2023-04 Arctic Tanker Sector Report

A spicy cocktail
Shipping - Tank - Sector Report

Arctic Securities
9 April 2024 Equity Research
Kristoffer Barth Skeie

+47 41 36 36 63
kristoffer.skeie@arctic.com
Lars Moen Eide

+47 95 44 72 13
lars.eide@arctic.com
1
Arctic Shipping
Tank | Sector Report | 09 April 2024 | 06:28
A spicy cocktail
Ordering activity has picked up in recent months, leaving the orderbook at 7.9%. However,
yard capacity for 2027 slots is close to filled up for the largest vessels, while we are seeing
the share of the crude fleet above 20 years of age growing from 17.7% now to 27.7% by the
start of 2027. The situation is more or less the same for product tankers. Net fleet growth
for the next 3 years with conservative scrapping assumptions is 0.4%, 0.8% and 1.6%, while
oil demand is continuing to grow at a healthy rate. It's just a matter of time before Opec
reverses its cuts, which we believe will occur gradually from July, and this should benefit
the crude market which is just waiting to join the party that product owners are already
seeing. We reiterate Buys across the board. The space is now trading at an average P/E of
5.3x in 2024 and street estimates are still too low across the board.
The fleet is hardly growing….

The orderbook has crept upwards (7.9%), with crude and product now standing at 5.6% and 12.5%,
respectively. We assume that vessels turning 25 years of age (not saying anything about vessels
above that now) will be retired, leaving the net fleet growth at 0.4%, 0.8% and 1.6% in 2024, 2025
and 2026, respectively. To illustrate how the fleet is ageing, it is worth mentioning that the share
of the fleet above 20 years of age is now 17.7% and 15.7% for crude and products respectively.
This increases to 27.7% and 27.6% by the start of 2027.
… while oil demand is definitely not slowing

Over time, oil demand continues to be the main driver behind seaborne trade. The EIA estimates
that oil consumption is set to grow to 102.4 mbd in 2024, before reaching 103.8 mbd in 2025.
Other agencies are seeing strong growth also, with the IEA also forecasting growth of 1.4 mbd
in 2024 and Opec seeing 2.2 mbd. This should translate into incremental vessel demand. Opec
2
is still holding back barrels, resulting in inventory draws and with oil now breaking USD 90/bbl, a
reversal is within sight.
Crude bound to show strength…

We believe Opec members will display modest growth in production for Q2, thus remaining near
the 27 mbd level seen in Q1. This is due to a near 100% compliancy amongst members under
production targets, additionally the upside of increased output remains limited for members not
under production targets. This compares to our estimated "call" on Opec oil of 28 mbd in Q1.
We expect this level to rise by a further 0.5-1.0 mbd in Q2. After a gradual reversal of the 2024
cuts from July, we believe 2025 will be a year when production is increased stepwise towards the
September 2022 levels. Other key drivers include the TMX in Canada (0.4 mbd in 2024 and 0.2
mbd in 2025) and continued production in the US and South America. This leaves us with volume
growth of 2.8% in 2024 (skewed towards H2), 5.3% in 2025 and 1.8% in 2026, while translating
into ton-mile growth of 5.6%, 5.5% and 1.7% in the same period.
… while product rates are already record strong

On the product side, we estimate volume growth of 2.0% in 2024, or a whopping 11.9% measured
in ton-miles, more or less attributed to the Suez Canal effect. This is reflected in product rates (vs.
crude) as more volumes flow through the canal on a relative basis, resulting in a rate development
of ~2-3x the 5-year average in Q1. Looking into 2025 and 2026, we estimate ton-mile growth of
2.2% and 1.6%, respectively.
Lifting H1, while keeping our view on rates unchanged long-term

On the back of recent developments, we hike our H1 rate estimates quite heavily to reflect the fact
that the market has been much stronger than anticipated. This leaves us with a conventional VLCC
earning USD 55.2k/d in 2024 and USD 70k/d thereafter. On the product side, we now see an LR2
earning USD 44.9k/d in 2024 (+19%) and USD 47k/d afterwards. We introduce flat rates into 2026.
Still upside, with one clear re-rating candidate

We reiterate our Buy recommendations across the board, seeing an average upside of 26%. Stocks
are trading closer and closer to NAV on all-time high asset values, but values are likely to stay
elevated for a long period of time given the supply situation, and likely no near-term reversal of
geopolitical events and their implications for trade patterns. Offering a P/E of 5.3x on average in
2024 and 4.0x in 2025, one might argue that values should fly higher soon, but we do not factor in
any asset appreciation in our targets. We highlight STNG (Buy, USD 94) which we find to be the 3
most obvious re-rating candidate in 2024. Trading at a P/NAV of 0.84x (vs. peer average of 0.97x)
with solid earnings momentum and too low consensus estimates for the full year, we believe that
a re-rating is warranted. Chunky distributions will likely not occur before the market is willing to the
price the stock at a premium to NAV, but until then, accretive buybacks will likely happen.
4
Orderbook vs. age of the fleet creating the perfect backdrop
The average age has not been higher since 2003 While the orderbook is still at low levels
15 60%
14
50%
13.1
13
40%
Orderbook as % of fleet
Average age
12
30%
11
20%
10
10%
9 7.9%
8 0%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total tanker fleet Current Total tanker fleet Current
Source: Arctic Securities Research, SIN, Sea-Web  5

We lift 2024 estimates to reflect the strength seen YTD and we do still believe that 2025 (and
2026) will be a strong year for tankers
Rate estimates Supply and demand summary
New VLCC Suezmax Aframax LR2 LR1 MR 8% 95%

Q1 42,900 56,300 56,500 52,400 40,200 32,200 7.1%
Q2 41,700 42,200 41,200 53,600 45,200 35,000
6% 93%
Q3 68,000 54,500 50,000 37,488 34,236 30,310
Q4 68,000 54,500 50,000 36,212 30,863 29,278 4.7%
2024e 55,200 51,900 49,400 44,900 37,600 31,700 91%
4%
2025e 70,000 55,000 50,000 47,000 42,000 38,000
2026e 70,000 55,000 50,000 47,000 42,000 38,000 89%
2% 1.6%
1.6%
0.8%
Old VLCC Suezmax Aframax LR2 LR1 MR 0.4% 87%
Q1 30,000 22,500 20,000 34,713 28,454 28,066 0%
Q2 30,000 22,500 20,000 41,987 40,847 33,947 85%
Q3 68,000 54,500 50,000 37,488 34,236 30,310
-2%
Q4 68,000 54,500 50,000 36,212 30,863 29,278
83%
2024e 49,000 38,500 35,000 37,600 33,600 30,400
2025e 70,000 55,000 50,000 47,000 42,000 38,000 -4%
2026e 70,000 55,000 50,000 47,000 42,000 38,000 81%
-6%
Change VLCC Suezmax Aframax LR2 LR1 MR 79%
Q1 43% 150% 183% 51% 41% 15%
Q2 39% 88% 106% 28% 11% 3% -8% 77%
Q3 0% 0% 0% 0% 0% 0%
Q4 0% 0% 0% 0% 0% 0%
-10% 75%
2024e 13% 35% 41% 19% 12% 4% 2019 2020 2021 2022 2023 2024 2025 2026
2025e 0% 0% 0% 0% 0% 0%
Supply Demand Utilisation
2026e 0% 0% 0% 0% 0% 0%
Source: Arctic Securities Research  6

We see healthy demand from crude, driven by Latin America in ’24 and Opec in ’25
Comments Growth assumptions in mbd Volume growth vs. ton-mile demand growth
 We expect volumes to expand by 3.5 10%
2.9%, 5.3% and 1.8% in 2024- 0.1

7.9%
2026, which translates into a ton- 3.0 8% 7.5%
0.6
mile growth of 5.6%, 5.5% and
1.7%. 2.5 5.9%
6% 5.6% 5.5%
5.3%
 In addition to strong estimates from 0.1
0.1
traditional production regions, both 2.0 0.2
4%
North- and South American 0.4 2.9%
exporters are expected to ramp up 1.5 2.3%
0.3 0.5
mbd
their production. TMX in Canada 2.5 1.8%

1.7%
2%
(0.4 mbd in 2024 and 0.2 mbd in 1.0
2025), continued production in the 0.7 0.4
1.5 0%
US and South America possessing 0.3
0.2
0.5 0.1
some of the world’s fastest growing 0.0
-0.7%
0.5 0.5 0.4
(relative) oil provinces. 0.2 -2%
0.0 0.1
0.0 -0.1
 Looking into 2025, we believe that -0.2
-0.4
-0.5 -0.5
the Opec members will gradually -0.3 -4% -3.7%
-0.5
-0.1
increase production towards the
September 2022 levels. This
-1.0 -6%
leaves us with growth of 1.5 mbd in 2021 2022 2023 2024 2025 2026 2021 2022 2023 2024 2025 2026
2025 from MEG.
MEG US Other North America Latin America Other Volumes Ton-miles
Source: Arctic Securities Research, SIN, Opec, IEA, EIA  7

Refinery dislocations continue to be the main driver for growth, boosted by Suez Canal
disruption
Comments Refinery capacity y-o-y Volume growth vs. ton-mile demand growth
4.0 14.0%
 We estimate volume growth of 2.0% in
3.0
2024, or 11.9% measured in ton-mile, 2.0
more or less attributed to the Suez 1.0
mbd
11.9%
0.0 12.0%
Canal effect. This is more reflected in
-1.0
product rates (vs. crude) as more
-2.0
volumes flow through the canal on a -3.0
10.0%
relative basis, with the rate 2020 2021 2022 2023 2024 2025 2026
9.0%
development being ~2-3x the 5-year North America Europe Middle East Asia Pacific and ISC Other 8.3%
average in Q1. Looking into 2025 and
8.0%
2026, we estimate ton-mile growth of
2.2% and 1.6%, respectively. Canal vs. COGH transits
 For the year as a whole, we 6.0%
incorporate a 0.25 mbd loss from 90
Vessels /7 days rolling)
Russian exports. While this is highly 80 4.7% 4.7%

70
uncertain, we find it prudent to include 4.0% 3.7%
60
such a loss. 50
40
 To offset this, there is significant 2.3% 2.2%
30 2.0% 1.9%
refinery capacity coming on stream in 20 2.0% 1.6%
1.3%
2024. We assume that 25% of these 10
volumes end up as seaborne volumes, 0
with the expected destination being 0.0%
Asia, where we believe that 40% of 2021 2022 2023 2024 2025 2026
incremental refined products will be COGH Suez Volume Ton-miles
exported.
Source: Arctic Securities Research, IEA, SIN  8

Valuation has come up since our last update…
Implied value of a resale VLCC
160
151
140 135
132 130
126
121
120 114
112
107
99
100
USDm
80
60
40
20
0
FRO-NO DHT-US INSW-US NAT-US STNG-US HAFNI-NO Current resale Current NB 10yr avg 20yr avg
Source: Arctic Securities Research, Arctic Shipping  9

… but the stocks are still attractive on multiples; Buy reiterated
Price TP Up/downside NAV/sh NAV/sh P/NAV P/NAV EV/GAV Impl. value P/E EV/EBITDA Dividend yield
(local) (local) (%) (current) (1yr fwd) (Q1e) (1yr fwd) (current) resale VLCC 2024e 2025e 2026e 2024e 2025e 2026e 2024e 2025e 2026e
FRO-NO 249.8 308.0 23% 197.6 246.1 1.26x 1.01x 1.15x 151.3 5.2x 4.3x 4.2x 5.6x 4.3x 4.0x 14% 19% 19%
DHT-US 11.5 14.5 26% 11.1 13.2 1.04x 0.87x 1.03x 135.4 6.0x 4.3x 4.1x 4.8x 3.7x 3.8x 17% 23% 24%
INSW-US 52.9 66.0 25% 65.0 73.3 0.81x 0.72x 0.85x 111.8 5.2x 3.8x 3.5x 4.3x 3.1x 2.5x 11% 15% 16%
NAT-US 3.9 4.9 25% 4.4 5.3 0.90x 0.75x 0.92x 120.9 6.1x 4.4x 4.4x 4.7x 3.6x 3.4x 16% 23% 23%
STNG-US 70.8 94.0 33% 84.2 97.1 0.84x 0.73x 0.86x 114.2 4.7x 3.7x 3.5x 3.6x 2.4x 1.7x 4% 6% 6%
HAFNI-NO 77.0 98.0 27% 81.8 98.3 0.94x 0.78x 0.95x 125.8 4.4x 3.8x 3.7x 4.1x 3.5x 3.2x 18% 24% 25%
Average 26% 0.97x 0.81x 0.96x 126.6 5.3x 4.0x 3.9x 4.5x 3.4x 3.1x 13% 18% 19%
Median 25% 0.92x 0.77x 0.93x 123.3 5.2x 4.0x 3.9x 4.5x 3.5x 3.3x 15% 21% 21%
From current to 1yr fwd P/NAV 1yr NAV appreciation in %
1.40x 30%
1.26x
1.20x 25%
1.01x 1.04x 25%
1.00x 0.90x 0.94x
0.87x 0.84x 20% 20%
0.81x 0.78x 20% 18%
0.80x 0.72x 0.75x 0.73x
15%
0.60x 15% 13%
0.40x
10%
0.20x
5%
0.00x
FRO-NO DHT-US INSW-US NAT-US STNG-US HAFNI-NO
0%
P/NAV (Q1e) P/NAV (1yr fwd) FRO-NO DHT-US INSW-US NAT-US STNG-US HAFNI-NO
Source: Arctic Securities Research, Bloomberg  10

Peer group
Mcap (USDm) EV* (USDm)
6,000 9,000
8,000
5,000
7,000
4,000 6,000
5,000
3,000
4,000
2,000 3,000
2,000
1,000
1,000
0 0
FRO-NO DHT-US INSW-US NAT-US STNG-US HAFNI-NO FRO-NO DHT-US INSW-US NAT-US STNG-US HAFNI-NO
# vessels Average age fleet (years)
140 14
120 12
100 10
80 8
60 6
40 4
20 2
0 0
*Adjusted
Source: Arctic Securities Research, Company data  11
Peer group
P/NAV EV/GAV
1.4x 1.4x
1.26x
1.15x
1.2x 1.2x
1.04x 1.03x
0.94x 0.92x 0.95x
1.0x 0.90x 1.0x 0.85x 0.86x
0.81x 0.84x
0.8x 0.8x
0.6x 0.6x
0.4x 0.4x
0.2x 0.2x
0.0x 0.0x
Net LTV NAV sensitivity (10% change in values)
60% 20% 18%

49% 18%
50% 16% 14%
14% 12% 12% 13%
40% 12%
32% 12%
30% 24% 24% 10%
22%
19% 8%
20% 6%
10% 4%
2%
0% 0%
Source: Arctic Securities Research, Company data, Arctic Shipping, Bloomberg  12

Market update
13
Rate snapshot: Where are we now?
Comments Crude rates (Q1 averages vs. 5yr average)

USD 44.1k/d (+35%) USD 53.6k/d (+55%) USD 55.8k/d (+52%)
 If we split the market into crude 100,000

80,000
and product, one could say that the
USD/day
60,000
crude tankers are lagging in terms
40,000
of earnings. Product rate averages
20,000
ranged from +112% to +197% in
0
Q1 compared to the 5yr average.
On the other hand, Crude rates
ranged between 35%-55%. In our VLCC Suezmax Aframax
view, this can be attributed to less 2024 2023 5yr avg.

dependency on the Suez Canal,
resulting in a softer impact from
current disruption. Additionally, Product rates (Q1 averages vs. 5yr average)
volume-growth has weakened, USD 59.4k/d (+197%) USD 45.8k/d (+185%) USD 32.9k/d (+112%)
which has led to the development 70,000

60,000
in crude earnings diverging to lower 50,000
USD/day
levels compared to product. 40,000

30,000
 Product rates are to a greater 20,000
10,000
degree reliant on the Suez Canal, 0
thus the disruption and
consequential re-rerouting around
LR2 LR1 MR
Cape of Good Hope has increased
ton-mile growth and driven rates. 2024 2023 5yr avg.
Source: Arctic Securities Research, Bloomberg, SIN  14

What’s the main driver behind tanker demand? …Oil demand
Oil demand vs. seaborne trade (crude &

Comments product) Demand dictates seaborne volumes
 2023 marked the year when 120
Global oil demand - mbd

100 R² = 0.9663
demand finally rebounded after the
100
pandemic slump, coming in at 80
101.0 mbd according to EIA and 60
thus above the 2019 level of 100.9 40
mbd. 80 20
 Over time, seaborne trade and oil 0

0 10 20 30 40 50 60 70
demand correlate well (naturally)
Total seaborne oil trade - mbd
and since 1980 the relationship mbd 60
shows an R2 of 0.97.
 Going into 2024, the EIA estimates 1.2% CAGR since 2000
that oil consumption is set to grow 40
to 102.4 mbd, before reaching 110.0 103.8
102.4
103.8 mbd in 2025. Other agencies 100.0
are seeing strong growth also, with
20 90.0
mbd
the IEA also forecasting growth of
80.0
1.4 mbd in 2024 and Opec seeing
2.2 mbd. 70.0
0 60.0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
Crude Product Demand World oil demand
Source: Arctic Securities Research, EIA  15

Oil demand is growing, not slowing
Comments The forecast from December… Vs. the forecast from March
 The IEA sees the risk of a 105 2.0 105 2.0
prolonged supply deficit even with

104 104
moderate demand growth. With the
1.5 1.5
seasonal low point in demand now
103 103
behind us, and expected moderate
supply gains, the stage for a 102 1.0 102 1.0
sustained swing up to a higher
USD 80-100 range should be set in 101 101
0.5 0.5
terms of the oil price. mbd
mbd
mbd
mbd
100 100
 The growth is driven by an
improved outlook from the US and 0.0 0.0
99 99
increased bunkering due to the
Suez Canal. Singapore bunker 98 98
-0.5 -0.5
sales rose 12% y-o-y in January
and exceeded 1 mbd. 97 97
-1.0 -1.0
96 96
95 -1.5 95 -1.5
Surplus/deficit Demand (l.s.) Supply (l.s.) Surplus/deficit Demand (l.s.) Supply (l.s.)
Source: Arctic Securities Research, IEA  16

Where are inventories headed?
Comments Inventory cycles dictate VLCC earnings
 Inventory cycles tend to dictate 160,000 400

140,000 300
VLCC earnings, where inventory 120,000 200
USD/day
100,000 100
building supports a higher rate
mbls
0
80,000
environment, while inventory draws -100
60,000 -200
have the opposite effect. 40,000 -300
20,000 -400
 Intuitively, the draws indicated by 0 -500
Q1/01
Q3/01
Q1/02
Q3/02
Q1/03
Q3/03
Q1/04
Q3/04
Q1/05
Q3/05
Q1/06
Q3/06
Q1/07
Q3/07
Q1/09
Q3/09
Q1/10
Q3/10
Q1/11
Q3/11
Q1/12
Q3/12
Q1/13
Q3/13
Q1/14
Q3/14
Q1/15
Q3/15
Q1/16
Q3/16
Q1/17
Q3/17
Q1/18
Q3/18
Q1/19
Q3/19
Q1/20
Q3/20
Q1/21
Q3/21
Q1/22
Q3/22
Q1/23
Q3/23
Q1/24
Q108
Q308
the IEA (previous slide) should
point to a low rate environment,
VLCC rates (lhs) Y-Y Inventory change (rhs)
which in turn would be negative for
the tanker segment. That being
said, we believe it is more a signal
US Commercial inventories OECD Commercial inventories
of how strong demand is set to be
and as inventories are already
1,500 3,300
below 2023 levels and the 5yr 1,450 3,200
range, we believe there is not 1,400 3,100
million barrels
million barrels
necessarily much downside here. 1,350 3,000
1,300 2,900
Stocks have also to a large extent
1,250 2,800
reached operational minimums. In 1,200 2,700
other words, with stocks at such 1,150 2,600
low levels, there may be increased 1,100 2,500
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
demand for imports to replenish
depleted inventories. 5yr range 2023 2024 5yr avg. 5yr range 2023 2024 5yr avg.
Source: Arctic Securities Research, IEA, Bloomberg, EIA  17

