DHT Holdings Inc. (DHT) just reported second-quarter earnings of $0.27 per share, a penny light of consensus of $0.28. Revenues fell 8.2% year-over-year to $103.7 million versus the $102.75 million FactSet consensus, notes Bryan Perry, editor of Cash Machine.
Management stated: “The freight market ended the second quarter and has commenced the third quarter with weaker freight rates when compared to the first half of 2024.
DHT Holdings Inc. (DHT)
Chinese economic growth and oil demand has recently been slower than expected. We understand Asian refiners to have built inventories of refined products in response to weak refining margins whilst drawing on crude inventories. It should be logical to expect this to be reversed in due course resulting in increased demand for crude oil feedstock and our services.
Further, we take encouragement from the growth prospects of the Chinese petrochemical industry as their predominant feedstock is crude oil based. A core pillar of our thesis assumes that the Atlantic basin is long oil, and that demand growth is foremost in Asia.
We maintain our view that the continued OPEC+ cuts reflect an acceptance that non-OPEC supply from the Atlantic basin is not going away, hence market share must be afforded to these mostly Atlantic-based producers, to balance the market and support oil prices. This has a fundamentally positive effect on our business through expanding transportation distances and a continued need for VLCCs with their competitive transportation cost and operational efficiency on long-haul routes.”
Recommended Action: Buy DHT.
