DHT Holdings, Inc. (DHT)

DHT has posted great financial results for Q2. It is proven to be a very well managed company ... some highlights :
- Stronger shipping revenue & adjusted net revenue. (QoQ, YoY)
- Higher Adjusted EBITDA (QoQ, YoY)
- Higher net income (QoQ, YoY)
- Higher quarterly EPS (QoQ, YoY)
- Higher Dividend payout (QoQ, YoY)
- Nice Reduction of Net Debt (QoQ, YoY)
-Stronger Cash & Cash Eq. Position (QoQ, YoY)
- Prepayment of debt installments in 2020, 2021.which would reduce substantially the opex costs this year and next year, which will increase the cash flow, well above the break - even threshold for their vessels.
-Securing Profitable Time Charters (TCs) to some of their vessels with profit split options to be realized on strong market cycle, which is expected 2H of this year.
It is indicated in the report that the spot & TC booking equal 75% of the total capacity for Q3 and has been covered at average rate of $51,200 per day ( not including any potential profit splits on 4 TCs)... this is pretty good !!! Glad I have increased steadily my position in DHT over the past few weeks .....Good Luck to All !

"After market close on Tuesday, the next of the tanker owners in the queue released its results. VLCC owner DHT reported net income of $72.2 million for the first quarter of 2020 compared to $17.7 million in the same period last year. Adjusted earnings of 58 cents per share topped the consensus forecast for earnings of 51 cents per share.
DHT reported that it had 66% of its available VLCC spot days booked for the second quarter at an average rate of $110,400 per day.
Jefferies analyst Randy Giveans described these rates as “dizzying” and the relatively low price of DHT’s stock as “tantalizing,” adding that the second quarter is poised “to set records.” Fearnleys Securities dubbed DHT’s earnings “as good as it gets.”

If you have a son, daughter, niece or nephew that you wish to expose to investing, buying them 100 shares of DHT would be a good low-cost educational experience for them that could pique their interest.
They would learn about:

-the concepts of revenue and expenses when providing a service

-macro conditions that affect the business

-choices businesses have to make such as time-charters versus the spot-market, short-term higher rates versus locking in lower rates for longer terms, utilizing ships for storage and contango

-supply/demand issues regarding VLCC availability, and the interesting options that tanker companies have of getting $15-20 million when selling an older ship for scrap, thus reducing ship availability and protecting rates

-the DHT practice of a baseline 0.02 cent quarterly-dividend (1.5% yield @ $5.33 share price) topped-up with 60% of profits going to share-holders will get the young investors attention and scrutiny. Those are real dollars being added to their account

-the DHT website is informative and easy to understand

-the romanticism of a gigantic ship at sea, with apps that can track their whereabouts and others that provide day-to-day spot-rates

-lots of other informative and interesting information about the industry available on the web

Go ahead and get a young person interested in investing for a low tuition fee!

For those of you who missed DHT's Q1 2020 Earnings call on Wed 5/6 morning, here's the full transcript:
https://www.fool.com/earnings/call-transcripts/2020/05/07/dht-maritime-dht-q1-2020-earnings-call-transcript.aspx

Randy Giveans (Jefferies - Analyst) asked some great questions during the Q&A, once of which was this:
Q: "With your shares trading pretty far below NAV and well below energy and wealth at the beginning of the year, it doesn't seem like you're really getting the premiums, you probably deserve for these large dividend payouts. So going forward, are you open to either changing your return of capital policy of 60% payout, or using more of this cash for share repurchases and dividends? How do you balance this?"

Trygve Munthe (DHT - Co-Chief Executive Officer)
A: "... We tend to focus on the cash dividends. And then, of course, shareholders can increase their stakes with their dividends. We have, certainly, at times done buybacks as well. And when there's been fantastic opportunities or disconnects between the underlying business and what's going on in the stock market."

My Take: Seeing that there is a current obvious disconnect between DHT's value and its equity price, along with favorable future Q2, Q3, & Q4 conditions, these sub-7 levels present an opportune buyback opportunity. In an earlier post, Forward EPS was project to be $3.03. With today's closing price of 6.62, that would equate to a Forward P/E of a mere 2.18. This is unheard of for a company paying out a 21% Dividend Yield (6.62 divided by (0.35 x 4)!

HAMILTON, BERMUDA, July 17, 2020 – DHT Holdings, Inc. (NYSE:DHT) (the “Company”) announces that it has sent notice of its intention to redeem all of the Company’s outstanding 4.5% Convertible Senior Notes due 2021 (CUSIP No. 23335SAD8) (the “Securities”), on August 21, 2020 (the “Redemption Date”), at a price equal to (a) 100% of the principal amount of Securities being redeemed plus (b) accrued and unpaid interest, if any, to, but excluding, the Redemption Date. The Securities may be converted into shares of common stock of the Company at any time before the close of business on August 20, 2020, upon satisfaction of the requirements therefor set forth in the Indenture. The Conversion Rate for the Securities is 187.0208 shares of common stock per $1,000 principal amount of Securities.

HAMILTON, BERMUDA, January 21, 2021 – DHT Holdings, Inc. (NYSE:DHT) (“DHT” or the “Company”) today announced that it has entered into agreement to acquire two VLCCs built in 2016 at DSME (Daewoo) for a total of USD 136 million. The vessels are scheduled to deliver during the first half 2021. The Company will finance the acquisition with available liquidity and projected mortgage debt hence it is expected to be accretive to DHT’s earnings per share. The vessels were built to high specifications by their current owner and are fuel efficient, scrubber fitted Eco-designs that will further improve the DHT fleet’s efficiencies, amongst others its Annual Efficiency Ratio (AER) and Energy Efficiency Operational Index (EEOI) metrics.

