Record earnings, but so is valuation

Research evidence excerpt

Record earnings, but so is valuation

DHT Holdings

The market can always get tighter, but risk reward in the shares are neutral

According to ship tracking data, exports of both crude and products are now rising. In the

crude tanker market, global crude exports are again above 45m bpd and closing in on last

year's level. With US SPR releases, which spend 2-3x longer at sea compared to Middle

East exports, crude oil-on-water is now actually 16% higher y-o-y. Product export volumes

have also rebounded but are still 5% below last year, and refinery margins have reached

highs not experienced since the early days following Russia's invasion of Ukraine in 2022.

Last week, the Houthis announced a maritime blockade on Saudi Arabia. Following the

announcement, one vessel carrying Saudi crude was attacked, while several tankers

transiting north through the Suez Canal made U-turns. However, some Chinese-operated

vessels continued their voyages while signalling "CHINA CREW & OWNER," suggesting

that the blockade is currently being enforced selectively based on crew nationality and

ownership. This should ease some of the pressure on the tanker market relative to a

scenario in which all Saudi Red Sea crude exports, around 4m bpd, are forced to reroute.

Saudi Red Sea exports account for roughly 10% of global crude tanker tonne-mile demand.

If all these volumes had to be rerouted north via the Suez Canal, tonne-mile demand for

those cargoes would increase by roughly 2.5x, making an already tight tanker market even

tighter.

Overall, the high freight rates, with VLCC rates from Oman and the US at around USD

120k/day, Suezmax and Aframax at approximately USD 100k/day, and MR at USD 45k/

day, indicate that fleet utilisation remains tight enough for shipowners to capture much of the