Oil in transit in line with 2023 levels
Comments Oil in transit Oil in transit vs. VLCC rates
1,250 1,200 100,000

 Global crude oil in transit, a good
illustration of actual ton-mile
90,000
demand, is basically flat y-o-y 1,200
(excluding the last two weeks). 1,150 80,000
Meanwhile, the fleet is up by 1.8% 1,150
in the same period, explaining why 70,000
Oil in transit - million barrelse
Oil in transit - million barrels

rates are not higher.
1,100
1,100 60,000
 This is despite the voluntary cuts
USD/day
from Opec+, showcasing how the 50,000
1,050
longer distances are offsetting the
lost volumes. The latest spike 1,050 40,000
shows that ton-mile demand is 1,000
creeping upwards due to re-routing 30,000

and volume increase. 950
1,000 20,000
 North America, particularly Canada,
is set to significantly increase 900
10,000
exporting capacity, which
consequently will lift the average 850 950 0
Jan-23
Jun-23
Jul-23
Jan-24
Mar-23
Mar-24
Feb-23
Nov-23
Dec-23
Feb-24
Aug-23
Sep-23
Apr-23
May-23
Oct-23
voyage distance. North American 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
exports will be covered in detail in Week
later slides. 5yr range 2023 2024 Oil in transit VLCC rates
Source: Arctic Securities Research, EIA, Bloomberg, Opec  18

China: Vital for the story
Comments Demand is instrumental for imports Imports are instrumental for rates
 The IEA’s monthly report took the 12 18 12.0 80,000
bull by the horns, literally, in

breaking with its months’ long 67,650
70,000
streak of bearish narratives. The 17 11.5

62,234
agency raised its demand forecast 60,000
11
to 103.2 mbd for 2024 and warned
that the market could be facing a 16 11.0 50,041 51,286 50,000
supply deficit for the rest of the
Demand (mbd)
Imports (mbd)
year. 40,000
USD/day
mbd
10 15 10.5
 Given that the majority of the 33,942
31,740
30,000
revisions have been to OECD
demand, where the IEA seems to
have had an exaggerated view of 14 10.0 20,000
how much demand will disappear 9

owing to energy efficiency and 10,000
EVs, it seems probable that more 13 9.5 3,989 5,378

2,837
upward revisions are in store for 503 0
-2,978
-3,590
2H.
8 12 9.0 -10,000
 Looking at China alone, demand is
expected to grow by 0.6 mbd,
skewed towards H2, boding well for
China crude imports Chinese demand (IEA) China crude imports Rates
tanker demand.
Source: Arctic Securities Research, IEA  19

Opec reversal keeps getting delayed, but the taps are closer to open now
Comments Output vs. quotas
 Opec+ and its members extended 12.00
the 2.2 mbd cuts through Q2 on 3 10.00
March and the monitoring 8.00
mbd
committee recommended to keep 6.00
the cuts in place on 3 April. 4.00
2.00
 With compliance from core
members strong and little upside to 0.00
Algeria Iraq Kuwait Nigeria Saudi Arabia UAE Kazakhstan Mexico Russia
non-core (Iran, Libya, Venezuela),
2024 target level With additional cuts Jan output Feb output
group output is expected to remain
around 27.0 mbd through Q2. This
is well below our estimated call-on-
Opec crude output vs. MEG output
Opec oil (i.e. inventory neutral
level) of 28.5 mbd in Q2, so
30.0
inventory draws are thus poised to 28.4 28.5 28.085
28.0 27.660 27.710 27.615 27.590
continue, and will become contra- 26.7
27.4 27.1 27.4
26.9 27.1 27.4 27.115 27.400 27.0 27.1 26.7 26.6 26.6 26.5 26.5
26.0 26.3 26.1 26.3
mbd
seasonal from here, thus impacting

24.0 24.0 24.1
prices more. 22.7 23.0 22.9 23.1
23.6 23.6 23.3 23.2
22.5 22.8 23.0 23.1
22.2 22.5 22.3 22.5
22.0 21.8 21.5
22.1 22.0 21.9 21.7 21.8 21.9
 We incorporate a gradual reversal
20.0
from Q3/24, before reaching the
production quotas for 2024 by year
end.
Opec crude MEG
Source: Arctic Securities Research, EIA, IEA  20

Trans-mountain pipeline expansion and its implications for Pacific Aframax fleet
Key takeaways Western Canadian Select historically sold at ~26% discount to WTI
The trans-mountain pipeline expansion, after 12 years of construction 140 100%

120
Discount to WTI
80%
and USD ~34bn in investments, is set for completion as the first crude 100 60%
USD/bbl
load (heading to China) is expected sometime in May. The expansion 80
40%
60
will almost 3x the capacity between Alberta to Vancouver, taking it from 26% 20%
40
300 kbd to 890 kbd. Canada has previously been selling oil at a 20 0%
discount to WTI as logistical limitations have hindered the oil from 0 -20%
reaching world markets. The pipeline expansion is expected to have a
significant impact on the regional oil and tanker market. Westridge
terminal, in Vancouver port, is dimensioned to service vessels up to WCS WTI Average disc.
and including Aframaxes, while currents, daylight only transits and air
draft considerations add further operational challenges for vessels.
Historic Vancouver Crude & Condensate export destinations
As for now, 10 shippers have been contracted for 80% of the capacity,
with the remaining 20% expected to go spot. To add perspective, the
100
terminal currently services 2x Aframaxes per month, while after the
80
expansion the terminal will have a capacity to service 1x Aframax per
60
day, a ~15x increase. Should this be the case, the Aframax fleet on the
kbd
40
West coast of North America will be insufficient, consequently, implying
20
a need for repositioning of the global Aframax fleet. This could be partly
0
offset by reverse lightering of VLCCs, which is expected when exports
have settled. It remains uncertain where Canadian crude will end up,
and estimates vary from a 50/50 split between West Coast US and
Asia while others predict Asia to take up to 75% of exports. United States China South Korea India Other
Source: Arctic Securities Research, Bloomberg, Poten, Vortexa  21

TMX boosting Pacific crude trading
US has been the driver of crude export growth With 590kbd on stream (full effect), the ton-mile
from North America effect will anyway be a clear positive Comments
5.0 1.6%  TMX expansion transforms Canada

4.2
3.7
4.0 3.3 0.1
1.4% from a regional to global exporter of
3.1 3.2 0.1
3.0 0.1
0.1 0.2 1.4% crude.
mbd
2.1 1.3%
2.0 0.1 4.1  Uncertainties remain regarding
3.2 3.6
export destinations; estimates vary
Ton-mile boost vs. global crude ton-mile 2023

3.0 3.0 1.2%
1.0 2.0 1.2%
between 50-75% to East-Asia,
0.0 1.1%
while historical export destinations
2018 2019 2020 2021 2022 2023
1.0%
0.9% have been in close proximity to
US Others
Canada. Global exports would
0.8% elevate the average voyage
96% of volumes have headed to the US, 0.8%
distance significantly, from the
providing limited ton-mile effect previously 0.7%
current distance of 849 nautical
0.6% 0.5% miles (ARCe), which compares to
5,000 10,000
the current average sailing distance
Estimated disctance (nm)
4,159 4,121
4,000 8,186 8,254 8,000 0.4%
of 8,186 nautical miles on North
Volume (kbd)
0.4%
3,000 6,000 0.3% American volumes.
2,000 4,000  Assuming 50% to East-Asia would
0.2% 0.2%
1,000 2,000
yield global ton-mile growth of
38 849 0.8%, which is our base case.
0 0
0.0%
Export Vancouver Remaining  The Westridge terminal has several
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Volume Distance limitations, which will impact the
Share to Asia
Aframax fleet particularly (at least
for now).
Source: Arctic Securities Research, SIN, EIA  22
Latin America with lifted export capacity following production ramp-up
Brazil has added ~0.6 mbd in production since

Comments 2021…. …which is reflected in exported volumes.
 Brazil’s crude production increased 5.0 16% 2,000
16.2% from ’21 to ’23 and is 4.5 4.5

4.5 14% 1,800 1,725
estimated to increase another 6.5% 4.3
13% 1,659
from ’23 to ’25. This translates to 1,626
1,564
4.0 12% 1,600
added production of ~850kbd for 3.7
3.8
the entire period. 1,402
1,362
1,392
3.5 10% 1,400 1,331 1,321 1,316
 The added production has trickled
1,205
down to exports, and consequently 3.0 8% 1,200
y-o-y growth
lifted exported volumes by 250kbd 1,074
from ’22 to ’23 after being flattish

mbd
kbd
2.5 6% 1,000
since the start of the 2020’s. If we 5%
apply the historic growth rate 2.0 4% 800
between Q1 and FY exports to
Q1/’24 exports, we get an implied 1.5 2% 2% 600
1%
‘24 export figure of ~1.7mbd, up
6.1% from ’23. 1.0 0% 400
 Brazil’s uptick in production is

0.5 -2% -2% 200
mostly due to increased activity
within the offshore region on its
0.0 -4% 0
south-east coast, making Brazil the 2021 2022 2023 2024e 2025e 2019 2020 2021 2022 2023 2024
7th largest global oil producer.
Brazil y-o-y growth Full year Jan-Mar
Source: Arctic Securities Research, Enerdata, IEA50  23

Guyana emerges as fastest growing oil producer following new offshore discoveries
Production numbers on a steep trajectory with

Comments more to come… … led by export-inclined consortium
800 160% 700

 An Exxon Mobil led consortium
controls all oil production in 662
704
Guyana and is pumping 645 kbd, 700 140% 621 628
134% 600
the company stated back in 625
February ’24. This comes on the 545
600 120%
back of discoveries of above 11bn 500
barrels made offshore.
500 100%
 According to Exxon 3x platforms
y-o-y growth
400 400 404 402
Liza Destiny, Liza Unity and 395 389 391 388
372 367 359 368 360
kdp
Prosperity are operational and 380 359
kpd
400 80% 354
pumping 160, 250 and 230 kpd, 325 330 322
300
respectively. Additionally, the 64%
300
258
60% 263 272
consortium states oil projects
Yellowtail, Uaru and Whiptail will 48% 48%
200 194
each have a capacity of 250 kpd, 200 40%
bringing total estimated capacity to 129

110
1.2 mbd upon completion in ’27. 100 74 20% 100 102 111
 For 2024, we include an increase 13%
of 245 kbd in production, while 0 0% 0

assuming 90% will end up as 2020 2021 2022 2023 2024e 2025e Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
exports. Guyana y-o-y growth 2022 2023 2024
Source: Arctic Securities Research, Reuters, EIA  24

South American exports
Comments Exports by destination
4,500
 The typical conception is that “all”
incremental barrels from South 3,992
America end up in Asia, or China in 4,000
particular. But since the Russian 408
3,519
invasion of Ukraine and the 3,500 122
imposition of sanctions, it is clear to 3,176
3,020 253 311
see that exports have risen to 76 Other
2,931
3,000 70
Europe, to replace these barrels. 2,737 172 South-East Asia
125 132 440 538
Looking at MED and North-West 139 MED + Black Sea
289 108 212
Europe, exports have risen from 2,500 106 NW Europe
72 307 348 290
385 182 167
kbd
213kbd in 2020 to 849kbd in 2024 USWC

234 165 189
(YTD average). 262 357 South-Central Asia
2,000 327 265 190 308 346
130 USGC
 In total, exports are now at 3,992 151
199 Latin America
kbd YTD, which reflects an 1,500 505 469
631
513 619 Eastern Asia
increase of 555 kbd y-o-y. 547
 In comparison, we include a growth 1,000
rate of 0.5 mbd for the full year in
2024. 1,294 1,308
1,117 1,146 1,086
500 997
0
2019 2020 2021 2022 2023 2024
Source: Arctic Securities Research, Frontline  25

While increased distances from the Suez Canal re-routing are adding fuel to the fire
Comments Suez canal transit Cape of Good Hope transit
 Crude transits (7 days rolling) 180 120
through the Suez Canal stood at

~41x vessels in March ’24, down 160
20% from November levels, while 100
product transits show a decline of 140
44%.
120 80
 In comparison, Cape of Good Hope
Vessels (7 days rolling)
Vessels (7 days rolling)

transits show that 45x crude
100
vessels transited in March on
60
average (+18% from November
80
levels). The change is more visible
on the product side where a figure
60 40
of 37x vessels stacks against the
November average of 17x
40
(+124%).
20
 We incorporate such changes in
20
our model, leaving us with a 2.5%
increase in distances on the crude
0 0
side in 2024 (including other
changes). On product, the change
is even more visible, with a gain of
Crude Product Crude Product
9.7%.
Source: Arctic Securities Research, SIN  22

26
North America driving crude growth in 2024, while Opec is crucial for the 2025 story
Comments Growth assumptions in mbd Volume growth vs. ton-mile demand growth
 We expect volumes to expand by 3.5 10%
2.9%, 5.3% and 1.8% in 2024- 0.1

7.9%
2026, which translates into ton-mile 3.0 8% 7.5%
0.6
growth of 5.6%, 5.5% and 1.7%.
 As elaborated on previously, North 2.5 5.9%
6% 5.6% 5.5%
5.3%
American growth is coming from 0.1
0.1
the TMX (0.4 mbd in 2024 and 0.2 2.0 0.2
4%
mbd in 2025), together with 0.4 2.9%
continued production growth in the 1.5 2.3%
0.3 0.5
mbd
US and South America. 2.5 1.8%

1.7%
2%
 Looking into 2025, we believe that 1.0

0.7 0.4
Opec members will gradually 1.5 0%
0.3
increase towards the September 0.2
0.5 0.1
0.0
2022 levels stepwise. This leaves -0.7%
0.5 0.5 0.4
0.2 -2%
us with growth of 1.5 mbd in 2025 0.0 0.1
0.0 -0.1
from MEG. -0.2
-0.4
-0.5 -0.5
-0.3 -4%
-0.5 -3.7%
-0.1
-1.0 -6%
2021 2022 2023 2024 2025 2026 2021 2022 2023 2024 2025 2026
MEG US Other North America Latin America Other Volumes Ton-miles
Source: Arctic Securities Research, SIN, Opec, IEA, EIA  27

Product rates holding up well on the back of strong demand
Comments Refinery capacity vs. seaborne trade Refinery margin vs. MR rates
2.0 40.0 60,000

 Product rates have held up well on 1.5
the back of strong refinery margins 1.0
0.5
and continued dislocations in trade. 0.0
35.0
mbd
-0.5 50,000
 In fact, distances, were on average -1.0
up by 3.4% in ’19, 1.9% in ’20, -1.5 30.0
-2.0
3.5% in ’21, 1.0% in ’22 and 6.5% -2.5 40,000
in ’23. We tie this change to -3.0
25.0
2017 2018 2019 2020 2021 2022 2023
opening and closures of refineries,
USD/day
USD/bbl
as well as the Russian effect which Refining capacity y-o-y Seaborne trade y-o-y
20.0 30,000
became visible in 2023.
Development in sailing distances 15.0

20,000
3,400 10.0
3,300
3,200 10,000
nautical miles
3,100 5.0
3,000
2,900
2,800 0.0 0
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
Apr-21
Oct-21
Apr-22
Oct-22
Apr-23
Oct-23
2,700
2,600
2,500
2015 2016 2017 2018 2019 2020 2021 2022 2023 Refinery margin MR

Ukraine/Russia war impacts global markets as refinery capacity is taken out of Russia
Comments Map
Russian energy-production, terminals and inventories has been a strategic goal Russia
for the Ukrainian military as they seek to compromise the Russian funding and
fuelling of their war machine. Lately, it seems that they have intensified their
efforts as several refineries have been taken out of operation by drone strikes. Finland
As of now, 10 refineries have been struck and estimations suggest total capacity
hit YTD is above 1 mbd, which represents ~20% of total capacity, with another 3 Baltic Sea Russia
China
Estonia
mbd at risk. Albeit the market seems to be unresponsive to such diminishing
Latvia
refinery capacity, with only a minor fall in diesel prices (mid-late March) to show Lithuania
for it, as it’s expected Russia will be able to make up for any lost volume by
tapping spare capacity in the rest of its refining sector. Russia remains a major Belarus
diesel supplier, at a time when diesel inventories are at the lowest in years, so a
drop in its 1 mbd export volume should be felt in global markets. Russian diesel Ukraine
Kazakhstan
exports have been ~1.2 mbd, equal to approximately 5% of total seaborne

volumes, but the recent increase in cracking spreads suggests that the figure is
falling. Consequently, tankers have been re-routed as supply needs to come
from elsewhere, resulting in a stretched fleet. US officials have even urged Black Sea
Uzbekistan
Caspian Sea
Ukraine to halt attacks on Russian refineries, as they fear it would drive global Georgia
oil prices higher, but not surprisingly Ukraine’s deputy PM has responded that Armenia Azerbaijan
Russian energy infrastructure is a legitimate target. Turkey Turkmenistan
Impacted refineries
Refineries within drone-range Syria
Iran
Mediterranean Sea Afghanistan
Iraq
Source: Arctic Securities Research, Reuters, EIG  29

Refinery dislocation continues to be the main driver for growth
Comments Refinery capacity y-o-y Volume growth vs. ton-mile demand growth
4.0 14.0%
 For the year as a whole, we
incorporate a 0.25 mbd loss from
Russian exports. While this is 3.0 12.0%
11.9%
highly uncertain, we do find it
prudent to include such a loss.
 To offset this, there is significant 2.0 10.0%
9.0%
refinery capacity coming on stream
8.3%
in 2024. We assume that 25% of
1.0 8.0%
these volumes end up as seaborne mbd
volumes, with the expectation
being Asia, where we believe that 6.0%
0.0
40% of incremental refined
4.7% 4.7%
products will be exported.
4.0% 3.7%
 This leaves us with volume growth -1.0
of 2.0% in 2024, or 11.9%

2.3% 2.2%
measured in ton-miles, more or 2.0% 1.9%
-2.0 2.0% 1.6%
less attributed to the Suez Canal 1.3%
effect. Looking into 2025 and 2026,
we estimate ton-mile growth of 0.0%
-3.0
2.2% and 1.6%, respectively. 2020 2021 2022 2023 2024 2025 2026 2021 2022 2023 2024 2025 2026
North America Europe Middle East Asia Pacific and ISC Other Volume Ton-miles

Supply
Ordering has picked up
31
Supply summary – Still favourable backdrop
2024 has so far been characterized by crude The orderbook is now standing at 5.6% on crude
Comments ordering picking up – up from the low of 2.6% in May 2023
12.5%
80 71.0
7.9%
70 70% 5.6%
 Ordering has picked up, with the
60 60%
YTD figure being higher than total 50
mDWT
33.7 50%
40 29.2 30.8 Total Crude Product
contracting seen in 2023 by 8.0m 26.4 23.5 20.9 18.1 19.2 40%
30 15.4
DWT. This leaves the total 20 11.7 9.5 30%
5.3 5.3 8.0
10 20%
orderbook now standing at 7.9%,
0 10%
but crude is still very low in a 0%
historical context at 5.6%.
1986
1988
1989
1990
1991
1993
1994
1995
1996
1998
1999
2000
2001
2003
2004
2005
2006
2008
2009
2010
2011
2013
2014
2015
2016
2018
2019
2020
2021
2023
 The increase in ordering is natural Crude Product
Total Crude Product
given where the market has
developed and the consensus view Reported VLCCs in the orderbook total 40x, but That said, slots are now for 2027 delivery,
that we are in for a long upcycle.
this is before options declared meaning that growth estimates are in the book
 With relatively modest scrapping
assumptions, we arrive at net fleet 250 220 30.0% 5%
3.8% 3.6%
growth of 1.3% in 2024, 2.7% in 200 24.2% 25.0% 4% 3.3%
Net fleet growth