Folks - You need to look at a longer term chart, a weekly or a monthly. Two years ago this was a $4 issue, a year ago it was a $5 issue. Look at the volumes. The volumes for about the last, going back to October has doubled on average. Fidelity has 10% of the issue essentially at $6. The story here for the last few months and probably for the next year is Contango - floating storage, with the company making excellent daily rates either on spot or fairly long term charters. Let's look at dividends, 2 to 8 cents for the most part in the past years. With brief periods of hitting 15, 21, 23 and 25 cents. Just thinking out loud here, but I'm gonna guess that yes a 60% payout is going to be guidance (the max), but also I'm thinking that 35 cents is also the max, with everything else going to pay down debt (the last few quarters at about $80 million/quarter isn't bad at all). They can trade off the 20 year old hulls and pick up some newer hulls over the course of time - while deleveraging. Renew the fleet while strengthening the balance sheet. Management is in this for a sustainable continuing business.

Fidelity bought in at $6 - with the high of $8.50 and low of $5 and change going back to the first of the year. It's a trading range. Fidelity would not have purchased 10% of the company with out plans of holding for a year and probably at least 2 - which in reading the Contango articles is the estimated hold period. Everything else being the same - the average volume has doubled, providing liquidity they can earn about 20% on their money in dividends and probably move out for around $6 in a couple of years - not a bad cash flow for the retire funds that they are running. They need cash flow to pay the retirees.

Moving sideways ($5 to $8) with about a 20 to 30% dividend is actually pretty good.

Appetite for floating storage
With the contango in crude futures markets gradually widening in recent weeks, some analysts expect oil firms to charter more tankers for storage play.

Trafigura has reportedly fixed at least eight VLCCs on short charters in the last two weeks, and some of the vessels are speculated to be used to store oil.

Among them, New Shipping’s 281,050-dwt New Kassos (built 2000) was said to be chartered for six months at $25,000 per day.

“I think some charterers are taking vessels on time charters for six months with storage option, plus betting on some rate upticks in the fourth quarter and first quarter,” said a London-based analyst.

Spot VLCC earnings have shown signs of bottoming out this week, supported by charter activity in West Africa and weaker bunker prices, brokers said.

Clarksons Platou Securities, the investment banking division of broker Clarksons, estimated global average VLCC earnings at $21,600 per day on Thursday, compared with $12,200 per day on Tuesday.

“Rates are up and bunker prices down, a winning combination for owners’ earnings,” the investment banking arm of Clarksons said in a note.

Earnings on the West Africa-China route were assessed by Fearnley Securities at $23,600 per day, up 24.9% from Wednesday’s level.

“With earnings approaching opex [operating expense] costs, there was little downside left and the drop in oil prices has shifted the forward curve into a meaningful contango,” Arctic Securities said.

“Charterers and traders thus both came down from fence and rates are off their lows. Whether this will turn into a rally with legs or is merely a short-term positional move remains to be seen.”

https://www.tradewindsnews.com/tankers/sbm-linked-floating-storage-deal-emerges-amid-spot-vlcc-rate-hikes/2-1-872953

From the Form F-3 and other sources:

"If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. ☒"

PLAN OF DISTRIBUTION
"Registration of the securities covered by this prospectus does not mean, however, that those securities necessarily will be offered or sold."

"In addition, we or the selling shareholder may sell any securities covered by this prospectus in private transactions rather than pursuant to this prospectus."

SELLING SHAREHOLDER
In accordance with the VAA, we entered into the Investor Rights Agreement, dated as of April 20, 2017 (the “IRA”), pursuant to which we agreed to file a registration statement for the resale of shares of our common stock issued to BW Group. BW Group, or its respective transferees, donees, pledgees, or other successors in interest, may resell, from time to time, all, some or none of our common stock covered by this prospectus, as provided in this prospectus under the section entitled “Plan of Distribution” and in any applicable prospectus supplement. However, we do not know when or in what amount BW Group, or its respective transferees, donees, pledgees, or other successors in interest may offer their shares of common stock for sale under this prospectus, if any."

Here's how BW Group fits in: "Our principal capital expenditures during the last three fiscal years and through June 17, 2020 were comprised of the acquisition of 14 VLCCs (including the acquisition of BW Group Limited’s (“BW Group”) VLCC fleet pursuant to the Vessel Acquisition Agreement, dated March 23, 2017 (“VAA”)) and capital expenditures related to ten scrubbers for a total of $907 million. Our principal divestitures during the same period comprise the sale of six VLCC tankers and two Aframax tankers for a total of $156 million."

Additional Info (not from F-3)
"BW Group is a global maritime group involved in shipping, floating gas infrastructure and deep water oil & gas production. The company has a fleet of over 165 vessels. BW has a long history in tankers and crude carriers as both Bergesen and World-Wide were involved in the industry. In April 2017, the BW VLCC fleet was sold to DHT Holdings and will be gradually phased into DHT's ownership over several months. In exchange, BW gained 33.5% of DHT's stake. a significant shareholder in DHT with a 33.5% holding."

2017 turned out to be a great time for DHT to be doubling their VLCC fleet, based on this year's prices.

As ALWAYS, these shares have to be registered (Form F-3) or BW Group would not be able to sell them, and that's part of the up front agreement when DHT bought the VLCC's in 2017.

So that's the Secondary Offering shown (25,702,545). In addition, they are registering a Primary which also doesn't mean they will issue all or any of these in the near future. It merely gives them the opportunity, should another great buying opportunity come along, to enter into a contract. The shares usually are also registered to fulfill company options issued to employees, though obviously the size of the registration would favor a huge new investment. In my opinion, it's very unlikely any of the new shares would be issued any time soon.