DHT Holdings posted big year-over-year gains in the first quarter and is showing no signs of slowing down.
With tanker owners expected to post big results in the coming weeks, New York-listed DHT reported a $72.2m profit for the first three months of 2020, versus a $17.7m profit for the same period last year.
That bottom line was $0.49 on a per-share basis, lower than the $0.54 analyst consensus. It was boosted by its fleet earning $66,400 per day in the spot market and $54,000 per day on time charter. Taken together, the figures come out to a time charter equivalent rate of $64,400 per day.
Those rates pushed revenue up to $211.9m from $132.3m for the first quarter last year.
DHT added that its fleet was earning $110,400 per day in the spot market in the second quarter, with 66% of days booked, plus $54,100 per day on time charter, driving an estimated $164.4m in adjusted revenue.
The first-quarter performance also saw DHT hand out a $0.35-per-share dividend. The company said last week its strategy was to pay out 60% in dividends and use the rest to deleverage, as tanker rates jumped thanks to the oil price collapse.
The results appeared to help DHT claw back some of its recent equity losses, with shares jumping $0.12 to $6.95 in after-hours trading.
'As good as it gets'
Fearnley Securities said the result was "as good as it gets".
Analysts Peder Nicolai Jarlsby, Espen Landmark Fjermestad and Ulrik Mannhart said earnings beat their expectations, but the super-cycle is winding down.
DHT has already secured $164m in TCE for the second quarter, they added.
"Assuming $60,000 per day for the uncommitted days (roughly today’s market) we see a Q2 profit of circa 90 cents," the analysts said.
"Our concern is, however, that this cycle is running out of steam and that second-half 2020 marks the start of the next down cycle.
"Both 2021 and 2022 look rough on paper as the industry battles both very limited production growth and massive crude inventories."
But Fearnley said DHT will fare better than most, holding sub-40% loan to value and very attractive cash break-even levels.
VLCC rates have fallen more than $100,000 over the past week.
"Announced Opec+ production cuts and forced shutdowns ... could easily constitute 150 VLCCs, we believe," the analysts said.
Like much of the rest of the tanker sector, DHT saw shares slide over the past week as oil prices firmed.
That, plus rosier economic data as economies worldwide begin to reopen from their Covid-19 shutdowns, prompted Evercore analyst Jonathan Chappell to downgrade DHT and two other tanker owners Monday.
On Wednesday last week, DHT was trading at $7.70. Shares closed at $6.83 on Tuesday.
