve customers and dynamically position a portfolio of vessels.
Like their size. Big enough to serve customers and dynamically position a portfolio of vessels.
100 ships is too much, loses flexibility to capture advantageous positions.
Sceptical about dual fuel and biofuel. (By implication, any new propulsion system.)
Think that existing eco designs will meet IMO2030 emissions targets.
Big oil must take the lead, with IMO.
Sceptical about dual fuel and biofuel. (By implication, any new propulsion system.)
Think that existing eco designs will meet IMO2030 emissions targets.
Big oil must take the lead, with IMO.
Even a large independent tanker company cannot set the tone. Too risky to buy new propulsion technology, at a premium, which may obsolete, unless well covered by long-term time charters, which customers are not offering.
In summary, they prefer diesel engines, but not yet.
In summary, they prefer diesel engines, but not yet.
Will not offer any more convertible debentures. They do not like them in the stack.
Hin Leong tankers were distress sales, but 10yo and worse fuel economy than average, so not of interest to them.
Hin Leong tankers were distress sales, but 10yo and worse fuel economy than average, so not of interest to them.
Although bearish on oil volumes, they pointed out the low order book (7%) and large 15+yo segment (25%) for VLCCs, so the global fleet would likely shrink in coming years. Not a question of if the market will balance, but when.
Question about sufficiency of scrapyard capacity: there were queues at the beaches, due to restrictions, but the market has been too strong. It's very weak now, but it needs to be weak for a while longer before scrapping. When this comes, the recycling capacity will be there.
No TC-in deals. They prefer full control of the fleet. And to buy ships cheap to keep break-even low.
No buybacks. The stock is not cheap enough. They will do only if there is a large dislocation.
No buybacks. The stock is not cheap enough. They will do only if there is a large dislocation.
Also, NAV is dynamic. They think not only about buying under NAV, but how much that NAV is relative to historical vessel values. If P/NAV in low with high asset values, buybacks still destroy value. If NAV is low, probably they need a big discount. Would rather rejuvenate.
Interesting to hear a few shareholders on the line, as well as analysts. The shareholders seemed favourably impressed with the management's performance. Plenty of time was made for Q&A, with many good questions and answers.
If you're interested in the crude tanker market, then I suggest at least following these guys, and listening to the calls. They have called the market right. They've fared as well as anyone could in this tough industry, throughout the past decade of mostly dismal conditions.
Svein & Trygve are often terse, but are direct and transparent. They give clear guidance, so investors know what to expect.
G&A has been creeping up lately, but costs are lower than most listed peers, especially given pure VLCC fleet composition.
G&A has been creeping up lately, but costs are lower than most listed peers, especially given pure VLCC fleet composition.
Overall a very well run company in a tough industry. Financially derisked and well positioned for the next upcycle, which may not be imminent.
