Irish product tanker specialist Ardmore Shipping is pledging $30m to a new shares buy-back programme.
The shipowner cited the combined influence of depressed stock prices and confidence in its balance-sheet liquidity after paying down debt in explaining the move.
The New York-listed company said the new authorisation effective through September 2023 will replace and expand an existing regime.
Ardmore shares jumped 6% at the start of New York trading on Tuesday on the announcement.
"Over the past six months, shipping equities have settled into price levels which reflect a dramatic discount to net asset value," said chief executive Anthony Gurnee in a statement to TradeWinds.
"We have made good progress in reducing leverage towards our target levels and believe it is time to consider share repurchases."
Ardmore's announcement comes one day after the stock hit a yearly trading low of $2.94 per share before edging up to a close of $3.01 on Monday. Ardmore's trading high for 2020 came on 2 January when shares reached $9.20.
Ardmore is trading at just 44% of its net asset value (NAV), but that does not make it unusual for a New York-listed product tanker company, according to Jefferies lead shipping analyst Randy Giveans.
Peers Scorpio Tankers and Diamond S Shipping — which also has crude tankers — are also priced at between 40% and 44% of NAV, Giveans said. This is well below the average 70% of NAV for crude tankers.
"With a low market cap and small free float, any repurchases would be meaningful to ASC’s stock price and valuation. As such, we think this is a very accretive use of cash, and we’ll be watching for the timing and amount of actual repurchases in the coming weeks and months," Giveans told TradeWinds on Tuesday.
Gurnee said that while Covid-19's impact on the global economy remains a concern, "we believe the current share price levels represent a compelling value opportunity".
He called buy-backs "an important weapon in the arsenal as we focus on building shareholder value over time".
