Today we are going to talk about a giant / quality company in the oil tanker industry-Scorpio tanker.

I. Company business

$Scorpio Tankers (STNG.US) $It is one of the largest product tanker owners in the world, mainly engaged in maritime transportation of refined petroleum products, providing services to end-users in the oil supply chain by distributing refinery gasoline, heating oil and fuel oil.

As an oil tanker company, excluding ships to be sold, the company currently owns and operates 113 finished oil tankers, of which 86 are equipped with desulphurization towers.

Specifically, its fleet includes 39 LR2 tankers, 60 Mr tankers and 14 Handymax tankers.

According to the company, in 2021, the company completed the sale of 12 LR1 tankers and 2 Mr tankers, with a total recovery of $472.2 million, and in late March 2022, the company also announced that it would sell two LR2 tankers and one Mr tanker for a total price of $112.5 million, and is expected to receive about $55 million in liquidity from the transaction.

In addition, the company has two LR1 tankers, three LR2 tankers and one Mr tanker waiting to be sold.It is reported that the company plans to complete the sale of the six tankers by the end of the third quarter of this year.，After that, we will focus on the LR2 tanker market.。

To some extent, the sale of tankers makes the company's balance sheet healthier and has more cash flow for day-to-day operations and feedback to shareholders:

As of June 6, 2022, the principal balance of the outstanding debt of the Scorpio tanker was $2.7113 billion. Since December 31, 2021, the company's debt has decreased by a net $452.4 million, including $69.7 million repaid after the maturity of convertible notes due in May 2022. In addition, the company recently bought back convertible bonds maturing in 2025 with a total principal of $10.8 million on the open market.

At the same time, Scorpio tanker is also the youngest tanker company in the world. the average age of its tanker fleet is 6.3 years, while a large part of the global short-and medium-haul tanker fleet is over 15 years old.

In the current market, 29% of Handy&MR ships for more than 15 years account for 28% of LR1.Therefore, the finished product tanker也There will be a peak in the replacement of old ships.Capacity market supply space will have a certain shortage cycle to boost the industry index.

Second, industry location: Super profit cycle

On the other hand, from the fundamentals of the company to the industry cycle.

At present, from the shipping price index, the Baltic crude Cruise Index (BDTI) and the Baltic Oil products tanker Index (BCTI) are in the high range since 2015, and the BCTI index is still rising sharply, and the trend is very strong.

From the price of the tanker type, the overall price is also showing an upward trend, which corresponds to the rising trend of the industry index.

Moreover, under the new guidance issued by the company for the second quarter on June 9, the price of LR2 ships increased by 44%, the number of days of use increased by 41%, the number of days of use increased by 13%, the number of days of use increased by 43%, the number of days of use of Handymax increased by 16%, and the number of days of use increased by 45%.

Overall, Scorpio's profitability and efficiency have been greatly improved, and the oil tanker industry as a whole is in a very strong profit cycle.

End

Finally, according to recent company disclosures, Robert Bugbee, the company's president, once again bought the company's call options, totaling 20100 common shares at a total price of $237000, with a strike price of $15 and an expiration date of January 2023.

Combined with the views of industry analysts, all seven analysts are bullish, with the highest price of $45 and the average price of 37.14, which analysts believe has 4% room to rise.