Price discounts to VLCC net asset value have now reached the highest levels in decades

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Courageous investors could look to listed VLCC vehicles as a shipping kick-start as new data emerges on the undervaluation of much of the stock today.

Evercore ISI research shows that net asset value discounts for Euronav and DHT, which serve as a proxy for the VLCC industry, are now at the highest levels in decades.

“Usually, stock prices have a positive correlation with ship prices because the downside valuation measure remains net asset value (P / NAV), for better or for worse,” explained Evercore ISI in a note to clients.

Asset values ​​can be a predictor in calling market inflection points – VLCC history is needed

Analysts have noted not only a renewal in the activity of selling and buying oil assets, but also an increase in values ​​that far outweighs any improvement – or lack thereof – in underlying spot rates. Oil stocks, on the other hand, reacted to this rise in asset values ​​by plunging.

“We fully recognize that investors will need to see the whites of their eyes of real improvement in rates to buy our new favorable equity thesis, but asset values ​​may be a predictor to call the inflection points. Marlet. It will certainly take nerves of steel to buy those sharp drops in tanker (or any other shipping) stocks today, but with the market rebounding down, both oil demand and supply are on the mend. , and with asset values ​​providing a solid floor at current valuations, the risk / return tradeoff significantly skews the latter, ”said Evercore ISI.


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