148 20.0% 3.0%
2025 and 1.6% in 2026. 150 110 3% 2.5% 2.2%
15.0% 2.1%
2.1%
100 63 10.3% 2% 1.6%
 As shown on the next slide, the 40 8.5% 10.0%
8.7% 1.3%
50 23 29 7.2% 0.8% 0.9%
share of the crude and product fleet 4.5% 3.5% 0 5.0% 1% 0.4%
0 0.0% 0.0%
above 20 years of age is growing 0%
0.0%
from 17.7% and 15.7% now to -1%
-0.7%
2022 2023 2024e 2025e 2026e
27.7% and 26.7% by the start of
2027 (suggesting a lot of Vessels on order In % Total Crude Product
scrapping).
Source: Arctic Securities Research, Sea-Web  32
Supply: Demolition potential and replacement need
The age profile of the total tanker fleet shows significant potential
Resulting in increased scrapping potential over the coming years,
for demolition
both for product and crude
50 11-15yrs: 26.9%
16-20yrs: 21.6%
45 60% 56.1%
53.3%
52.4%
51.9%
6-10yrs: 19.7%
Share of fleet measured in

40 46.0%
21-25yrs: 10.9% 50%
35 0-5yrs: 19.2%OB: 7.9% 39.6%
30 40%
mDWT
24.5% 27.7%
27.6%
25 Survey pool: 30% 23.2%
mDWT
17.7%
15.7%
20 25% 20% 12.5%
15 10% 5.6% 3.5%5.2%
10 1.2%1.3%
0%
5
OB 20+ 15+ OB 20+ 15+ OB 20+ 15+
0
Current 2026 2027
Crude Product
Crude replacement need: Orderbook vs. vessels > 15yrs Product replacement need: Orderbook vs. vessels > 15yrs
1.0x 1.2x
Orderbook / fleet +15 years
Orderbook / fleet +15 years

1.0x 24.2%, 1.1x
0.8x
0.8x
0.6x
Fleet renewal
Fleet renewal
10.3%, 0.3x 0.6x
4.5%, 0.2x 8.5%, 0.2x
0.4x
5.6%, 0.2x 0.4x
0.2x 3.5%, 0.1x 0.2x 7.2%, 0.1x 12.5%, 0.3x
0.0x 0.0x
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Orderbook / fleet Orderbook / fleet
VLCC Suezmax Aframax Total crude LR2 LR1 MR Total product

Deliveries vs. ageing fleet
From now to 2026
VLCCs turning 20 years vs. deliveries Suezmaxes turning 20 years vs. deliveries
120 120
101 97
100 100
#Suezmaxes
80 80
#VLCCs
64
60 60
41
40 27 28 28 40 25 28 25 26
19 18 23 23
15
20 5 20 5 6
2
0 0
2024 2025 2026 2027 Accumulated 2024 2025 2026 2027 Accumulated
Deliveries Turning 20 years Deliveries Turning 20 years
Aframaxes turning 20 years vs. deliveries Age distribution of the crude fleet
200 100.0%
Share of existing fleet

160
150 80.0%
#Aframaxes
60.0%
100
40.0%
39 46 42
50 33 20.0%
27
12 9 4 2 0.0%
17
16
30
29
28
27
26
25
24
23
22
21
20
19
18
15
14
13
12
11
10
>30yrs
9
8
7
6
5
4
3
2
1
0
0
2024 2025 2026 2027 Accumulated
Deliveries Turning 20 years Age distribution

Orderbook vs. age of the fleet creating the perfect backdrop
The average age has not been higher since 2003 While the orderbook is still at low levels
15 60%
14
50%
13.1
13
40%
Orderbook as % of fleet
Average age
12
30%
11
20%
10
10%
9 7.9%
8 0%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total tanker fleet Current Total tanker fleet Current
Source: Arctic Securities Research, SIN, Sea-Web  35

Supply: Fleet growth is modest in both segments
Crude Product Total
30 12 6% 40 8%
8%
25 10 5%
4.8%
6.7% 30 6.0% 6%
20 6%
8 4%
3.6%
15
27 4% 6 3.0% 3% 20 4%
3.8% 11 38
3.6% 2.6% 11 2.7% 2.5% 2.5% 3.3% 3.3%
20
net fleet growth

10
net fleet growth

20 9 9
net fleet growth

2.7% 2.2% 28
15 16 4 8 2% 25 27
2.6%
mDWT
mDWT
2.1% 7
mDWT
2% 7 22
10 2.1% 20 2%
5 9 10 6 18
1.1% 7 0.9% 5 1.3% 1.6% 1.6%
2 1% 15
3 9 0.8%
0 -1 0 0.0% 0%
-2 -4 -3 0.4%
-5 -0.7% 0 0% 0 0%
-7 0 -2 -1
-5 -10 -1 -4 -6
-2 -2 -6
-2% -3 -3 -2 -9 -9
-3
-16 -2 -4 -1% -13
-10
-10 -19 -2%
-4%
-4 -2%
-15
-20 -6% -6 -3% -20 -4%
Total deliveries Total scrapping Net fleet growth Total deliveries Total scrapping Net fleet growth Total deliveries Total scrapping Net fleet growth

Market balance
37
Supply and demand summary
Crude Product Total
10.0% 15.0% 8% 95%

7.1%
7.9% 11.9%
8.0% 6% 93%
6.7% 10.0% 4.7%
9.0%
5.9% 8.3%
6.0% 5.6% 5.5% 91%
4%
3.8% 4.8% 4.7% 89%

4.0% 3.6% 5.0% 1.6%
1.6%
3.0% 3.6% 2%
2.7% 2.6% 2.7% 2.5% 2.5% 3.0% 0.8%
2.2% 2.2% 0.4%
2.1% 1.6% 87%
1.7% 1.3%
2.0% 0%
1.1% 0.3% 0.5%
0.9%
0.0% 85%
0.0% -2%
0.0%
83%
-0.7%
-2.0% -1.4% -5.0% -4%
81%
-4.0% -3.7% -6%

79%
-10.0% -9.2%
-6.0% -8% 77%
-6.8%
-8.0% -15.0% -10% 75%
2018 2019 2020 2021 2022 2023 2024 2025 2026 2018 2019 2020 2021 2022 2023 2024 2025 2026 2019 2020 2021 2022 2023 2024 2025 2026
Supply Ton-miles Supply Ton-miles Supply Demand Utilisation
Source: Arctic Securities Research, IEA, EIA, Opec, SIN, BP, Sea-Web  38
We lift 2024 estimates to reflect the strength seen YTD
Rate estimates Fuel savings – Crude tankers
New VLCC Suezmax Aframax LR2 LR1 MR 90,000

Q1 42,900 56,300 56,500 52,400 40,200 32,200 80,000 6,900 6,900
70,000 6,100 6,100
Q2 41,700 42,200 41,200 53,600 45,200 35,000 7,525 4,600 4,600
60,000
USD/day
6,800 4,975 4,000 4,000 4,750 4,300 4,300
Q3 68,000 54,500 50,000 37,488 34,236 30,310 50,000 4,425 3,625 3,200 3,200
Q4 68,000 54,500 50,000 36,212 30,863 29,278 40,000
70,000 70,000
30,000 55,200 51,900 55,000 55,000
2024e 55,200 51,900 49,400 44,900 37,600 31,700 49,400 50,000 50,000
20,000
2025e 70,000 55,000 50,000 47,000 42,000 38,000 10,000
0
2026e 70,000 55,000 50,000 47,000 42,000 38,000 2024 2025 2026 2024 2025 2026 2024 2025 2026
VLCC Suezmax Aframax
Old VLCC Suezmax Aframax LR2 LR1 MR
Q1 30,000 22,500 20,000 34,713 28,454 28,066 Standard Scrubber savings ECO savings
Q2 30,000 22,500 20,000 41,987 40,847 33,947
Q3 68,000 54,500 50,000 37,488 34,236 30,310
Q4 68,000 54,500 50,000 36,212 30,863 29,278 Fuel savings – Product tankers
2024e 49,000 38,500 35,000 37,600 33,600 30,400
2025e 70,000 55,000 50,000 47,000 42,000 38,000
60,000
2026e 70,000 55,000 50,000 47,000 42,000 38,000 4,400 4,400
50,000 4,850 3,300 3,300
3,725 2,900 2,900
3,200 2,600 2,600 4,900 4,900
40,000
USD/day
Change VLCC Suezmax Aframax LR2 LR1 MR 2,975 5,350 2,200 2,200
30,000 2,400
Q1 43% 150% 183% 51% 41% 15%
44,900 47,000 47,000 42,000 42,000
Q2 39% 88% 106% 28% 11% 3% 20,000 37,600 38,000 38,000
31,700
Q3 0% 0% 0% 0% 0% 0% 10,000
Q4 0% 0% 0% 0% 0% 0% 0
2024 2025 2026 2024 2025 2026 2024 2025 2026
2024e 13% 35% 41% 19% 12% 4%
2025e 0% 0% 0% 0% 0% 0% LR2 LR1 MR
2026e 0% 0% 0% 0% 0% 0% Standard Scrubber savings ECO savings
Source: Arctic Securities Research  39

Fuel spreads keep climbing back
VLSO, HFO and spread Brent vs. VLSO and HFO
1200 500 1200
450
R² = 0.9361
1000 1000
400
350
800 800
300
Fuel - USD/mt
USD/mt
USD/mt
600 250 600 R² = 0.8879
200
400 400
150
100
200 200
ARCe
50
0 0 0
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Mar-20
Mar-21
Mar-22
Jul-22
Jan-23
Jul-23
Jan-24
Mar-23
Mar-24
Nov-21
Nov-19
Nov-20
Nov-22
Nov-23
Sep-20
Sep-21
Sep-22
Sep-23
May-20
May-21
May-22
May-23
0 20 40 60 80 100 120 140

Brent - USD/bbl
Spread VLSFO avg. HFO avg. VLSFO vs. Brent HFO vs. Brent

Values have continued to rise since our last update
5yr old vs. historical averages 5yr old vs. Dec ’23 and Mar ‘23
120.0 25%
114.0
100.0 20%
20%
85.5
81.8 81.5
80.0 75.4
71.0 15%
15%
USDm
59.1 59.1
60.0 56.7
52.4 51.0 10.6% 11%
47.3 47.0
10%
42.0
40.0 36.9 37.8
34.1 33.3 32.8
29.6
5%
20.0 3.6%
3.2%
0.0 0%
VLCC Suezmax Aframax LR1 MR VLCC Suezmax MR
Current 5yr avg. 10yr avg. 20yr avg. YTD y-o-y

We believe there is more in store
1. There is no doubt that rates dictate asset values, evidenced by 3. Our rate estimates for 2025 suggest that values should come up
the historical relationship between a 5yr VLCC and 1yr TC-rate even more….
180 140 127.8

160 114.0
120
140 93.6
100 81.5 82.3
120
71.0
USDm
USDm
100 80 62.8
80 60 47.0
60 40
40
20
20
0 0
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 VLCC Suezmax Aframax MR
USD/d Current Implied by 2025e rate estimates
2. In nominal terms, asset values are still below the 2005-2008 4. Suggesting heavy GAV uplifts, but we believe this is more likely
levels –a 5yr VLCC on average had a cost of USD 125m (nominal) on the largest sizes as NB prices are a natural constraint
100,000 200 40%

34%
35%
80,000 114.0 28%
150 30%
USD/day
USDm
60,000 25%
100 20% 15% 16%
40,000 12% 13%
15%
20,000 50 10% 4%
5%
0 0
0%
Apr 93
Apr 98
Apr 03
Apr 08
Apr 13
Apr 18
Apr 23
Oct 95
Oct 00
Oct 05
Oct 10
Oct 15
Oct 20
Jul 94
Jul 99
Jul 04
Jul 09
Jul 14
Jul 19
Jan 92
Jan 97
Jan 02
Jan 07
Jan 12
Jan 17
Jan 22
-5% -2%
VLCC Suezmax Aframax MR
Day rate 5 yr old VLCC Uplift from current 5yr Premium/discount to NB

Context: Vessel requirement per mbd of oil shipped
Incremental volumes from the US is the largest driver for VLCC demand
Annual VLCC
2
Crude demand Equivalents
growth
Barrels
Vessel size
capacity
Vessels mbd Number
0.7 27x
VLCC
2m 890x 0.8 31x
200k+ dwt
0.9 35x
Suezmax
1m 610x
125-200k dwt 1 39x
Aframax 1.1 43x
0.5-0.8m 663x
80-125k dwt
1.2 46x
~18x
Panamax ~52x 1.3 50x
0.4-05m 55x
55-80k dwt
~25x 1.4 54x
Products 1.5 58x
Barrels 1.6 62x
Vessel size Vessels
capacity
LR2
0.5-0.8m
~43x
455x
80-122k dwt
LR1
0.4-0.6m 403x
55-80k dwt
MR
0.2-0.4m 2,591x
27-55k dwt
Handy
<0.4m 1,703x
10-27k dwt

Waiting for the Vs to spark
DHT - Equity Update
Arctic Securities

+47 41 36 36 63
Lars Moen Eide

+47 95 44 72 13
44
Buy
DHT Hold
DHT US | Tank | Equity Company Update | 08 April 2024 | 20:53 Sell
Waiting for the Vs to spark Financials and estimates changes Target $ 14.50
After ordering 4x firm vessels, with the option for 4x more, DHT has helped bring the Key Figures (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Highlights
Recommendation Buy
orderbook up to 5.6%. This leaves the orderbook at 40x Vs on our figures (4.5%), but
Revenue 268.6 394.9 544.8 665.8 700.1 Target Price $ 14.50
including options it is likely quite a bit higher. That’s fine and not too worrisome in our view EBITDA 177.9 302.0 454.3 575.5 605.7 Share Price 11.51
as the portion of the crude fleet set to be over 20 years of age will be 27.7% by the start of EBIT 74.2 193.1 341.0 462.6 487.6 Upside (%) 26.0
2027, up from today’s 17.7%. The need for replacement is therefore clear. DHT is attractively EPS 0.38 0.99 1.91 2.68 2.82 Market cap (USDm) 1,853
priced now, with juicy earnings and distribution power. Our TP is reiterated at USD 14.5/sh Adj. EBITDA 177.9 302.0 454.3 575.5 605.7 Enterprise Value (m) 2,228
and we still recommend Buy. Adj. EBITDA margin (%) 66.2 76.5 83.4 86.4 86.5 Number of shares (m) 161
Adj. EPS 0.38 0.99 1.91 2.68 2.82
A spicy cocktail 12 months share price performance:
Revenue growth (%) 32.0 47.0 38.0 22.2 5.2
The orderbook has crept upwards (7.9%), with crude and product now standing at 5.6% and 12.5%, EPS growth (%) (495.3) 164.4 92.1 40.2 5.0 Performance (%) 3M 6M 1Y
DHT US 10.8% 24.0% 36.0%
respectively. We assume that vessels turning 25 years of age (not saying anything about vessels 14.00 OSEBX 8.6% 19.4% 22.9%
13.50
already beyond 25 years) will be retired, leaving the net fleet growth at 0.4%, 0.8% and 1.6% in DPS 0.48 0.99 1.91 2.68 2.82 13.00
2024, 2025 and 2026, respectively. To illustrate how the fleet is ageing, it is worth mentioning that Dividend yield (%) 4.2 8.6 16.6 23.3 24.5
12.50
12.00
the share of the fleet above 20 years of age is now 17.7% and 15.7% for crude and products. Net interest bearing debt 270.7 354.0 313.8 262.1 476.8 11.50
This increases to 27.7% and 27.6% by the start of 2027. Over time, oil demand continues to be ROE (%) 5.8 15.3 28.8 38.5 39.5 11.00
10.50
the main driver behind seaborne trade. The EIA estimates that oil consumption is set to grow to ROACE (%) 5.2 14.1 24.3 32.8 32.1
10.00
102.4 mbd in 2024, before reaching 103.8 mbd in 2025. Other agencies are seeing strong growth 9.50
9.00
EV / Sales (x) 8.0 5.6 4.0 3.2 3.4
also, with the IEA also forecasting growth of 1.4 mbd in 2024 and Opec seeing 2.2 mbd. This 8.50
EV / EBITDA 12.1 7.4 4.8 3.7 3.9

should translate into incremental vessel demand. We model combined (crude and product) ton- 8.00
EV / EBIT (x) 28.9 11.5 6.4 4.6 4.8 7.50
mile growth of 7.1%, 4.7% and 1.6% for the coming three years, implying a very strong market 7.00
P/E (x) 30.6 11.6 6.0 4.3 4.1
balance ahead when stacking it against the fleet growth. 6.50
P/BV (x) 1.7 1.8 1.7 1.6 1.6 6.00
The listed owner that takes a newbuild bet EV Static 2,207.1 2,207.1 2,207.1 2,207.1 2,207.1 Jun-23 Sep-23 Dec-23 Mar-24
DHT US OSEBX
EV 2,144.8 2,228.0 2,187.8 2,136.1 2,350.8
In February, DHT confirmed the rumour that it had entered into agreements to construct 4x
scrubber fitted VLCCs with scheduled delivery between April and December 2026, of which 2x
45
will be constructed at Hyundai Samho and 2x at Hanwha Ocean (ex. DSME) in South-Korea. The
order includes options for 4x additional vessels with H1/27 delivery, taking the potential order up
to 8x vessels. The price is USD 128.5m apiece, representing a total capex of USD 514m for the
firm order (USD 1,028m incl. options). After being one of the lowest levered companies prior to
the announcement (17%), it is now at 34%, which we consider appropriate. DHT does not intend
to issue any new capital to fund the orders, instead, it plans to fund them with cash flow from
operations, available liquidity and new mortgage debt, meaning that the company will maintain
its dividend policy (100% pay-out ratio). We assume that the company will draw USD 3m per
depreciation year (USD 60m) per vessel upon delivery, while available revolving capacity will help
fund the first two 10% payments (USD ~12.9m per vessel per 10%), i.e. USD 102.8m.
TP kept unchanged with plenty of upside left

The stock is trading at an 16% dividend yield in ’24, which we see growing to 23% next year. A
yield contraction is likely in our view should we be right on estimates and we are in fact 25% above
consensus EPS for 2024. Looking at steel, the stock is implicitly valuing a 5yr VLCC to be worth
USD 118m (vs. quotes of USD 114m), which we don’t find very demanding either. On the back of
both steel and attractive multiples, coupled with too low street estimates, we believe a re-rating is
likely. We keep our TP unchanged at USD 14.5/sh, which reflects a 10% premium to 1yr fwd NAV.
46
Estimates
Comments Arctic vs. consensus - Quarter
In February, DHT confirmed the DHT Holdings Q1/24e Diff vs. cons % change
rumour that it had entered into (USDm) Q1/23 Q4/23 Arctic Cons. % abs. QOQ YOY
agreements to construct 4x scrubber TC revenue 93.9 94.5 106.5 109.1 -2% -3 13% 13%
fitted VLCCs with scheduled delivery EBITDA 71.9 72.9 83.9 86.3 -3% -2 15% 17%
between April and December 2026, of EBIT 46.2 44.4 55.8 57.8 -3% -2 26% 21%
which 2x will be constructed at Net profit 38.2 35.4 47.3 49.7 -5% -2 34% 24%
Hyundai Samho and 2x at Hanwha EPS 0.23 0.22 0.29 0.31 -4% -0 34% 25%
Ocean (ex. DSME) in South-Korea. DPS 0.23 0.22 0.29 0.29 2% 0 33% 28%
The order includes options for 4x
additional vessels with H1/27 delivery,
taking the potential order up to 8x
vessels. The price is USD 128.5m Arctic vs. consensus - Annual
apiece, representing a total capex of
USD 514m for the firm order (USD DHT Holdings 2024e 2025e 2026e
1,028m incl. options). After being one (USDm) Arctic Cons. Diff Arctic Cons. Diff Arctic Cons. Diff
of the lowest levered companies prior TC revenue 544.8 479.5 14% 665.8 578.4 15% 700.1 651.7 7%
to the announcement (17%), it is now EBITDA 454.3 406.7 12% 575.5 503.8 14% 605.7 538.7 12%
at 34%, which we consider EBIT 341.0 285.4 19% 462.6 389.3 19% 487.6 428.1 14%
appropriate. DHT does not intend to Net profit 307.8 258.3 19% 431.6 377.8 14% 453.3 415.0 9%
issue any new capital to fund the EPS 1.91 1.53 25% 2.68 2.18 23% 2.82 2.46 14%
orders. DPS 1.91 1.58 21% 2.68 2.41 11% 2.82 2.57 9%

