DHT Holdings Inc. Pins Hopes on Increase in Global Trade

DHT Holdings Inc. Pins Hopes on Increase in Global Trade

DHT Holdings Inc. Pins Hopes on Increase in Global Trade

DHT Holdings Inc. (NYSE: DHT) is an independent crude oil tanker company whose fleet trades internationally. The company’s fleet consists of nine tankers that are fully owned by the company. Of the nine tankers, five are VLCCs (very large crude carrier) all having a deadweight tonnage of over 300,000 tons. The company also owns and operates four smaller tankers with a deadweight tonnage ranging from 112,000 to154,000 tons.  The company is based out of Norway and led by CEO Svein Moxnes, a veteran in the shipping industry, with over 20 years of experience and an impressive resume of holding key positions at several other large multinational companies.

Global economy, Global market, Global opportunities

The company’s fleet of ships operate international routes transporting crude oil and petroleum products. DHT’s impressive fleet of products allows them to operate all over the world. Companies like DHT (along with others within the shipping industry) should benefit from increased economic activity. This also results in increased exportation of finished goods, as well as transportation of energy products like oil and liquid natural gas. Global economic activity has been lackluster for 2013 due to concerns in Europe with Japan also a question mark. The stock is a strong pick intended for investors that are optimistic in a sustained, prolonged, positive global economy. 

Fundamentals

DHT offers a small dividend of $0.08 a year, which translates to a 1.7 percent yield. The stock unfortunately has been on a downward spiral since 2011 and the company was forced to announce a 12 for 1 reverse split effective July 17, 2012. On a pre-split adjusted basis, the stock has traded as low as $.40 a share. Currently, the stock is trading near historical all time lows of (split adjusted) $4.75 a share. While the overall industry remains positive, the company is simply not in good shape. The company’s EPS is -7.83, and the company is losing market share to much larger competitors. The stock is certainly not a grand slam pick, however a small position in any investor’s portfolio can prove to pay off in the long run.

Conclusion

All is not doom for DHT as it can continue competing in the market. The company does not have any scheduled debt repayments until 2015, which will give it the advantage of financial flexibility that many of their competitors do not have. This means that DHT can stock up on cash to stay competitive.

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  • meikoacebo

    I have seen a lot of shipping stocks trading at below book values. Investors are not so confident about their future and they are worth dead than alive. But this is a good insight though on global trade.

  • Innovictor

    The Shipping business is one of the business that I find somewhat hard to understand. I’d rather invest somewhere else than Shipping. Great article though.

    • konraad

      I agree, it not a good idea to invest in an industry where you don’t know how the dynamics play out

  • lyieke

    Shipping requires a lot of due diligence on the part of the investor. Dynamics in the industry are entirely different from other industries.

  • Innovictor

    Interestingly, I met a guy who is heavily into shipping and listening to him speak will get you wondering if there’s ever a better industry than shipping. Moral: invest only in businesses you understand.