E DHT Holdings: An Undervalued Shipping Play With A Large And Young Fleet

Risk

DHT Holdings appears quite highly leveraged concerning debt to EBITDA but that is not unusual in this industry. Without debt you can’t really operate. Given where prices are it is not all that awful.

Chart

Together with the organization's comparatively low break-even prices the firm has a great prospect of getting through the next upturn.

Catalyst

For spot prices to spike up we need demand for shipping capacity from the market to go up or for capacity to go down. Demand is really hard to predict but capacity is a tiny bit simpler.

Let us look at this current graph from a current Hellenic Shipping News:

Fleets seem to be shrinking because of scrapping and relatively low levels of deliveries of newbuilds. It's surely possible scrapping will accelerate while it is not quite as likely to fall off.

Conclusion

This looks like a fantastic time to pick up a number of your favourite shipping businesses. DHT Holdings is surely a candidate because of its appealing fleet, very low valuation at 7.9x EV/EBITDA and possible catalysts for rate climbs.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Michael Molman 2 years ago Contributor's comment

I have been researching shipping for the last month and a half and I completely agree with your analysis. I personally see the tightening market in LNG carriers as a prime opportunity given the depressed prices of most stocks in the sector. What do you think of $LPG (Dorian LPG)?

Kurt Benson 2 years ago Member's comment

I've barely been able to find anything on $LPG myself. Are you planning on putting together an article about it? Would love to read it.

Michael Molman 2 years ago Contributor's comment

I am planning on publishing an article describing the various oppurtunities in shipping, including $LPG

Doug Morris 2 years ago Member's comment

I love little known stocks. $DHT is new to me but I'll certainly be taking a closer look. Thanks for bringing it to my attention.