Valuation
Comments NAV estimate (Q1/24e) NAV sensitivity
 The stock is trading at an 18%

# Age Value Implied 16 14.2
13.4
VLCC 28x 8.7 2,500 2,586 14 12.7
dividend yield in ’24, which we see 12 10.3
11.1
11.9
Fleet value 28x 8.7 2,500 2,586 11.6 9.6
growing to 25% next year. A yield 10 8.8
USD/sh
Debt -481 -481 8.0
contraction is likely in our view 8
Capex -463 -463 6
should we be right on estimates and
Cash 136 136 4 A 10% change in asset values would imply a 14%
we are in fact 25% above Other 96 96 2 change in NAV (USD 1.6/sh)
consensus EPS for 2024. Looking NAV 1,788 1,874 0
at steel, the stock is implicitly -20% -15% -10% -5% 0% 5% 10% 15% 20%
Shares 161 161
valuing a 5yr VLCC to be worth NAV per share 11.11 11.64 NAV per share - USD Share price - USD
USD 118m (vs. quotes of USD
114m), which we don’t find very P/NAV 1.05x
demanding either. EV/GAV 1.03x
From current to 1yr fwd NAV
 On the back of both steel and Net LTV 34%
18.0
attractive multiples, coupled with too 15.0
low street estimates, we believe a Per unit (USDm) Value Implied 5.0
12.0 4.3 1.9
USD/sh
VLCC (8.7 years) 89.3 92.3 0.6 0.9
re-rating is likely. We keep our TP 9.0
15.5
Resale VLCC 132.0 136.5 6.0
14.7 13.2
unchanged at USD 14.5/sh, which 11.1
5yr VLCC 114.0 117.9 3.0
reflects a 10% premium to 1yr fwd
0.0
NAV.
Other
Other
Net debt
Net debt
NAV
Dividends
NAV
GAV
GAV
2024 Q1e 2025 Q1e

Estimates
DHT Holdings (USDm) 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
TCE Revenue 94 113 89 95 106 110 162 167 269 390 545 666 700
EBITDA 72 90 67 73 84 87 139 144 178 302 454 576 606
EBIT 46 63 39 44 56 59 111 115 74 193 341 463 488
Net profit 38 57 31 35 47 51 102 107 62 161 308 432 453
EPS 0.23 0.35 0.19 0.22 0.29 0.31 0.64 0.67 0.38 0.99 1.91 2.68 2.82
Adj. EPS 0.24 0.35 0.19 0.22 0.29 0.31 0.64 0.67 0.17 1.00 1.91 2.68 2.82
DPS 0.23 0.35 0.19 0.22 0.29 0.31 0.64 0.67 0.48 0.99 1.91 2.68 2.82
Other key items 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
Operational cash flow 66 87 56 42 68 77 100 133 128 251 379 523 559
Investing cash flow -15 -18 -93 -2 -51 0 0 -51 111 -128 -103 -77 -334
Financing cash flow -60 -56 -19 -40 8 -56 -58 -60 -173 -175 -166 -475 -253
FCFF 59 74 -30 48 26 85 109 90 263 152 309 477 259
FCFE 50 60 10 31 61 68 93 124 113 152 346 365 410
GIBD 396 388 437 429 473 464 456 499 397 429 499 418 603
Cash 118 131 74 75 100 121 163 185 126 75 185 156 127
NIBD 278 258 363 354 372 343 293 314 271 354 314 262 477
Acheived rates 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
VLCC 49,100 56,300 42,500 42,800 48,744 50,283 73,296 75,496 30,378 47,500 61,955 76,046 76,349
 349
ESG considerations
͟
SUSTAINABILITY AT DHT
ESG Initiatives
 DHT is transporting fossil fuels and will accordingly
not be eligible for taxonomy alignment in the near
• The company has initiated several initiatives over the recent years and discloses several risks which are
future.
mitigated in the ESG report:
 DHT publishes an annual ESG Report. The report
• Actively working to renew its fleet, by selling older vessels and investing in vessels with newer engine
is prepared in accordance with the Marine
types. As a result, the EEO decreased by 1.7% in 2022 to 4.07.
Transportation Standard (2018) established by the
Sustainability Accounting Standards Board (SASB). • The company has port calls at ports in countries that are among the 20 lowest rankings in the
The last available report is from 2023, which Transparency International’s Corruption Perception Index and has not reported any monetary losses as
includes figures up to 2022. a result of legal proceedings associated with bribery or corruption.
 The ESG report can be accessed through the • Committed to responsible ship recycling in accordance with the Hong Kong International Convention.
company website (link). • If a vessel should be sold for recycling, it will be done in accordance with the BIMCO Recyclecon terms.
ESG Performance date

ESG metric Unit 2020 2021 2022 Target
Taxonomy GHG emissions, scope 1 tCO2e 1,314,772 1,119,112 1,061,954 n/a
Sustainalytics Disclosed ESG
eligible
ESG risk rating Targets GHG emissions, scope 2 tCO2e n/a n/a n/a n/a
activities
GHG emissions, scope 3 tCO2e n/a n/a n/a n/a
31.9 No Yes NOx mt n/a n/a 22,330 n/a

SOx mt n/a 3,268 3,117 n/a
AER CO2 / cargo tonmiles 2.15 1.95 1.89 n/a
*0-100 where 0 is
best Carbon intensity EEDI 2.18 2.16 2.15
Board gender diversity 20% 33% 33%
Source: Company information, Arctic Securities Research  50
Profit and Loss
Profit and Loss (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Profit and Loss Statement (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e
Revenue 268.6 394.9 544.8 665.8 700.1 Adj. revenue 268.6 394.9 544.8 665.8 700.1
Cost of sales (73.8) (75.4) (74.7) (74.5) (77.9) Adj. EBITDA 177.9 302.0 454.3 575.5 605.7
Other operating income/(costs) 0.0 0.0 0.0 0.0 0.0 Adj. EBIT 74.2 193.1 341.0 462.6 487.6
Operating expenses (90.7) (92.9) (90.5) (90.3) (94.4) Adj. net profit 62.0 161.4 307.8 431.6 453.3
EBITDA 177.9 302.0 454.3 575.5 605.7
Depreciation (123.3) (108.9) (113.3) (113.0) (118.1) Gross margin 72.5 80.9 86.3 88.8 88.9
Impairment 19.5 0.0 0.0 0.0 0.0 EBITDA margin (%) 66.2 76.5 83.4 86.4 86.5
Share of JV and ass. companies 0.0 0.0 0.0 0.0 0.0 Adj. EBITDA margin 66.2 76.5 83.4 86.4 86.5
Other 0 0 0 0 0 EBIT margin (%) 27.6 48.9 62.6 69.5 69.6
EBIT 74.2 193.1 341.0 462.6 487.6 Adj. EBIT margin 27.6 48.9 62.6 69.5 69.6
Interest expense (12.7) (35.5) (37.7) (37.9) (39.4) Net profit margin 23.1 40.9 56.5 64.8 64.7
Net interest (11.6) (31.1) (33.2) (31.0) (34.3) Adj. net profit margin 23.1 40.9 56.5 64.8 64.7
Other 0.0 0.0 0.0 0.0 0.0
Pre-tax profit 62.6 162.0 307.8 431.6 453.3 Revenue growth (%) 32.0 47.0 38.0 22.2 5.2
Income tax (0.6) (0.6) 0.0 0.0 0.0 EBITDA growth (%) 63.1 69.7 50.4 26.7 5.2
Net income 62.0 161.4 307.8 431.6 453.3 EBIT growth (%) (1,782.6) 160.2 76.6 35.7 5.4
Net profit growth (605.2) 162.9 91.3 40.4 5.0
Equity holders of the parent 62.0 161.4 307.8 431.6 453.3
Revenue per share 1.6 2.4 3.4 4.1 4.3
Adj. EPS 0.4 1.0 1.9 2.7 2.8
DPS 0.5 1.0 1.9 2.7 2.8
51
Balance Sheet
Balance Sheet (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Balance Sheet (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e
Property, plant and equipment 1,262.0 1,283.7 1,273.2 1,237.4 1,453.3 Equity attributable to the parent 1,073.5 1,031.7 1,103.7 1,141.1 1,155.1
Right-of-use assets 0.0 0.0 0.0 0.0 0.0 Non-controlling interests 0.0 0.0 0.0 0.0 0.0
Intangible assets 0.0 0.0 0.0 0.0 0.0 Total equity 1,073.5 1,031.7 1,103.7 1,141.1 1,155.1
Share of JV, ass. comp. and other inv. 0.0 0.0 0.0 0.0 0.0
Interest bearing assets 0.0 0.0 0.0 0.0 0.0 Long-term interest-bearing debt 367.1 398.4 417.7 363.5 424.1
Deferred tax assets 0.0 0.0 0.0 0.0 0.0 Non-current lease liabilities 0.0 0.0 0.0 0.0 0.0
Other non-current assets 10.9 8.0 8.0 8.0 8.0 Deferred tax liabilities 0.0 0.0 0.0 0.0 0.0
Total non-current assets 1,272.9 1,291.7 1,281.2 1,245.4 1,461.4 Other non-current liabilities 3.5 5.5 5.5 5.5 5.5
Total non-current liabilities 370.6 404.0 423.2 369.0 429.6
Inventories 33.1 33.8 33.8 33.8 33.8
Receivables 59.5 75.8 133.8 163.4 180.8 Short-term interest-bearing debt 29.6 30.3 80.9 54.2 179.4
Other current assets 17.1 16.1 16.1 16.1 16.1 Current lease liabilities 0.0 0.0 0.0 0.0 0.0
Cash and cash equivalents 125.9 74.7 184.8 155.6 126.7 Current tax assets 0.0 0.0 0.0 0.0 0.0
Total current assets 235.6 200.5 368.5 368.9 357.4 Other current liabilities 5.4 5.8 5.8 5.8 5.8
Total current liabilities 64.4 56.6 122.9 104.2 234.1

Total assets 1,508.5 1,492.2 1,649.8 1,614.2 1,818.8
Total equity and liabilities 1,508.5 1,492.2 1,649.8 1,614.2 1,818.8
Gross debt 396.7 428.7 498.6 417.7 603.5
Net interest bearing debt 270.7 354.0 313.8 262.1 476.8
Capital employed 1,344.2 1,385.7 1,417.4 1,403.2 1,631.9
Working capital 74.9 99.5 141.7 163.3 176.1
52
Cash Flow Statement
Cash Flow Statement (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Cash Flow Statement (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e
Net profit 62.0 161.4 307.8 431.6 453.3 Free cash flow to firm 251.0 158.7 313.7 483.7 263.9
D,A&I 103.7 110.6 113.3 113.0 118.1 Free cash flow to equity 113.3 151.7 345.9 365.0 410.3
Change in working capital (28.4) (27.9) (42.3) (21.6) (12.7)
Cash flow from JV's and Associates 0.0 0.0 0.0 0.0 0.0
Other operating cash flow items (9.5) 7.3 0.0 0.0 0.0
Cash flow from operations 127.8 251.4 378.8 523.0 558.6

Capital expenditures (5.4) (128.1) (102.8) (77.1) (334.1)
Net financial investments 0.0 0.0 0.0 0.0 0.0
Net acquisitions/divestments 114.2 (0.0) 0.0 0.0 0.0
Other investment items 1.7 (0.1) 0.0 0.0 0.0
Cash flow from investing activities 110.5 (128.2) (102.8) (77.1) (334.1)
New debt 4.0 339.8 102.8 0.0 240.0
Repayment of debt (129.0) (311.3) (32.9) (80.9) (54.2)
Change in debt (125.0) 28.5 69.9 (80.9) 185.8
Dividend payment (19.7) (186.7) (235.8) (394.2) (439.2)
Other financing items (3.9) 2.5 0.0 0.0 0.0
Cash flow from financing activities (173.3) (174.5) (165.9) (475.1) (253.4)
Other (e.g. FX) 0.0 0.0 0.0 0.0 0.0
Net cash flow 65.0 (51.3) 110.1 (29.2) (28.9)
53
Key ratios & Valuation
Key ratios & Valuation (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Key ratios & Valuation (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e
Avg. shares outstanding (m) 164.7 162.2 161.0 161.0 161.0 FCFF yield 11.7 7.1 14.3 22.6 11.2
Avg. diluted shares outstanding (m) 164.8 162.4 161.2 161.2 161.2 FCFE yield 6.1 8.2 18.7 19.7 22.1
EV 2,124.9 2,208.1 2,167.9 2,116.2 2,330.9 ROE 5.8 15.3 28.8 38.5 39.5
NIBD / EBITDA (x) 1.5 1.2 0.7 0.5 0.8 ROACE 5.2 14.1 24.3 32.8 32.1
IBD / EBITDA (x) 2.2 1.4 1.1 0.7 1.0 EV / Sales 8.0 5.6 4.0 3.2 3.4
IBD / (EBITDA - capex) (x) 2.3 2.5 1.4 0.8 2.2 EV / adj. Sales 8.0 5.6 4.0 3.2 3.4
IBD / Total assets 26.3 28.7 30.2 25.9 33.2 EV / EBITDA 12.1 7.4 4.8 3.7 3.9
Operating cash flow / IBD 32.2 58.6 76.0 125.2 92.6 EV / adj. EBITDA 12.1 7.4 4.8 3.7 3.9
Free cash flow / IBD 63.3 37.0 62.9 115.8 43.7 EV / EBIT 28.9 11.5 6.4 4.6 4.8
EBITDA / Interest (x) 14.0 8.5 12.1 15.2 15.4 EV / adj. EBIT 28.9 11.5 6.4 4.6 4.8
EBITDA / (Interest+Amortisation) (x) 14.0 8.5 12.1 15.2 15.4 P/E 31 12 6 4 4
Equity / total assets 71.2 69.1 66.9 70.7 63.5 P/E adj. 29.90 11.48 6.02 4.29 4.09
P/BV 1.7 1.8 1.7 1.6 1.6
Earnings yield 3.3 8.6 16.6 23.3 24.5
Dividend yield 4.2 8.6 16.6 23.3 24.5
54
Longevity of the cycle warrants higher
multiples
Arctic Securities
Frontline - Equity Update
Equity Research

8 April 2024 +47 41 36 36 63
Lars Moen Eide

+47 95 44 72 13
55
Buy
Frontline Hold
FRO NO | Tank | Equity Company Update | 08 April 2024 | 19:33 Sell
Longevity of the cycle warrants higher multiples Financials and estimates changes Target NOK
308.00 (275.00)
FRO continues to trade at a premium to NAV, now standing at P/NAV 1.26x. We believe Key Figures (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e
the longevity of the cycle allows for such a premium and we apply a 25% rate to the 1yr Highlights
Revenue 834.1 1,185.7 1,784.6 2,065.7 2,069.5
Recommendation
forward NAV as the basis for our updated TP. If we assume that rates diverge to the 20yr EBITDA 593.5 955.7 1,506.6 1,788.9 1,792.7
Buy
Target Price NOK 308.00
average, and asset values follow, we arrive at a NAV of NOK 107/sh currently. Adding back EBIT 442.8 746.7 1,246.2 1,441.8 1,445.6 (275.00)
discounted cash flows throughout our forecasting period puts the NAV at NOK 250/sh. Slots EPS 2.21 2.95 4.49 5.48 5.61 Share Price NOK 249.8
are already starting to be filled up for 2027, and the orderbook as a whole is at a rather Adj. EBITDA 584.0 953.5 1,506.6 1,788.9 1,792.7 Upside (%) 23.3
comfortable 7.9%. Buy is reiterated with a TP of NOK 308/sh. Adj. EBITDA margin (%) 70.0 80.4 84.4 86.6 86.6 Market cap (NOKm) 55,611
Adj. EPS 1.61 2.57 4.11 5.48 5.61 Enterprise Value (m) 8,352
A spicy cocktail Number of shares (m)
Revenue growth (%) 130.1 42.1 50.5 15.8 0.2 223
The orderbook has crept upwards (7.9%), with crude and product now standing at 5.6% and 12.5%, EPS growth (%) (4,038.0) 33.5 52.3 22.0 2.3
12 months share price performance:
already beyond 25 years) will be retired, leaving the net fleet growth at 0.4%, 0.8% and 1.6% in DPS 1.22 2.17 3.31 4.41 4.51
Performance (%)
FRO NO
3M
13.1%
6M
31.5%
1Y
83.7%
OSEBX 11.4% 27.4% 62.3%
2024, 2025 and 2026, respectively. To illustrate how the fleet is ageing, it is worth mentioning that Dividend yield (%) 5.2 9.3 14.1 18.9 19.3
300
the share of the fleet above 20 years of age is now 17.7% and 15.7% for crude and products. Net interest bearing debt 2,116.3 3,148.1 3,167.4 2,567.9 2,048.0
280
This increases to 27.7% and 27.6% by the start of 2027. Over time, oil demand continues to be ROE (%) 24.1 28.9 40.3 42.8 39.7
260
the main driver behind seaborne trade. The EIA estimates that oil consumption is set to grow to ROACE (%) 10.7 15.2 22.1 25.2 26.5 240
102.4 mbd in 2024, before reaching 103.8 mbd in 2025. Other agencies are seeing strong growth 220
EV / Sales (x) 8.8 7.0 4.7 3.8 3.5

also, with the IEA also forecasting growth of 1.4 mbd in 2024 and Opec seeing 2.2 mbd. This 200
EV / EBITDA 12.3 8.7 5.6 4.3 4.0

should translate into incremental vessel demand. We model combined (crude and product) ton- 180
EV / EBIT (x) 16.5 11.2 6.7 5.4 5.0

mile growth of 7.1%, 4.7% and 1.6% for the coming three years, implying a very strong market 160
P/E (x) 10.6 7.9 5.2 4.3 4.2

balance ahead when stacking it against the fleet growth. 140
P/BV (x) 2.3 2.3 1.9 1.7 1.6 120
We are-14-23% above street EBITDA for ’24-26 EV Static 8,353.3 8,353.3 8,353.3 8,353.3 8,353.3
100
EV 7,320.4 8,352.3 8,371.5 7,772.0 7,252.1

On the back of the Q1 guiding, we are at an EBITDA of USD 306.9m (-2% vs. Cons.), while
Jun-23 Sep-23 Dec-23 Mar-24
expecting a DPS of 0.57/sh on the basis of an 80% pay-out. That said, the quarter will likely FRO NO OSEBX
56
be impacted by the deliveries of the 13x remaining Vs from January and the sale of 6x older
tankers. The latter (USD 238m cash release) and refinancings (USD 408m of cash release) will
generate USD 646m of liquidity, enabling the company to complete a USD 2.35bn transaction
without printing any shares. Additionally, the Hemen debt (shareholder loan and drawn under the
USD 275m facility) would also be repaid. We consider it has been masterly played, and leaves the
net LTV at 49%, which stacks against the peer average of 23%. Looking at the year as a whole,
we are 14% above for EBITDA. For 2024 and 2025, our estimates leave us 21% and 23% above
the street.
TP lifted to NOK 308 (275); The longevity of the cycle allows it

