Seguimiento y opiniones de Scorpio Tankers (STNG)

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Seguimiento y opiniones de Scorpio Tankers (STNG)
Seguimiento y opiniones de Scorpio Tankers (STNG)

Seguimiento y opiniones de Scorpio Tankers (STNG)

Aquí la opinión de Scorpio Tankers de Evermore Value

Scorpio Tankers Inc. (Ticker: STNG), one of the world’s largest product tanker operators, was the second largest detractor to Fund performance in the first quarter. Shares of Scorpio Tankers underperformed largely due to the COVID-19 crisis and fears related to a global slowdown in trade. 

As we got closer to the end of the quarter, we saw the beginning of a fight between Saudi Arabia and Russia regarding cuts to oil production. With no agreement in place, both countries decided to fight each other and announced substantial production increases to incredible levels. 

While not openly stated, we believe the objective was to destroy the U.S. shale industry by pushing the price of oil to such distressed levels where it would be clearly uneconomical for U.S. competitors to produce. The global shutdown to thwart the spread of COVID-19 then caused the price of oil to implode. With record levels of oil being produced, the demand for oil rapidly waning and limited onshore storage capacity filling up quickly, there was no place to store the excess oil. 

The only viable solution was to charter oil tankers for floating storage, which led to tanker rates surging to unprecedented levels. For the crude tankers (i.e. Frontline, which the Fund also owns), charter rates for very large crude carrier vessels increased substantially from around $20,000 per day to over $300,000 per day virtually overnight before backing off a bit.

 Charter rates are now still over $150,000 per day. In the near 13 | P a g e term, we believe Scorpio Tankers will continue to benefit from the current situation, as the recent OPEC+ deal to reduce production by 10 million barrels per day will not be enough to offset the current oversupply. The bottom line is that, in spite of the COVID-19 pandemic, the tanker industry continues to benefit from a record 20-year low order book for new vessels, favorable International Maritime Organization regulatory changes, Saudi Arabia/Russia conflicts that are collectively creating a situation that is extremely compelling and unique for the industry 


Re: Seguimiento y opiniones de Scorpio Tankers (STNG)

SCORPIO TANKERS (Long) STNG provides seaborne transportation of refined petroleum products (gasoline, jet fuel, etc.). The company operates one of the largest and most modern fleets in the public markets. It is the world’s largest owner of Long Range, or LR2 vessels (the largest product vessels), and with its recent purchase of 19 vessels from commodity trader Trafigura, is also the largest Medium Range (MR) player. Its 124-vessel fleet has an average age of 4.0 years, notably younger than the next three largest product tanker companies. When I initially established a position in STNG, my biggest fear was a global recession. In a recession, it’s not hard to envision how the dominoes would fall.

 A global recession would reduce refined product demand; lower refined product demand would sap utilization of the global tanker fleet; reduced utilization would result in declining rates and cash flow; and declining rates and cash flow would strain STNG’s less-than-pristine balance sheet. Right now, we’re seeing a highly unusual set of circumstances. Despite being in a global recession, seaborne product tanker rates are currently reaching record levels. While refinery runs have been curtailed, the rapid and steep decline in product demand has resulted in significant oversupply. 

Tankers are increasingly being utilized for floating storage. In another positive for STNG, a significant number of the market’s largest product vessels have moved into the socalled “dirty” trade (storing crude oil), further exacerbating the supply-demand mismatch. Despite the market offering historic rates, shares recently traded as low as ~0.50x P/NAV and as of today, STNG still only garners a valuation of ~0.8x P/NAV. 

The last time rates were anywhere near current levels (2015), shares traded well north of 1.0x NAV, leading me to believe there remains additional upside. What’s more, NAV itself should increase going forward on the heels of strengthening vessel values and strong cash generation, each being a function of the current rate backdrop. 


Re: Seguimiento y opiniones de Scorpio Tankers (STNG)

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