We hike our TP to NOK 308/sh (NOK 275), reflecting a 25% premium to the 1yr forward NAV of
NOK 246/sh (+25% from the current of NOK 198/sh). If we assume that asset values return to a
20yr average in 2027, while discounting the FCF in our forecasting period with a rate of 12%, we
arrive at a NAV of NOK 250 currently. Applying a 20% premium here, suggests a fair value of NOK
300/sh. Our updated TP reflects an adj. P/E of 7.0x in 2024, before dropping to 5.3x in 2025.
57
Estimates
 On the back of the Q1 guiding, we

Frontline Q1/24e Diff vs. cons % change
(USDm) Q1/23 Q4/23 Arctic Cons. % abs. QOQ YOY
are at an EBITDA of USD 306.9m
TC revenue 338.5 256.9 376.3 395.0 -5% -19 46% 11%
(-2% vs. Cons.), while expecting a
EBITDA 283.7 198.1 306.9 311.8 -2% -5 55% 8%
DPS of 0.57/sh on the basis of an
EBIT 240.9 138.0 309.0 258.0 20% 51 124% 28%
80% pay-out. That said, the quarter Net profit 199.6 118.4 247.1 223.5 11% 24 109% 24%
will likely be impacted by the EPS 0.90 0.53 1.11 1.00 11% 0 109% 24%
deliveries of the 13x remaining Vs Adjusted EPS 0.87 0.46 0.73 1.00 -27% -0 58% -16%
from January and the sale of 6x DPS 0.70 0.37 0.59 0.64 -9% -0 58% -16%
older tankers. The latter and
refinancings will generate USD
646m of liquidity, enabling the
company to complete a USD Arctic vs. consensus - Year
2.35bn transaction without printing
any shares. Frontline 2024e 2025e 2026e
(USDm) Arctic Cons. Diff Arctic Cons. Diff Arctic Cons. Diff
 We consider it has been masterly
TC revenue 1,784.6 1,682.9 6% 2,065.7 1,858.5 11% 2,069.5 1,882.8 10%
played, and leaves the net LTV at
49%, which stacks against the peer
EBITDA 1,506.6 1,320.9 14% 1,788.9 1,474.9 21% 1,792.7 1,462.9 23%
average of 23%. Looking at the EBIT 1,246.2 997.8 25% 1,441.8 1,153.7 25% 1,445.6 1,144.9 26%
year as a whole, we are 14% Net profit 999.9 809.7 23% 1,220.3 988.9 23% 1,248.1 866.8 44%
above for EBITDA. For 2024 and EPS 4.49 3.53 27% 5.48 4.45 23% 5.61 4.34 29%
2025, our estimates leave us 21% Adjusted EPS 4.11 3.53 17% 5.48 4.45 23% 5.61 4.34 29%
and 23% above the street. DPS 3.31 2.88 15% 4.41 3.82 15% 4.51 3.89 16%

Valuation
 We hike our TP to NOK 308/sh # Age Value Implied 320

269
VLCC 41x 5.3 4,441 5,091 280 251
(NOK 275), reflecting a 25% 249.8 233
240 215
premium to the 1yr forward NAV of Suezmax 24x 7.2 1,764 2,022 180
198
200
NOK/sh
162
NOK 246/sh (+25% from the LR2 18x 6.4 1,222 1,402 160 126
144
current of NOK 198/sh). If we Fleet value 83x 6.1 7,427 8,515 120
A 10% change in asset values would imply a
Debt -3,905 -3,905 80 18% change in NAV (NOK 35.7/sh)
assume that asset values return to 40
Capex 0 0
a 20yr average in 2027, while 0
Cash 285 285 -20% -15% -10% -5% 0% 5% 10% 15% 20%
discounting the FCF in our
Other 308 308
forecasting period with a rate of NAV per share - NOK Share price - NOK
NAV 4,116 5,204
12%, we arrive at a NAV of NOK
Shares 223 223
250 currently. Applying a 20%
NAV per share - USD 18.49 23.38 From current to 1yr fwd NAV
premium here, suggests a fair
NAV per share - NOK 197.6 249.8
value of NOK 300/sh. Our updated
TP reflects an adj. P/E of 7.0x in 400
P/NAV 1.26x 350
2024, before dropping to 5.3x in 300
EV/GAV 1.15x 174 144
NOK/sh
250
2025. 200 15
35
Gross LTV 53% 357 15 340
150
Net LTV 49% 100 246
198
50
0
Other
Net debt
Net debt
Other
NAV
Dividends
NAV
GAV
GAV
Per unit (USDm) Value Implied
VLCC (5.3 years) 108.3 124.2
Resale VLCC 132.0 151.3
5yr VLCC 114.0 130.7 2024 Q1e 2025 Q1e

Estimates
Frontline (USDm) 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
TCE Revenue 339 356 232 257 376 401 504 502 825 1,184 1,785 2,066 2,070
EBITDA 284 301 173 198 307 332 435 433 593 956 1,507 1,789 1,793
EBIT 241 253 115 138 309 245 347 345 443 747 1,246 1,442 1,446
Net profit 200 231 108 118 247 182 285 286 473 656 1,000 1,220 1,248
EPS 0.90 1.04 0.48 0.53 1.11 0.82 1.28 1.28 2.21 2.95 4.49 5.48 5.61
Adj. EPS 0.87 0.94 0.36 0.46 0.73 0.82 1.28 1.28 1.59 2.63 4.11 5.48 5.61
DPS 0.70 0.80 0.30 0.37 0.59 0.66 1.03 1.03 1.22 2.17 3.31 4.41 4.51
Operational cash flow 263 283 203 100 185 269 373 373 371 849 1,200 1,567 1,595
Investing cash flow -43 41 0 -1,226 -574 -19 -19 -19 -239 -1,228 -631 -76 -76
Financing cash flow -249 -243 -224 1,149 366 -180 -196 -279 10 433 -289 -1,138 -1,109
FCFF 220 324 202 -1,126 -389 250 354 354 131 -379 569 1,491 1,519
FCFE 209 238 157 90 60 200 304 305 184 693 869 1,245 1,410
GIBD 2,383 2,295 2,255 3,456 3,905 3,855 3,806 3,756 2,371 3,456 3,756 3,510 3,400
Cash 225 307 285 308 285 355 514 589 255 308 589 942 1,352
NIBD 2,157 1,988 1,970 3,148 3,620 3,500 3,292 3,167 2,116 3,148 3,167 2,568 2,048
VLCC 52,500 64,000 42,500 42,300 47,935 53,127 79,428 79,428 31,300 50,300 64,979 80,103 80,103
Suezmax 64,000 61,700 37,600 45,700 49,315 49,921 62,221 62,221 37,100 52,600 55,919 61,858 61,858
LR2 56,300 52,900 33,900 42,900 54,521 59,059 42,947 41,671 38,500 46,800 49,549 51,777 51,767
 60
ESG considerations
͟
SUSTAINABILITY AT FRO
ESG Initiatives
 Frontline is transporting fossil fuels and will
accordingly not be eligible for taxonomy alignment
• The company has initiated several initiatives over recent years and discloses several risks which are
in the near future. However, as one of the largest
transporters of seaborne oil and associated
products with established access to capital • Frontline only has vessels running on conventional fuel; however, the average annual efficiency ratio
markets, the company should be well positioned for (AER) is lower than industry peers for all three vessel segments.
future initiatives with regard to new propulsion • It has initiated an energy efficiency project together with DNV (“Decarbonization journey towards IMO
technology. 2030-2050”), where the intention is to fully digitalize performance date, set KPI targets on energy
 Frontline publishes an annual ESG Report. The efficiency and establish a strategy on the implementation of alternative fuels.
report is prepared in accordance with the Marine • Frontline is a member of The Maritime Anti-Corruption Network which works towards zero corruption in
Transportation Standard (2018) established by the the shipping space
Sustainability Accounting Standards Board
(SASB).The ESG report can be accessed through
the company website (link).
eligible
ESG risk rating Targets GHG emissions, scope 2 tCO2e 5.1 66 35.7 n/a
activities
GHG emissions, scope 3 tCO2e n/a 9.3 83.1 n/a
29.9 No Yes Nox Mt 48,188 50,460 47,645 n/a

Sox Mt 5,302 6,260 5,848 n/a
Particulate matter Mt 2,325 2,341 2,244 n/a
*0-100 where 0 is
best Board gender diversity 0% 0% 0%

Profit and Loss
Revenue 834.1 1,185.7 1,784.6 2,065.7 2,069.5 Adj. revenue 824.7 1,183.6 1,784.6 2,065.7 2,069.5
Cost of sales (193.0) (176.5) (222.1) (221.2) (221.2) Adj. EBITDA 584.0 953.5 1,506.6 1,788.9 1,792.7
Other operating income/(costs) 0.6 0.0 0.0 0.0 0.0 Adj. EBIT 4,631.4 7,723.2 12,411.1 15,410.1 15,450.4
Operating expenses (240.7) (230.1) (278.0) (276.9) (276.9) Adj. net profit 345.1 571.2 914.9 1,220.3 1,248.1
EBITDA 593.5 955.7 1,506.6 1,788.9 1,792.7
EBIT 442.8 746.7 1,246.2 1,441.8 1,445.6 Adj. EBIT margin 555.2 651.3 695.5 746.0 746.6
Other 127.6 63.2 0.0 0.0 0.0
Pre-tax profit 473.1 656.6 999.9 1,220.3 1,248.1 Revenue growth (%) 130.1 42.1 50.5 15.8 0.2
Income tax (0.4) (0.2) 0.0 0.0 0.0 EBITDA growth (%) 271.0 61.0 57.6 18.7 0.2
Net income 472.7 656.4 999.9 1,220.3 1,248.1 EBIT growth (%) 3,527.4 68.6 66.9 15.7 0.3
Net profit growth (3,629.1) 38.9 52.4 22.1 2.3
Equity holders of the parent 472.7 656.4 999.9 1,220.3 1,248.1
Adj. EPS 1.6 2.6 4.1 5.5 5.6
DPS 1.2 2.2 3.3 4.4 4.5
62
Balance Sheet
Interest bearing assets 0.0 0.0 0.0 0.0 0.0 Long-term interest-bearing debt 2,112.5 3,194.5 3,334.2 3,312.7 2,907.4
Deferred tax assets 0.0 0.0 0.0 0.0 0.0 Non-current lease liabilities 0.0 0.0 0.0 0.0 -
Total non-current liabilities 2,116.9 3,196.4 3,336.1 3,314.6 2,909.3
Inventories 0.0 0.0 0.0 0.0 0.0
Other current assets 626.5 419.6 512.9 512.9 512.9 Current lease liabilities 0.0 0.0 0.0 0.0 -
Cash and cash equivalents 254.5 308.3 588.6 942.2 1,352.4 Current tax assets 0.0 0.0 0.0 0.0 0.0
Total current assets 881.1 727.9 1,101.5 1,455.1 1,865.3 Other current liabilities 133.3 147.1 180.1 180.1 180.1

Total assets 4,776.1 5,882.8 6,626.9 6,709.3 6,848.4
Gross debt 2,370.8 3,456.5 3,756.0 3,510.1 3,400.4
Net interest bearing debt 2,116.3 3,148.1 3,167.4 2,567.9 2,048.0
Working capital 493.2 272.5 332.8 332.8 332.8
63
Cash Flow Statement
Net profit 472.7 656.4 999.9 1,220.3 1,248.1 Free cash flow to firm 230.1 (207.9) 830.1 1,739.7 1,757.6
D,A&I 150.7 230.9 345.4 347.1 347.1 Free cash flow to equity 183.7 692.9 868.7 1,245.5 1,409.6
Change in working capital (131.1) (8.0) (60.2) 0.0 0.0
Other operating cash flow items (121.4) (30.5) (85.0) 0.0 0.0
Cash flow from operations 370.9 848.9 1,200.0 1,567.4 1,595.2

Capital expenditures (318.0) (1,631.4) (965.9) (76.0) (76.0)
Net acquisitions/divestments 80.0 142.7 335.0 0.0 0.0
Other investment items (1.5) 260.5 0.0 0.0 0.0
Cash flow from investing activities (239.5) (1,228.2) (630.9) (76.0) (76.0)
New debt 651.2 1,609.4 1,221.2 175.9 87.8
Change in debt 52.2 1,072.2 299.5 (246.0) (109.6)
Other financing items (8.8) (0.2) 0.0 0.0 0.0
Cash flow from financing activities 10.0 433.1 (288.8) (1,137.9) (1,109.0)
Other (e.g. FX) 0.0 0.0 0.0 0.0 0.0
Net cash flow 141.5 53.8 280.3 353.5 410.2
64
Avg. shares outstanding (m) 214.0 222.6 222.6 222.6 222.6 FCFF yield 3.1 (2.5) 9.9 22.4 24.2
EV 7,322.5 8,354.7 8,374.0 7,774.2 7,254.1 ROE 24.1 28.9 40.3 42.8 39.7
IBD / (EBITDA - capex) (x) 8.6 (5.1) 6.9 2.0 2.0 EV / adj. Sales 8.9 7.1 4.7 3.8 3.5
Free cash flow / IBD 9.7 (6.0) 22.1 49.6 51.7 EV / EBIT 16.5 11.2 6.7 5.4 5.0
P/BV 2.3 2.3 1.9 1.7 1.6
Earnings yield 0.9 1.2 1.8 2.2 2.2
Dividend yield 5.2 9.3 14.1 18.9 19.3
65
Ready for the big screen
Hafnia - Equity Update
Arctic Securities

+47 41 36 36 63
Lars Moen Eide

+47 95 44 72 13
66
Buy
Hafnia Hold
HAFNI NO | Tank | Equity Company Update | 09 April 2024 | 06:44 Sell
Ready for the big screen Financials and estimates changes Target NOK 98.00 (95.00)
On 9 April, HAFNI will start trading on the New York Stock Exchange. A dual listing is set Key Figures (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Highlights
Recommendation Buy
to attract a broader audience, with greater focus on cash flow compared to the traditional
Revenue 1,387.2 1,411.6 1,507.3 1,597.1 1,609.5 Target Price NOK 98.00
NAV focus in Nordic markets. From an NAV perspective, the stock is now trading close EBITDA 1,006.9 1,012.9 1,103.0 1,208.9 1,214.7 (95.00)
to intrinsic value (P/NAV 0.94x), but this is building to NOK 98/sh within the coming four EBIT 823.2 857.9 896.5 1,011.6 1,014.2 Share Price NOK 77
quarters. Offering a 2024 P/E of 4.3x, with conservative rates for H2 (compared to now), EPS 1.57 1.57 1.65 1.92 1.97 Upside (%) 27.3
HAFNI is a Buy in our view. Adj. EBITDA 1,006.9 1,012.9 1,103.0 1,208.9 1,214.7 Market cap (NOKm) 39,025
Adj. EBITDA margin (%) 72.6 71.8 73.2 75.7 75.5 Enterprise Value (m) 4,771
A spicy cocktail Number of shares (m) 507
Adj. EPS 1.57 1.57 1.65 1.92 1.97
The orderbook has crept upwards (7.9%), with crude and product now standing at 5.6% and 12.5%, Revenue growth (%) 225.5 1.8 6.8 6.0 0.8 12 months share price performance:
respectively. We assume that vessels turning 25 years of age (not saying anything about vessels EPS growth (%) (1,129.0) 0.1 5.0 16.0 2.6
already beyond 25 years) will be retired, leaving the net fleet growth at 0.4%, 0.8% and 1.6% in 95 Performance (%)
HAFNI NO
3M
13.4%
6M
24.3%
1Y
60.2%
90 OSEBX 9.5% 16.4% 35.3%
2024, 2025 and 2026, respectively. To illustrate how the fleet is ageing, it is worth mentioning that DPS 0.80 1.00 1.32 1.72 1.77
85
the share of the fleet above 20 years of age is now 17.7% and 15.7% for crude and products. Dividend yield (%) 11.1 13.9 18.3 23.9 24.5 80
This increases to 27.7% and 27.6% by the start of 2027. Over time, oil demand continues to be Net interest bearing debt 1,596.1 1,137.3 832.0 522.3 231.4 75
the main driver behind seaborne trade. The EIA estimates that oil consumption is set to grow to ROE (%) 48.2 37.4 36.2 39.1 38.0 70
102.4 mbd in 2024, before reaching 103.8 mbd in 2025. Other agencies are seeing strong growth ROACE (%) 27.7 24.6 27.2 32.0 33.8 65
55
EV / Sales (x) 3.8 3.4 3.0 2.6 2.4
should translate into incremental vessel demand. We model combined (crude and product) ton-
50
EV / EBIT (x) 6.4 5.6 5.0 4.1 3.8
P/E (x) 4.6 4.6 4.4 3.8 3.7
P/BV (x) 1.8 1.6 1.5 1.4 1.4
35
Another juicy quarter ahead EV 5,229.5 4,770.8 4,465.5 4,155.8 3,864.9

At the time of Q4 reporting (29 February), HAFNI had booked 80% of vessel days at USD ~37.7k/ HAFNI NO OSEBX
d. We apply market developments on open days, resulting in a fleet-wide rate of USD ~38.5k/d.
This culminates in an EBITDA of USD 313.5m, leaving us 5% above consensus, with an EPS of
67
USD 0.48/sh (P/E of 3.7x). We incorporate the updated dividend policy, suggesting an 80% pay-
out (net LTV > 20%). This leaves us 16% above on Q1 distribution. For the full year, we are more
or less in line with the street (+5% vs. EBITDA), but the difference becomes more visible in 2025
and 2026 where we are 28% and 44% above consensus, which models a 10% and 20% decline
from 2024 levels. We apply a 90% pay-out ratio from Q1/25 as we see the LTV falling below 20%,
which translates into a DPS of USD 1.72/sh (yield of 24%).
Lifting TP to 1yr fwd NAV of NOK 98/sh

We estimate a NAV of NOK 82/sh, building to NOK 98/sh one year ahead, which is our updated
target price. We believe that over time, the US market will appreciate the HAFNI equity story. It
offers moderate leverage and a high pay-out ratio, combined with solid backing from the BW group
which owns 43% following the recent private placement at NOK 73/sh.
68
Estimates
 At the time of Q4 reporting (29 Hafnia Limited Q1/24e Diff vs. cons % change
February), HAFNI had booked 80% (USDm) Q1/23 Q4/23 Arctic Cons. % abs. QOQ YOY
of vessel days at USD ~37.7k/d. We TC revenue 377.2 329.8 408.8 395.7 3% 13 24% 8%
apply market developments on open EBITDA 296.0 234.5 313.5 300.0 5% 14 34% 6%
days, resulting in a fleet-wide rate of EBIT 280.7 180.5 261.0 246.4 6% 15 45% -7%
USD ~38.5k/d. This culminates in an Net profit 256.6 176.4 244.6 232.6 5% 12 39% -5%
EBITDA of USD 313.5m, leaving us EPS 0.51 0.35 0.48 0.46 5% 0 38% -6%
5% above consensus, with an EPS of DPS 0.30 0.24 0.39 0.33 16% 0 59% 27%
USD 0.48/sh (P/E of 3.7x). We
incorporate the updated dividend
policy, suggesting an 80% pay-out
(net LTV > 20%). This leaves us 16% Arctic vs. consensus - Year
above on Q1 distribution.
Hafnia Limited 2024e 2025e 2026e
 For the full year, we are more or less
in line with the street (+5% vs.
TC revenue 1,507.3 1,426.0 6% 1,597.1 1,377.5 16% 1,609.5 1,275.6 26%
EBITDA), but the difference becomes
EBITDA 1,103.0 1,055.4 5% 1,208.9 945.7 28% 1,214.7 845.7 44%
more visible in 2025 and 2026 where
we are 28% and 44% above
EBIT 896.5 834.1 7% 1,011.6 726.6 39% 1,014.2 652.5 55%
consensus, which models a 10% and Net profit 837.3 798.8 5% 970.9 709.4 37% 996.1 652.7 53%
20% decline from 2024 levels. With EPS 1.65 1.55 7% 1.92 1.34 43% 1.97 0.94 110%
an estimated LTV below 20% from DPS 1.32 1.15 15% 1.72 1.08 59% 1.77 1.02 74%
Q1/25, we are 59% and 74% above
on distribution for 2025 and 2026.
Valuation
 We estimate a NAV of NOK 82/sh, # Age Value Implied 120

102.9
97.7
building to NOK 98/sh one year Fleet value 115x 8.4 4,872 4,624 100 87.4 92.6
77.1 82.3
ahead, which is our updated target Debt -1,333 -1,333 80 66.8 71.9
61.677.00
NOK/sh
price. We believe that over time, Capex -99 -99 60
the US market will appreciate the Cash 242 242 40 A 10% change in asset values would imply a 13%
HAFNI equity story. It offers Other 199 199 20
change in NAV (NOK 10.3/sh)
moderate leverage and a high pay-

NAV 3,882 3,633
0
Shares 507 507 -20% -15% -10% -5% 0% 5% 10% 15% 20%
out ratio, combined with solid
NAV per share - USD 7.66 7.17
backing from the BW group which NAV per share - NOK Share price - NOK
NAV per share - NOK 82.3 77.00
owns 43% following the recent
private placement at NOK 73/sh.
P/NAV 0.94x From current to 1yr fwd NAV
EV/GAV 0.95x
Net LTV 24% 120
100
25 17 13
Per unit (USDm) Value Implied 80 4 4
NOK/sh
MR (8.2 years) 39.6 37.6 60
103 98 98
40 82
Resale MR 54.0 51.3
20
5yr MR 47.0 44.6 0
Other
Net debt
Net debt
Other
NAV
Dividends
NAV
GAV
GAV
2024 Q1e 2025 Q1e

Estimates
HAFNI (USDm) 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
TCE Revenue 377 349 310 330 409 426 333 312 1,347 1,367 1,480 1,566 1,579
EBITDA 296 262 221 235 314 332 239 219 1,007 1,013 1,103 1,209 1,215
EBIT 281 230 167 181 261 280 187 168 823 858 897 1,012 1,014
Net profit 257 213 147 176 245 265 173 154 752 793 837 971 996
EPS 0.51 0.42 0.29 0.35 0.48 0.52 0.34 0.30 1.57 1.57 1.65 1.92 1.97
Adj. EPS 0.44 0.38 0.29 0.35 0.48 0.52 0.34 0.30 1.55 1.46 1.65 1.92 1.97
DPS 0.30 0.25 0.20 0.24 0.39 0.42 0.27 0.24 0.80 1.00 1.32 1.72 1.77
Operational cash flow 356 172 333 199 297 317 224 205 730 1,061 1,044 1,168 1,197
Investing cash flow 99 2 -40 -92 -17 -17 -17 -17 -191 -32 -69 -58 -19
Financing cash flow -361 -201 -410 -115 -179 -252 -269 -195 -464 -1,087 -895 -1,154 -1,126
FCFF 455 174 293 107 280 300 207 188 539 1,029 975 1,110 1,177
FCFE 283 150 26 112 224 244 151 131 312 572 750 757 938
GIBD 1,605 1,583 1,320 1,292 1,236 1,180 1,124 1,067 1,775 1,292 1,067 714 474
Cash 268 241 125 142 242 290 229 222 174 142 222 178 229
NIBD 1,336 1,341 1,195 1,151 994 890 895 845 1,601 1,151 845 536 245
LR2 40,791 36,926 31,272 38,884 43,950 43,752 34,568 33,841 33,508 36,968 39,028 39,648 39,648
LR1 43,268 41,119 30,198 32,184 48,013 45,999 35,671 32,546 35,083 36,692 40,557 42,735 42,735
MR 34,223 30,954 29,141 31,355 32,276 34,558 30,400 29,463 30,040 31,418 31,674 36,204 35,499
Handy 31,144 30,100 26,780 25,459 29,836 36,670 23,760 22,654 24,582 28,371 28,230 33,250 33,250
 71
ESG considerations
͟
SUSTAINABILITY AT HAFNIA
ESG Targets
 Hafnia is transporting fossil fuels and will
• The company has initiated several initiatives over recent years and discloses several risks which are
in the near future.
 The company publishes sustainability metrics and
• Hafnia is committed to the IMO’s Carbon Intensity Targets, including its regulations on sulphur emissions
targets in its annual report.
and 2030 goals.
 The ESG reporting can be accessed through the
• The company is working to reduce the fleets carbon intensity to 4.35 gms/T NM by 2028, meeting the
annual report on the company website (link).
IMO targets ahead of schedule.
• Continued fuel reduction y-o-y, to achieve a reduction in carbon intensity by 40% by 2028, from 2008.
• Committed to responsible ship recycling in accordance with the Hong Kong International Convention for
Safe and Environmentally Sound Recycling of Ships, EU-Ship Recycling Regulation, Basel Convention,
European Waste Shipment Regulation and other local regulations as applicable.

eligible
activities
20 No Yes NOx mt 77,724 76,528 79,162 n/a

SOx mt 4,609 4,819 5,078 n/a
*0-100 where 0 is

Profit and Loss
Revenue 1,387.2 1,411.6 1,507.3 1,597.1 1,609.5 Adj. revenue 1,387.2 1,411.6 1,507.3 1,597.1 1,609.5
Cost of sales (297.1) (303.4) (300.4) (288.9) (293.9) Adj. EBITDA 1,006.9 1,012.9 1,103.0 1,208.9 1,214.7
Other operating income/(costs) 0.0 0.0 0.0 0.0 0.0 Adj. EBIT 8,798.7 9,169.9 9,582.5 10,812.3 10,840.2
EBITDA 1,006.9 1,012.9 1,103.0 1,208.9 1,214.7
EBIT 823.2 857.9 896.5 1,011.6 1,014.2 Adj. EBIT margin 634.3 649.6 635.7 677.0 673.5
Other 0.0 0.0 0.0 0.0 0.0
Pre-tax profit 758.3 799.5 844.8 978.4 1,003.7 Revenue growth (%) 225.5 1.8 6.8 6.0 0.8
Income tax (6.7) (6.3) (7.5) (7.5) (7.5) EBITDA growth (%) 563.5 0.6 8.9 9.6 0.5
Net income 751.6 793.3 837.3 970.9 996.1 EBIT growth (%) (17,049.0) 4.2 4.5 12.8 0.3
Net profit growth (1,431.9) 5.6 5.6 16.0 2.6
Adj. EPS 1.6 1.6 1.7 1.9 2.0
DPS 0.8 1.0 1.3 1.7 1.8
73
Balance Sheet
Interest bearing assets 74.2 69.6 69.6 69.6 69.6 Long-term interest-bearing debt 1,455.2 1,025.0 713.8 452.4 178.1
Total non-current liabilities 1,455.2 1,025.0 713.8 452.4 178.1
Inventories 10.1 107.7 107.7 107.7 107.7
Total current assets 853.1 946.2 1,026.5 982.7 1,033.9 Other current liabilities 3.8 8.4 8.4 8.4 8.4

Total assets 3,918.9 3,913.9 3,856.5 3,673.5 3,543.7
Gross debt 1,775.3 1,292.4 1,067.3 713.8 474.1
Net interest bearing debt 1,596.1 1,137.3 832.0 522.3 231.4
Working capital 539.3 397.4 397.4 397.4 397.4
74
Cash Flow Statement
Net profit 751.6 793.3 837.3 970.9 996.1 Free cash flow to firm 634.7 1,124.3 1,055.8 1,175.7 1,211.6
Change in working capital (274.2) 48.7 0.0 0.0 0.0
Other operating cash flow items 54.9 63.9 0.0 0.0 0.0
Cash flow from operations 729.6 1,060.8 1,043.8 1,168.2 1,196.6

Cash flow from investing activities (190.9) (31.7) (68.8) (58.1) (19.4)
New debt 442.8 246.0 0.0 0.0 21.7
Change in debt (227.1) (457.5) (225.1) (353.5) (239.7)
Cash flow from financing activities (464.3) (1,086.9) (894.7) (1,153.9) (1,126.0)
Other (e.g. FX) 4.8 33.6 0.0 0.0 0.0
Net cash flow 79.1 (24.2) 80.2 (43.8) 51.2
75
EV 56,097.0 51,193.1 47,929.1 44,618.1 41,508.1 ROE 48.2 37.4 36.2 39.1 38.0
P/BV 1.8 1.6 1.5 1.4 1.4
Earnings yield 2.0 2.0 2.1 2.5 2.6
Dividend yield 11.1 13.9 18.3 23.9 24.5
76
Estimates bound to push higher
International Seaways - Equity Update
Arctic Securities

+47 41 36 36 63
Lars Moen Eide

+47 95 44 72 13
77
Buy
International Seaways Hold
INSW US | Tank | Equity Company Update | 08 April 2024 | 20:25 Sell
Estimates bound to push higher Financials and estimates changes Target $ 66.00 (63.80)
INSW continues to be an attractive bet on the tanker cycle. On one hand, the stock offers Key Figures (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Highlights
Recommendation Buy
63% exposure (share of vessels) to the red-hot product market, and on the other hand, crude
Revenue 854.4 1,055.5 1,033.9 1,210.3 1,267.6 Target Price $ 66.00 (63.80)
rates are bound to push higher eventually. With a 18% discount to NAV, the stock offers a P/ EBITDA 534.5 709.1 701.2 882.4 939.0 Share Price 52.86
E of 5.2x this year. Capital allocation should no longer be a big concern as the company has EBIT 442.6 615.4 548.9 725.9 776.9 Upside (%) 24.9
shown over a longer period of time that it prioritizes shareholders, justifying higher prices EPS 7.85 11.36 10.16 13.81 14.93 Market cap (USDm) 2,586
in our view. Our TP is raised to USD 66/sh. Adj. EBITDA 534.5 709.1 701.2 882.4 939.0 Enterprise Value (m) 3,134
Adj. EBITDA margin (%) 62.6 67.2 67.8 72.9 74.1 Number of shares (m) 49
A spicy cocktail
Adj. EPS 7.46 10.63 10.16 13.81 14.93
The orderbook has crept upwards (7.9%), with crude and product now standing at 5.6% and 12.5%, Revenue growth (%) 207.7 23.5 (2.0) 17.1 4.7
respectively. We assume that vessels turning 25 years of age (not saying anything about vessels EPS growth (%) (325.0) 44.7 (10.6) 36.0 8.1 70 Performance (%) 3M 6M 1Y
INSW US 12.5% 31.2% 59.8%
already beyond 25 years) will be retired, leaving the net fleet growth at 0.4%, 0.8% and 1.6% in OSEBX 9.7% 24.3% 50.6%
65
2024, 2025 and 2026, respectively. To illustrate how the fleet is ageing, it is worth mentioning that DPS 3.30 5.61 6.06 8.06 8.68
the share of the fleet above 20 years of age is now 17.7% and 15.7% for crude and products. Dividend yield (%) 6.2 10.6 11.5 15.3 16.4
60
This increases to 27.7% and 27.6% by the start of 2027. Over time, oil demand continues to be Net interest bearing debt 750.9 557.8 468.8 171.3 (176.9) 55
the main driver behind seaborne trade. The EIA estimates that oil consumption is set to grow to ROE (%) 29.2 34.7 27.2 32.2 30.2 50
102.4 mbd in 2024, before reaching 103.8 mbd in 2025. Other agencies are seeing strong growth ROACE (%) 20.1 27.5 23.5 29.9 32.1
45
also, with the IEA also forecasting growth of 1.4 mbd in 2024 and Opec seeing 2.2 mbd. This
40
EV / Sales (x) 3.9 3.0 3.0 2.3 1.9
EV / EBITDA 6.3 4.5 4.4 3.1 2.6
EV / EBIT (x) 7.6 5.1 5.6 3.8 3.1

P/E (x) 6.7 4.7 5.2 3.8 3.5

25
Q1 in line; The market is too bearish on ’25 and ‘26 P/BV (x) 1.7 1.5 1.3 1.1 1.0
Looking at Q1, we arrive at an EBITDA of USD 174.9m (+2% vs. Cons.), while estimating a DPS EV Static 3,122.1 3,122.1 3,122.1 3,122.1 3,122.1 Jun-23 Sep-23 Dec-23 Mar-24
INSW US OSEBX
EV 3,349.3 3,156.2 3,067.3 2,769.8 2,421.6
of USD 1.54/sh (+61% vs. Cons.). Despite being significantly above consensus on distribution,
we believe that the sell-side is expecting distributions in line with us (59% pay-out). Looking at
78
the year as a whole, we are 2% above consensus on EBITDA, while 27% and 41% in 2025 and
2026, respectively.
Buy reiterated - TP lifted to USD 66/sh

After being among the names offering the largest discounts to the tanker party, the market has
gradually come to appreciate Seaways’ equity. Since Q3/22, INSW has distributed USD 8.73/sh
vs. the EPS of USD 18.10/sh, thus reflecting a pay-out ratio of 48%. This has obviously been
welcomed and we now turn our eyes to 1yr fwd NAV, while applying a 10% discount, which is the
basis for our updated TP.
79
Estimates
 Looking at Q1, we arrive at an Intl. Seaways Q1/24e Diff vs. cons % change
EBITDA of USD 174.9m (+2% vs. (USDm) Q1/23 Q4/23 Arctic Cons. % abs. QOQ YOY
Cons.), while estimating a DPS of TC revenue 283.3 247.9 256.7 254.3 1% 2 4% -9%
USD 1.54/sh (+61% vs. Cons.). EBITDA 204.5 155.7 174.9 171.4 2% 4 12% -14%
Despite being significantly above EBIT 185.3 147.3 138.9 134.0 4% 5 -6% -25%
consensus on distribution, we Net profit 172.6 132.1 126.9 121.4 5% 6 -4% -26%
believe that the sell-side is EPS 3.51 2.70 2.59 2.47 5% 0.12 -4% -26%
expecting distributions in line with Adjusted EPS 3.29 2.19 2.59 2.47 5% 0.12 19% -21%
us (59% pay-out). DPS 1.62 1.32 1.54 0.96 61% 0.58 17% -5%
 Looking at the year as a whole, we

are 2% above consensus on
Arctic vs. consensus - Year
EBITDA, while 27% and 41% in
2025 and 2026, respectively.
Intl. Seaways 2024e 2025e 2026e
TC revenue 1,033.9 1,028.1 1% 1,210.3 1,029.5 18% 1,267.6 1,007.3 26%
EBITDA 701.2 690.5 2% 882.4 696.8 27% 939.0 663.8 41%
EBIT 548.9 552.3 -1% 725.9 556.9 30% 776.9 529.0 47%
Net profit 501.1 488.7 3% 684.9 514.6 33% 740.2 473.8 56%
EPS 10.16 10.05 1% 13.81 10.34 33% 14.93 9.55 56%
Adjusted EPS 10.16 10.05 1% 13.81 10.34 33% 14.93 9.55 56%
DPS 6.06 5.43 12% 8.06 6.32 28% 8.68 5.34 62%

Valuation
 After being among the names # Age Value Implied 100

Fleet value 82x 11.7 3,892 711 76.9 80.9
offering the largest discounts to the 80 69.0 73.0
Debt -706 -706 61.0 65.0
tanker party, the market has 57.1
49.1 53.1
USD/sh
Capex -451 -451 60
53.1
gradually come to appreciate
Cash 233 233 40
Seaways’ equity. Since Q3/22,
Other 205 205 20 A 10% change in asset values would imply a 12%
INSW has distributed USD 8.73/sh JVs 8 8 change in NAV (USD 8/sh)
vs. the EPS of USD 18.10/sh, thus NAV 3,180 0 0
reflecting a pay-out ratio of 48%. -20% -15% -10% -5% 0% 5% 10% 15% 20%
Shares 49 49
This has obviously been welcomed NAV per share - USD 65.00 53.11 NAV per share - USD Share price - USD
and we now turn our eyes to 1yr
fwd NAV, while applying a 10%
discount, which is the basis for our P/NAV 0.82x
updated TP. EV/GAV 0.18x
Net LTV 24% 100
80
18.9 11.4 6.0
USD/sh
4.4 4.3
Per unit (USDm) Value Implied 60
VLCC (8.1 years) 90.8 16.6 40 79.5 74.4 73.3
65.0
Resale VLCC 132.0 24.1 20
5yr VLCC 114.0 20.8 0
Other
Other
Net debt
Net debt
NAV
Dividends
NAV
GAV
GAV
2024 Q1e 2025 Q1e

Estimates
INSW (USDm) 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
TCE Revenue 283 288 236 248 257 243 269 266 854 1,056 1,034 1,210 1,268
EBITDA 205 201 148 156 175 161 184 181 534 709 701 882 939
EBIT 185 169 114 147 139 124 145 142 443 615 549 726 777
Net profit 173 154 98 132 127 111 133 130 388 556 501 685 740
EPS 3.51 3.13 2.00 2.70 2.59 2.26 2.67 2.63 7.85 11.36 10.16 13.81 14.93
Adj. EPS 3.29 3.14 2.01 2.19 2.59 2.26 2.67 2.63 7.46 10.63 10.16 13.81 14.93
DPS 1.62 1.42 1.25 1.32 1.54 1.36 1.59 1.56 3.30 5.61 6.06 8.06 8.68
Investing cash flow -72 -136 39 45 -21 -257 -16 -19 43 -124 -313 -184 -127
Financing cash flow -218 -116 -165 -183 -96 -72 -99 -110 -186 -681 -377 -428 -477
FCFF 166 75 204 185 154 -96 168 162 388 630 388 699 812
FCFE 32 38 96 100 111 -139 125 119 241 266 216 590 725
GIBD 951 978 842 723 691 660 629 598 1,065 723 598 530 479
Cash 261 236 214 187 233 53 110 151 324 187 151 380 678
NIBD 690 742 628 536 458 607 519 447 742 536 447 149 -199
Acheived Rates 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
VLCC 46,590 49,777 39,525 41,898 41,149 41,188 59,395 59,395 30,650 44,242 50,282 60,171 60,171
Suezmax 55,077 56,579 37,518 44,793 41,997 38,407 47,774 49,400 32,212 48,355 44,394 50,670 51,092
Aframax 50,756 53,482 35,148 42,510 45,667 37,810 43,750 43,750 36,488 45,833 42,744 44,482 45,968
LR2 19,108 21,328 32,603 43,666 47,556 48,240 33,739 32,591 17,613 29,224 40,532 42,300 42,300
LR1 70,838 63,608 56,295 46,199 55,270 40,680 30,812 27,777 38,706 60,428 38,635 38,002 38,828
MR 31,099 27,620 25,926 30,153 32,734 30,517 26,969 26,173 30,247 28,683 29,098 33,879 34,620
 382
ESG considerations
͟
SUSTAINABILITY AT INSW
ESG Targets
 International Seaways is transporting fossil fuels
and will accordingly not be eligible for taxonomy
alignment in the near future.
 The company publishes an annual Sustainability
• Member of the Poseidon Principles and Sea Cargo Charter, which works towards targets as stated by
Report.
EEXI and CII. As such, the company aims to be aligned with the goals set by the IMO and Paris
 The ESG report can be accessed through the Agreement.
company website (link).
• Committed to responsible ship recycling in accordance with the Hong Kong International Convention for
Safe and Environmentally Sound Recycling of Ships.

eligible
ESG risk rating Targets GHG emissions, scope 2 tCO2e n/a n/a 17.59 n/a
activities
41 No Yes NOx mt 30,053 63,159 54,823 n/a

SOx mt 11,347 21,183 20,612 n/a
*0-100 where 0 is

Profit and Loss
Revenue 854.4 1,055.5 1,033.9 1,210.3 1,267.6 Adj. revenue 854.4 1,055.5 1,033.9 1,210.3 1,267.6
Other operating income/(costs) (0.8) 0.0 0.0 0.0 0.0 Adj. EBIT 422.9 579.5 548.9 725.9 776.9
EBITDA 534.5 709.1 701.2 882.4 939.0
Other (1) (1) 0 0 0 EBIT margin (%) 51.8 58.3 53.1 60.0 61.3
Other 3.1 10.7 0.0 0.0 0.0
Pre-tax profit 388.0 560.3 501.1 684.9 740.2 Revenue growth (%) 207.7 23.5 (2.0) 17.1 4.7
Income tax (0.1) (3.9) 0.0 0.0 0.0 EBITDA growth (%) (4,095.1) 32.7 (1.1) 25.8 6.4
Net income 387.9 556.4 501.1 684.9 740.2 EBIT growth (%) (586.9) 39.1 (10.8) 32.2 7.0
Net profit growth (387.7) 43.6 (10.0) 36.7 8.1
Adj. EPS 7.5 10.6 10.2 13.8 14.9
DPS 3.3 5.6 6.1 8.1 8.7
84
Balance Sheet
Inventories 0.5 1.3 1.3 1.3 1.3

Total assets 2,615.3 2,521.8 2,646.4 2,902.8 3,165.6
Gross debt 1,074.6 744.5 619.6 551.5 501.0
Net interest bearing debt 750.9 557.8 468.8 171.3 (176.9)
Working capital 267.8 220.3 220.3 220.3 220.3
85
Cash Flow Statement
Change in working capital (173.2) 37.2 0.0 0.0 0.0

Cash flow from investing activities 42.8 (124.3) (312.8) (183.6) (127.1)
New debt 748.1 219.7 0.0 0.0 14.8
Change in debt (89.8) (298.3) (124.9) (68.2) (50.5)
Cash flow from financing activities (185.8) (681.1) (376.5) (428.5) (477.5)
Other (e.g. FX) 80.0 (20.0) 0.0 0.0 0.0
Net cash flow 224.8 (137.0) (35.9) 229.3 297.7
86
EV 3,347.4 3,166.8 3,077.9 2,780.4 2,432.2 ROE 29.2 34.7 27.2 32.2 30.2
NIBD / EBITDA (x) 1.4 0.8 0.7 0.2 (0.2) ROACE 20.1 27.5 23.5 29.9 32.1
P/BV 1.7 1.5 1.3 1.1 1.0
Earnings yield 14.9 21.5 19.2 26.1 28.2
Dividend yield 6.2 10.6 11.5 15.3 16.4
87
Ready for the next leg
Nordic American Tanker - Equity Update
Arctic Securities

+47 41 36 36 63
Lars Moen Eide

+47 95 44 72 13
88
Buy
Nordic American Tanker Hold
NAT US | Tank | Equity Company Update | 09 April 2024 | 06:51 Sell
Ready for the next leg Financials and estimates changes Target $ 4.90 (4.60)
NAT, with its fleet of 20x Suezmaxes, is an attractive bet on the prolonged tanker upswing. Key Figures (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Highlights
Recommendation Buy
Clocking in an EPS of USD 0.47 in 2023, we model that this grows to USD 0.89 when we
Revenue 169.8 262.2 303.4 351.3 351.3 Target Price $ 4.90 (4.60)
reach 2025, with the latter 18% above consensus. On DPS, we are 35% above consensus. EBITDA 87.6 179.2 214.4 262.6 262.6 Share Price 3.93
This increase should warrant a repricing in our view and we hike our TP to USD 4.9/sh. EBIT 42.9 127.9 160.2 208.5 208.5 Upside (%) 24.7
EPS 0.08 0.47 0.65 0.89 0.90 Market cap (USDm)
A spicy cocktail 821
Adj. EBITDA 87.6 179.2 214.4 262.6 262.6 Enterprise Value (m) 1,094
The orderbook has crept upwards (7.9%), with crude and product now standing at 5.6% and 12.5%,
Adj. EBITDA margin (%) 51.6 68.4 70.7 74.7 74.7 Number of shares (m) 209
Adj. EPS 0.05 0.47 0.65 0.89 0.90
already beyond 25 years) will be retired, leaving the net fleet growth at 0.4%, 0.8% and 1.6% in Revenue growth (%) 151.5 54.5 15.7 15.8 0.0
2024, 2025 and 2026, respectively. To illustrate how the fleet is ageing, it is worth mentioning that EPS growth (%) (107.4) 503.2 36.9 38.0 0.6 Performance (%) 3M 6M 1Y
5.40
NAT US -9.4% 1.4% 29.7%
the share of the fleet above 20 years of age is now 17.7% and 15.7% for crude and products. 5.20
OSEBX -12.1% -3.0% 15.2%
This increases to 27.7% and 27.6% by the start of 2027. Over time, oil demand continues to be DPS 0.25 0.46 0.65 0.89 0.90 5.00
the main driver behind seaborne trade. The EIA estimates that oil consumption is set to grow to Dividend yield (%) 6.4 11.7 16.5 22.7 22.9
4.80
4.60
102.4 mbd in 2024, before reaching 103.8 mbd in 2025. Other agencies are seeing strong growth Net interest bearing debt 242.7 268.2 188.4 123.2 68.8 4.40
also, with the IEA also forecasting growth of 1.4 mbd in 2024 and Opec seeing 2.2 mbd. This ROE (%) 2.9 18.3 24.3 31.9 31.6 4.20
should translate into incremental vessel demand. We model combined (crude and product) ton- ROACE (%) 5.3 16.1 20.4 28.2 30.3 4.00
3.80
mile growth of 7.1%, 4.7% and 1.6% for the coming three years, implying a very strong market 3.60
EV / Sales (x) 6.3 4.2 3.3 2.7 2.5
balance ahead when stacking it against the fleet growth. 3.40
EV / EBIT (x) 24.9 8.6 6.3 4.6 4.3 3.20
Consensus too low on distribution we argue P/E (x) 50.2 8.3 6.1 4.4 4.4 3.00
Going into the first quarter of ’24, NAT has 57% of its spot days booked at USD ~40.7k/d. Applying
2.80
P/BV (x) 1.5 1.5 1.4 1.4 1.4
2.60
market rates for the remainder of the period, we arrive at an average spot rate of USD ~34.7k/ EV 1,068.5 1,094.0 1,014.2 948.9 894.6
d, thus leaving us 21% below consensus on EBITDA. In light of recent distributions (Q4 DPS of NAT US OSEBX
USD 0.12/sh vs. EPS of USD 0.08/sh), we hike our distribution assumption to 100% going forward.
89
This translates into a 16% yield in 2024 and 23% in 2025. This is 59% and 35% above consensus
expectations.
TP lifted to USD 4.9/sh

On our updated figures, the NAV is set to build from the current USD 4.4/sh to USD 5.3/sh within
Q1/25e. We apply current P/NAV discount to the 1yr fwd NAV, which is the basis for our updated
TP. Our TP reflects a P/E of 5.9x in 2025, which we believe will make its way to shareholders
pockets. That said, NAT also faces a fleet modernization need going forward, with 3x vessels being
19 years, 2x vessels 20 years and 2x vessels 21 years old. This stacks against the total fleet of 20x
Suezmaxes, thus reflecting a large portion with a potential replacement need (i.e. capex need).
Leverage is however modest at 24%, suggesting that there is capacity here to eventually acquire
secondhand tonnage to replace the oldest vessels with some debt. It will be interesting to see how
long the oldest vessels can trade before they eventually face extinction, but we do not assume any
scrapping through our forecasting period.
90
Estimates
 Going into the first quarter of ’24, NAT Q1/24e Diff vs. cons % change
NAT has 57% of its spot days booked (USDm) Q1/23 Q4/23 Arctic Cons. % abs. QOQ YOY
at USD ~40.7k/d. Applying market TC revenue 87.1 59.3 58.2 65.6 -11% -7 -2% -33%
rates for the remainder of the period, EBITDA 67.4 37.9 36.1 45.7 -21% -10 -5% -46%
we arrive at an average spot rate of EBIT 54.6 24.6 22.6 30.2 -25% -8 -8% -59%
USD ~34.7k/d, thus leaving us 21% Net profit 46.9 17.5 15.8 0.0 16 -10% -66%
below consensus on EBITDA. In light EPS 0.22 0.08 0.08 0.11 -31% -0 -10% -66%
of recent distributions (Q4 DPS of DPS 0.15 0.12 0.08 0.07 4% 0 -37% -50%
USD 0.12/sh vs. EPS of USD
0.08/sh), we hike our distribution
assumption to 100% going forward.
This translates into a 16% yield in Arctic vs. consensus - Year
2024 and 23% in 2025. This is 59%
and 35% above consensus NAT 2024e 2025e 2026e
expectations. (USDm) Arctic Cons. Diff Arctic Cons. Diff Arctic Cons. Diff
TC revenue 303.4 289.2 5% 351.3 320.8 10% 351.3 0.0
EBITDA 214.4 206.2 4% 262.6 230.2 14% 262.6 208.0 26%
EBIT 160.2 145.6 10% 208.5 176.6 18% 208.5 0.0
Net profit 135.1 124.7 8% 186.5 199.5 -7% 187.7 0.0
EPS 0.65 0.59 9% 0.89 0.75 18% 0.90 0.69 30%
DPS 0.65 0.41 59% 0.89 0.66 35% 0.90 0.00

Valuation
On our updated figures, the NAV is # Age Value Implied 6 5.2

5.5
4.9
Suezmax 20x 12.6 1,126 1,039 5 4.4 4.6
set to build from the current USD 4.1
Fleet value 20x 12.6 1,126 1,039 3.8
3.6
4.3/sh to USD 5.3/sh within Q1/25e. 4 3.3 4.1
USD/sh
Debt -295 -295
We apply current P/NAV discount to 3
Capex 0 0
the 1yr fwd NAV, which is the basis for 2
Cash 28 28 A 10% change in asset values would imply a 12%
our updated TP. Our TP reflects a P/E Other 54 54 1 change in NAV (USD 0.5/sh)
of 5.8x in 2025, which we believe will NAV 913 826 0
make its way to shareholders pockets. -20% -15% -10% -5% 0% 5% 10% 15% 20%
Shares 209 209
NAV per share - NOK Share price - NOK
That said, NAT also faces a fleet NAV per share - USD 4.37 3.96
modernization need going forward, NAV per share - NOK 4.37 3.96
with 3x vessels being 19 years, 2x
P/NAV 0.90x
vessels 20 years and 2x vessels 21
years old. This stacks against the total EV/GAV 0.92x
Net LTV 24% 6.0
fleet of 20x Suezmaxes, thus 5.0 1.3 0.8 0.7
reflecting a large portion with a 0.3 0.3
4.0
USD/sh
potential replacement need (i.e. capex 3.0 5.4 5.1 5.3
Suezmax (12.6 years) 56.3 51.9 2.0 4.4
need). Leverage is however modest at
Resale Suezmax 92.0 84.8 1.0
24%, suggesting that there is capacity
5yr Suezmax 81.5 75.2 0.0
here to eventually acquire
Net debt
Other
Other
Net debt
Dividends
NAV
NAV
GAV
GAV
secondhand tonnage to replace the
oldest vessels with some debt.
2024 Q1e 2025 Q1e

Estimates
Nordic American Tankers (USDm) 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
TCE Revenue 87 68 48 59 58 69 88 88 170 262 303 351 351
EBITDA 67 47 27 38 36 47 66 66 88 179 214 263 263
EBIT 55 34 14 25 23 33 52 52 43 128 160 209 209
Net profit 47 27 7 18 16 27 46 46 16 99 135 186 188
EPS 0.22 0.13 0.04 0.08 0.08 0.13 0.22 0.22 0.08 0.47 0.65 0.89 0.90
Adj. EPS 0.22 0.13 0.04 0.08 0.08 0.13 0.22 0.22 0.05 0.47 0.65 0.89 0.90
DPS 0.15 0.13 0.06 0.12 0.08 0.13 0.22 0.22 0.25 0.46 0.65 0.89 0.90
Investing cash flow 0 0 0 -73 0 0 0 0 -14 -74 0 0 0
Financing cash flow -53 -7 -55 19 -10 -32 -34 -53 9 -96 -130 -197 -225
FCFF 51 48 27 -60 30 37 52 60 10 65 178 234 242
FCFE 29 41 3 -14 19 30 45 53 -8 59 147 205 204
GIBD 285 279 255 302 291 284 277 270 306 302 270 242 204
Cash 57 96 69 31 51 55 73 80 60 31 80 116 133
NIBD 228 182 186 271 241 229 204 191 246 271 191 125 71
Suezmax 51,902 39,300 31,235 39,170 31,990 37,909 47,872 47,872 26,459 40,402 41,411 48,142 48,142
 393
ESG considerations
͟
SUSTAINABILITY AT NAT
EU Taxonomy alignment
 NAT is transporting fossil fuels and will accordingly
not be eligible for taxonomy alignment in the near
• The company has not disclosed any information regarding EU Taxonomy alignment
future.
• In order to be taxonomy aligned, vessels cannot be dedicated to transport of fossil fuels. As NAT is a
seaborne transporter of crude oil and crude products, we do not expect any taxonomy alignment in any
foreseeable future.

Taxonomy GHG emissions, scope 1 tCO2e n/a n/a n/a n/a
eligible
activities
42.4 NO NO Carbon intensity EEDI n/a n/a n/a n/a

Gender diversification n/a 25% 25% n/a
*0-100 where 0 is
best

Profit and Loss
Revenue 169.8 262.2 303.4 351.3 351.3 Adj. revenue 169.8 262.2 303.4 351.3 351.3
Other operating income/(costs) 0.0 0.0 0.0 0.0 0.0 Adj. EBIT 37.2 127.9 160.2 208.5 208.5
EBITDA 87.6 179.2 214.4 262.6 262.6
Other 0.0 0.0 0.0 0.0 0.0
Pre-tax profit 15.8 98.7 135.1 186.5 187.7 Revenue growth (%) 151.5 54.5 15.7 15.8 0.0
Income tax 0.0 0.0 0.0 0.0 0.0 EBITDA growth (%) (654.4) 104.6 19.6 22.5 0.0
Net income 15.8 98.7 135.1 186.5 187.7 EBIT growth (%) (129.7) 198.3 25.3 30.1 0.0
Net profit growth (108.8) 546.2 37.3 38.3 0.6
Adj. EPS 0.1 0.5 0.6 0.9 0.9
DPS 0.3 0.5 0.6 0.9 0.9
95
Balance Sheet
Property, plant and equipment 735.1 768.6 714.4 660.4 606.3 Equity attributable to the parent 540.0 538.3 575.1 592.9 593.3
Intangible assets 0.0 0.0 0.0 0.0 0.0 Total equity 540.0 538.3 575.1 592.9 593.3
Total non-current assets 737.2 770.3 716.1 662.1 608.0 Other non-current liabilities 1.2 0.7 0.7 0.7 0.7
Inventories 25.4 31.2 31.2 31.2 31.2

Total assets 880.7 879.2 886.3 876.5 838.9
Total equity and liabilities 880.7 879.2 886.3 876.5 838.9
Gross debt 306.0 301.6 270.3 241.6 203.6
Net interest bearing debt 242.7 268.2 188.4 123.2 68.8
Capital employed 782.7 806.5 763.5 716.1 662.1
Working capital 46.6 37.0 48.1 54.7 54.7
96
Cash Flow Statement
D,A&I 50.4 51.4 54.2 54.0 54.0 Free cash flow to equity (7.6) 59.4 146.8 205.3 203.7
Change in working capital 0.0 (15.1) (11.1) (6.6) 0.0

Capital expenditures (95.4) (73.5) 0.0 0.0 0.0
Other investment items 0.0 (0.1) 0.0 0.0 0.0
Cash flow from investing activities (14.3) (73.7) 0.0 0.0 0.0
New debt 88.0 53.3 81.5 0.0 0.0
Change in debt (17.4) (5.9) (31.3) (28.6) (38.0)
Other financing items 0.0 0.0 0.0 0.0 0.0
Cash flow from financing activities 9.0 (95.7) (129.6) (197.3) (225.3)
Other (e.g. FX) (0.3) 0.4 0.0 0.0 0.0
Net cash flow 18.5 (29.9) 48.5 36.6 16.4
97
Avg. diluted shares outstanding (m) 202.0 208.8 208.8 208.8 208.8 FCFE yield (0.9) 7.2 17.9 25.0 24.8
EV 1,064.3 1,089.8 1,010.0 944.7 890.4 ROE 2.9 18.3 24.3 31.9 31.6
IBD / (EBITDA - capex) (x) (39.1) 2.9 1.3 0.9 0.8 EV / adj. Sales 6.3 4.2 3.3 2.7 2.5
P/BV 1.5 1.5 1.4 1.4 1.4
Earnings yield 2.0 12.0 16.5 22.7 22.9
Dividend yield 6.4 11.7 16.5 22.7 22.9
98
Cash me if you can
Scorpio Tankers - Equity Update
Arctic Securities

+47 41 36 36 63
Lars Moen Eide

+47 95 44 72 13
99
Buy
Scorpio Tankers Hold
STNG US | Tank | Equity Company Update | 08 April 2024 | 23:01 Sell
Cash me if you can Financials and estimates changes Target $ 94.00 (78.00)
The product market continues to run at high speed and we expect a Q1 EPS of USD Key Figures (USDm) Dec-22 Dec-23 Dec-24e Dec-25e Dec-26e Highlights
Recommendation Buy
3.66/sh (-2% vs. Cons.). Meanwhile, the equity market continues to focus on very chunky
Revenue 1,470.2 1,328.0 1,550.1 1,752.5 1,775.0 Target Price $ 94.00 (78.00)
distributions from STNG once the USD 800m net debt level is reached – which we estimate EBITDA 1,058.3 906.1 1,148.0 1,354.7 1,377.2 Share Price 70.82
at some time during Q2. We see the DPS being raised to USD 0.50/sh, before reaching EBIT 797.7 705.2 951.6 1,160.3 1,182.8 Upside (%) 32.7
USD 1.00/sh from Q4. In other words, we don’t expect a distribution which represents a EPS 11.49 10.44 14.98 19.26 20.02 Market cap (USDm) 3,761
big portion of EPS as the stock still offers a discount to NAV and we believe buybacks will Adj. EBITDA 1,058.3 906.1 1,148.0 1,354.7 1,377.2 Enterprise Value (m) 4,994
remain the priority. That said, that doesn’t mean that STNG is not a stock to own in 2024 Adj. EBITDA margin (%) 72.0 68.2 74.1 77.3 77.6 Number of shares (m) 53
and we raise our TP to USD 94/sh. Adj. EPS 12.43 10.30 14.98 19.26 20.02
Revenue growth (%) 173.6 (9.7) 16.7 13.1 1.3
A spicy cocktail EPS growth (%) (368.2) (9.2) 43.5 28.5 4.0 90 Performance (%) 3M 6M 1Y
STNG US 12.8% 39.6% 31.8%
The orderbook has crept upwards (7.9%), with crude and product now standing at 5.6% and 12.5%, 85
OSEBX 12.1% 37.9% 28.8%
respectively. We assume that vessels turning 25 years of age (not saying anything about vessels DPS 0.50 1.25 2.80 4.00 4.00 80
already beyond 25 years) will be retired, leaving the net fleet growth at 0.4%, 0.8% and 1.6% in Dividend yield (%) 0.7 1.8 4.0 5.6 5.6
75
70
2024, 2025 and 2026, respectively. To illustrate how the fleet is ageing, it is worth mentioning that Net interest bearing debt 1,555.2 1,232.7 330.3 (522.2) (1,467.6)
65
the share of the fleet above 20 years of age is now 17.7% and 15.7% for crude and products. ROE (%) 29.3 21.6 27.6 28.3 24.0
60
This increases to 27.7% and 27.6% by the start of 2027. Over time, oil demand continues to be ROACE (%) 18.2 18.0 25.9 33.0 34.5
55
the main driver behind seaborne trade. The EIA estimates that oil consumption is set to grow to 50
EV / Sales (x) 3.6 3.8 2.6 1.8 1.3

102.4 mbd in 2024, before reaching 103.8 mbd in 2025. Other agencies are seeing strong growth 45
EV / EBITDA 5.0 5.5 3.6 2.4 1.7

EV / EBIT (x) 6.7 7.1 4.3 2.8 1.9

35
P/E (x) 6.2 6.8 4.7 3.7 3.5 30

mile growth of 7.1%, 4.7% and 1.6% for the coming three years, implying a very strong market
P/BV (x) 1.5 1.5 1.2 0.9 0.8 25
balance ahead when stacking it against the fleet growth.

EV Static 4,993.8 4,993.8 4,993.8 4,993.8 4,993.8 Jun-23 Sep-23 Dec-23 Mar-24
STNG US OSEBX
EV 5,316.3 4,993.8 4,091.4 3,238.9 2,293.5
100
Estimate revisions incoming
We arrive at a Q1 EBITDA and EPS of USD 285.9m (+1% vs. Cons.) and USD 3.66/sh (-2%
vs. Cons.). The biggest difference is the distribution level, where we are at USD 0.50/sh while
consensus is at USD 0.42/sh – up from the Q4 distribution of USD 0.40/sh. We include higher
distributions going forward, with a run-rate DPS of USD 1.00/sh from Q4 (yield of 6%). That said,
we believe buybacks are still to be prioritized due to pricing. Keep in mind, STNG has acquired
USD 651.1m worth of shares since the start in Q3/22 vs. cash distributions of USD 104.3m in the
same period (incl. Q1 paid). Looking into 2024, 2025 and 2026, we are 20%, 63% and 98% above
street expectations on EBITDA.
Buy reiterated; TP lifted to USD 94/sh

We raise our TP to USD 94/sh, a slight discount to 1yr fwd NAV of USD 97.1/sh. That said, it still
reflects an attractive P/E of 4.9x in 2025, or a cash adjusted P/E of 4.4x (or 3.3x in 2026).
101
Estimates
 We arrive at a Q1 EBITDA and Scorpio Tankers Q1/24e Diff vs. cons % change
EPS of USD 285.9m (+1% vs. (USDm) Q1/23 Q4/23 Arctic Cons. % abs. QOQ YOY
Cons.) and USD 3.66/sh (-2% vs. TC revenue 377.2 334.1 387.3 387.5 -0% -0 16% 3%
Cons.). The biggest difference is EBITDA 281.2 218.0 285.9 284.2 1% 2 31% 2%
the distribution level, where we are EBIT 231.2 161.7 236.3 229.8 3% 7 46% 2%
at USD 0.50/sh while consensus is Net profit 193.2 120.9 194.3 197.5 -2% -3 61% 1%
at USD 0.42/sh – up from the Q4 EPS 3.40 2.43 3.66 3.72 -2% -0 51% 8%
distribution of USD 0.40/sh. We DPS 0.25 0.40 0.50 0.42 18% 0 25% 100%
include higher distributions going
forward, with a run-rate DPS of
USD 1.00/sh from Q4 (yield of 6%).
That said, we believe buybacks are Arctic vs. consensus - Year
still to be prioritized due to pricing.
Keep in mind, STNG has acquired Scorpio Tankers 2024e 2025e 2026e
USD 651.1m worth of shares since (USDm) Arctic Cons. Diff Arctic Cons. Diff Arctic Cons. Diff
the start in Q3/22 vs. cash TC revenue 1,550.1 1,388.9 12% 1,752.5 1,248.9 40% 1,775.0 1,100.3 61%
distributions of USD 104.3m in the EBITDA 1,148.0 972.5 18% 1,354.7 830.7 63% 1,377.2 695.8 98%
same period (incl. Q1 paid). EBIT 951.6 764.1 25% 1,160.3 612.3 89% 1,182.8 490.7 141%
 Looking into 2024, 2025 and 2026,
Net profit 795.7 646.7 23% 1,022.7 544.2 88% 1,063.3 422.2 152%
we are 20%, 63% and 98% above EPS 14.98 12.53 20% 19.26 10.81 78% 20.02 9.04 122%
street expectations on EBITDA. DPS 2.80 1.67 68% 4.00 2.95 35% 4.00 2.30 74%

Valuation
# Age Value Implied 110 99.0

104.0
 We raise our TP to USD 94/sh, a slight 94.1
100 89.1
discount to 1yr fwd NAV of USD MR 57x 8.2 2,385 2,063 90 79.2
84.2
80 74.3
LR2 39x 8.2 2,436 2,107 69.3
97.1/sh. That said, it still reflects an 70 64.470.8
USD/sh
attractive P/E of 4.9x in 2025, or a cash Handy 14x 9.9 432 374 60
50
adjusted P/E of 4.4x (or 3.3x in 2026). Fleet value 110x 8.4 5,254 4,544 40
30 A 10% change in asset values would imply a
Debt -1,272 -1,272 20 12% change in NAV (USD 9.89/sh)
Capex 0 0 10
0
Cash 257 257 -20% -15% -10% -5% 0% 5% 10% 15% 20%
Other 232 232 NAV per share - USD Share price - USD
NAV 4,471 3,761
Shares 53 53
NAV per share - USD 84.18 70.82 From current to 1yr fwd NAV
P/NAV 0.84x 120

EV/GAV 0.86x 100 3.1
19.1 3.2 4.6
Net LTV 19% 80 4.4
USD/sh
60
98.9 92.7 97.1
40 84.2
20
MR (8.2 years) 41.8 36.2 0
Other
Net debt
Net debt
Other
NAV
Dividends
NAV
GAV
GAV
Resale MR 54.0 46.7
5yr MR 47.0 40.7
2024 Q1e 2025 Q1e

Estimates
Scorpio Tankers (USDm) 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 2023 2024 2025 2026
TCE Revenue 377 328 289 334 387 444 364 354 1,470 1,328 1,550 1,752 1,775
EBITDA 281 221 185 218 286 344 264 254 1,058 906 1,148 1,355 1,377
EBIT 231 171 141 162 236 295 215 205 798 705 952 1,160 1,183
Net profit 193 132 100 121 194 256 177 169 637 547 796 1,023 1,063
EPS 3.40 2.50 2.01 2.43 3.66 4.82 3.33 3.17 11.49 10.44 14.98 19.26 20.02
Adj. EPS 3.40 2.50 1.87 2.54 3.66 4.82 3.33 3.17 12.46 10.41 14.98 19.26 20.02
DPS 0.25 0.25 0.35 0.40 0.50 0.60 0.70 1.00 0.50 1.25 2.80 4.00 4.00
Operational cash flow 276 225 178 186 213 272 272 223 769 865 980 1,171 1,264
Investing cash flow -8 -4 29 27 28 62 -18 -21 572 44 50 -85 -85
Financing cash flow -33 -519 -156 -222 -340 -288 -87 -98 -1,195 -930 -812 -347 -312
FCFF 308 260 251 255 283 373 292 238 1,504 1,073 1,187 1,224 1,298
FCFE 391 -22 164 21 -75 75 203 145 329 555 347 973 1,100
GIBD 2,053 1,812 1,766 1,588 1,272 1,013 962 905 1,932 1,588 905 792 713
Cash 613 314 365 356 257 302 471 575 377 356 575 1,314 2,180
NIBD 1,440 1,498 1,401 1,233 1,015 711 491 330 1,555 1,233 330 -522 -1,468
MR 33,517 28,586 28,587 31,195 33,627 39,885 35,709 34,771 32,876 30,461 35,998 42,765 42,097
LR2 43,292 39,526 29,856 36,546 47,968 54,091 42,116 41,170 37,548 37,268 46,336 50,217 52,774
Handy 38,349 26,784 22,875 30,427 31,363 38,600 25,011 23,847 39,253 29,578 29,705 35,000 35,000
 104
3
ESG considerations
͟
SUSTAINABILITY AT STNG
ESG Targets
 Scorpio Tankers is transporting fossil fuels and will
in the near future.
 Scorpio Tankers publishes a Sustainability report
• The company fully supports the reduction of greenhouse gas emissions and has said it will continue to
and a Sustainability Policy.
partner with like-minded organizations and institutions in its efforts to reduce its environmental footprint.
 The ESG reporting can be accessed through the
• The company has said it will look to deploy capital in a manner consistent with a less carbon intense
annual report on the company website (link).
future.
• Scorpio has an increased risk as it has port calls at ports in countries that are among the 20 lowest
rankings in the Transparency International Corruption Perception Index. In 2022, the company had 33x
such port calls with 0x incidents of corruption.
• STNG is a member of The Maritime Anti-Corruption Network which works towards zero corruption in the
shipping space.
eligible
ESG risk rating Targets GHG emissions, scope 2 tCO2e n/a 397 481 n/a
activities
36.9 No Yes NOx mt 60,914 64,274 60,454 n/a

SOx mt n/a n/a n/a n/a
Board gender diversity 13% 30% 30% 22%
*0-100 where 0 is
best

Profit and Loss
Revenue 1,470.2 1,328.0 1,550.1 1,752.5 1,775.0 Adj. revenue 1,470.2 1,328.0 1,550.1 1,752.5 1,775.0
Cost of sales (323.7) (315.6) (306.5) (303.2) (303.2) Adj. EBITDA 1,058.3 906.1 1,148.0 1,354.7 1,377.2
Other operating income/(costs) 0.0 0.0 0.0 0.0 0.0 Adj. EBIT 851.5 703.6 951.6 1,160.3 1,182.8
Operating expenses (411.9) (421.8) (402.1) (397.8) (397.8) Adj. net profit 689.1 539.5 795.7 1,022.7 1,063.3
EBITDA 1,058.3 906.1 1,148.0 1,354.7 1,377.2
Impairment (53.8) 1.5 0.0 0.0 0.0 EBITDA margin (%) 72.0 68.2 74.1 77.3 77.6
EBIT 797.7 705.2 951.6 1,160.3 1,182.8 Adj. EBIT margin 57.9 53.0 61.4 66.2 66.6
Other 2.0 5.9 0.0 0.0 0.0
Pre-tax profit 637.3 546.9 795.7 1,022.7 1,063.3 Revenue growth (%) 173.6 (9.7) 16.7 13.1 1.3
Income tax 0.0 0.0 0.0 0.0 0.0 EBITDA growth (%) 606.7 (14.4) 26.7 18.0 1.7
Net income 637.3 546.9 795.7 1,022.7 1,063.3 EBIT growth (%) (981.4) (11.6) 34.9 21.9 1.9
Net profit growth (370.3) (14.2) 45.6 28.6 4.0
Equity holders of the parent 637.3 546.9 795.7 1,022.7 1,063.3
Adj. EPS 12.4 10.3 15.0 19.3 20.0
DPS 0.5 1.3 2.8 4.0 4.0
106
Balance Sheet
Interest bearing assets 0.0 0.0 0.0 0.0 0.0 Long-term interest-bearing debt 1,579.1 1,160.6 572.6 677.4 665.1
Total non-current liabilities 1,579.1 1,164.5 576.5 681.4 669.0
Inventories 15.6 7.8 7.8 7.8 7.8
Cash and cash equivalents 376.9 355.6 574.5 1,313.7 2,180.2 Current tax assets 0.0 0.0 0.0 0.0 0.0
Total current assets 687.3 577.1 808.4 1,596.3 2,456.4 Other current liabilities 91.5 72.7 72.7 72.7 72.7

Total assets 4,559.2 4,228.7 4,213.1 4,891.4 5,642.0
Gross debt 1,932.1 1,588.3 904.9 791.5 712.5
Net interest bearing debt 1,555.2 1,232.7 330.3 (522.2) (1,467.6)
Working capital 190.2 138.8 150.6 196.9 190.9
107
Cash Flow Statement
Net profit 637.3 546.9 795.7 1,022.7 1,063.3 Free cash flow to firm 1,511.1 1,092.3 1,192.9 1,238.3 1,327.8
D,A&I 206.8 202.5 196.5 194.4 194.4 Free cash flow to equity 328.8 554.9 347.4 972.6 1,100.0
Change in working capital (175.6) 59.5 (11.8) (46.3) 6.0
Other operating cash flow items 100.8 56.6 0.0 0.0 0.0
Cash flow from operations 769.3 865.5 980.4 1,170.8 1,263.7

Other investment items 606.4 66.7 111.4 0.0 0.0
Cash flow from investing activities 572.0 43.6 50.4 (84.8) (84.8)
New debt 122.6 1,386.5 25.7 218.9 35.1
Repayment of debt (1,135.1) (1,740.7) (709.1) (332.3) (114.1)
Change in debt (1,012.5) (354.2) (683.4) (113.3) (79.0)
Other financing items 2.3 (28.9) 0.0 0.0 0.0
Cash flow from financing activities (1,194.8) (930.4) (811.8) (346.8) (312.5)
Other (e.g. FX) 0.0 0.0 0.0 0.0 0.0
Net cash flow 146.5 (21.3) 219.0 739.2 866.5
108
EV 5,317.3 4,994.8 4,092.4 3,239.9 2,294.5 ROE 29.3 21.6 27.6 28.3 24.0
NIBD / EBITDA (x) 1.5 1.4 0.3 (0.4) (1.1) ROACE 18.2 18.0 25.9 33.0 34.5
P/BV 1.5 1.5 1.2 0.9 0.8
Earnings yield 16.2 14.7 21.2 27.2 28.3
Dividend yield 0.7 1.8 4.0 5.6 5.6
109
Disclaimer
Arctic Securities AS (“Arctic”)
Arctic’s business in general, as well as the reports it prepares, is subject to supervision by the Norwegian Financial Supervisory Authority (No: “Finanstilsynet”). Arctic aims always to operate in compliance with appropriate business principles, including Business Standard No. 3 of 6 September 2005
of the Norwegian Securities Dealers Association (No: “Verdipapirforetakenes Forbund”), regarding handling of conflicts of interests and the content of reports produced by investment companies and other relevant standards.
Risk of investment - general
There is risk attached to all investments in financial instruments. The opinions contained herein are based on numerous assumptions as described in this document. Different assumptions could result in materially different results. Furthermore, the assumptions may not be realized. This document
does not provide individually tailored investment advice and all recipients of this document are advised to seek the advice of a financial advisor before deciding on an investment or an investment strategy.
Prevention and avoidance of conflicts of interests
This report has been prepared by Arctic’s research department, which is separated from the corporate finance department in order to control the flow of information. All employees of Arctic are subject to duty of confidentiality towards clients and with respect to handling inside information.
110
Investment services provided to the Company(ies)
Readers should assume that Arctic may currently or may in the coming three months and beyond be providing or seeking to provide confidential investment banking services or other services to the company/companies.
This is a Third Party Research Report as defined by FINRA Rules 2241 and 2242. Any material conflict of interest that can reasonably be expected to have influenced the choice of Arctic as a research provider or the subject company of a Arctic research report, including the disclosures required
by FINRA Rules 2241 and 2242 can be found above.
The table below shows which investment banking services Arctic has provided to the Company(ies) and whether Arctic has received compensation for investment banking services from the Company(ies) in the previous twelve months.
Company(ies) General investment Placement of shares bonds 2) IPO 3) Market maker 4) Compensation 5) No investment No compensation 7)
banking services 1) banking services 6)
Frontline Plc - - - - - X X
Hafnia Limited - - - - - - -
International Seaways, Inc. - - - - - - -
Scorpio Tankers Inc. - - - - - - -
Nordic American Tanker Ltd. - - - - - - -
DHT Holdings, Inc. - - - - - - -
1. Arctic has provided general investment banking services to the Company in the previous twelve months.
2. Arctic has acted as financial advisor in connection with a placement of shares or bonds of the Company in the previous twelve months.
3. Arctic has acted as financial advisor in connection with an IPO of the Company in the previous twelve months.
4. Arctic has acted as market maker for the Company in the previous twelve months.
5. Arctic has received compensation for investment banking services from the Company in the previous twelve months.
6. Arctic has not provided any investment banking services to the Company in the previous twelve months.
7. Arctic has not received compensation for investment banking services from the Company in the previous twelve months.
111
Ownership of shares or bonds issued by the Company(ies)
Arctic may have holdings in the Company(ies) as a result of proprietary trading, market making and/or underlying shares as a result of derivatives trading. Arctic may buy or sell such shares both for its own account as a principal or as an agent. The table below shows the positions of the analyst(s)
who is/are authors of this report and whether Arctic alone, or together with its affiliates or subsidiaries hold a net short or long position exceeding 0.5 % of the total issued share capital of the Company(ies).
Company(ies) Analyst shares 1) Analyst bonds 2) Net short position 3) Net long position 4)
Frontline Plc - - - -
Hafnia Limited - - - -
International Seaways, Inc. - - - -
Scorpio Tankers Inc. - - - -
Nordic American Tanker Ltd. - - - -
DHT Holdings, Inc. - - - -
1. Number of shares owned by the analysts who are authors of the parts of the report concerning the mentioned Company.
2. Number of bonds owned by the analysts who are authors of the parts of the report concerning the mentioned Company.
3. The size of the position if Arctic alone, or together with its affiliates or subsidiaries hold a net short position exceeding 0.5 % of the total issued share capital of the mentioned Company.
4. The size of the position if Arctic alone, or together with its affiliates or subsidiaries hold a net long position exceeding 0.5 % of the total issued share capital of the mentioned Company.
The relationship to other reports prepared by Arctic regarding the Company(ies)
The graph(s) below show the historical share price and how our recommendation(s) for the financial instruments issued by the Company(ies) have changed over the last 12 months.
The part of this report concerning Frontline Plc has been prepared by Kristoffer Barth Skeie, Lars Moen Eide
Planned Updates
There is no fixed schedule for updating. However, Arctic aims to update the recommendation on a company when:
● The price target is achieved/large change in credit spread,

● New accounting figures are released, or
● Any material news on a company or its industry is released.
112
Limitation of liability
This report does not constitute or form any part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any securities; nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.
This report is based on publicly available information only. All information, including statements of fact, contained in this report has been obtained and compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made by Arctic
with respect to the completeness or accuracy of its contents, and it is not to be relied upon as authoritative and should not be regarded as a substitute for the exercise of a reasoned and independent judgement by you. Arctic accepts no liability whatsoever for any direct or consequential loss
arising from the use of this report or its content.
Jurisdiction, reproduction etc.
This report is governed by and to be construed solely in accordance with Norwegian law. It may not be reproduced, redistributed or republished by any recipient for any purpose or to any person. If you are not a client of Arctic, you are not entitled to receive this research report.
Distribution in the United States
Arctic Securities LLC takes responsibility for this research report. Research reports are prepared by Arctic for information purposes only. Arctic and its employees are not subject to the Financial Industry Regulatory Authority’s (“FINRA’s”) research analyst conflict rules. Arctic research reports are
intended for distribution in the United States solely to "major U.S. institutional investors" as defined in Rule 15a-6 under the United States Securities Exchange Act of 1934, as amended. Each major U.S. institutional investor that receives a copy of an Arctic research report by its acceptance thereof
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Rockefeller Plaza, Suite 1960 N.Y., N.Y. 10111. Arctic Securities LLC is a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the FINRA and the Securities Investor Protection Corporation.
This report does not provide individually tailored investment advice or offer tax, regulatory, accounting or legal advice. Prior to entering into any proposed transaction, recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic
risks and merits, as well as the legal, tax, regulatory and accounting characteristics and consequences, of the transaction. Financial statements included in the report, if any, may have been prepared in accordance with non-U.S. accounting standards that may not be comparable to the financial
statements of United States companies. It may be difficult to compel a non-U.S. company and its affiliates to subject themselves to U.S. laws or the jurisdiction of U.S. courts.
Prices and all other information herein are believed to be reliable as of the date on which this report was issued. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to
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For debt research reports please note:
This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This report may not be independent of Arctic’s proprietary interests. Arctic trades the securities covered in this
report for its own account and on a discretionary basis on behalf of certain clients. Such trading interests may be contrary to the recommendation(s) offered in this report.
Distribution in Brazil
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placed, distributed, offered or negotiated in the Brazilian capital markets and, as a result, have not been and will not be registered with the CVM. Therefore, Arctic represents, warrants and agrees that it has not offered or sold, and will not offer or sell the securities in Brazil, except in circumstances
which do not constitute a public offer, placement, distribution or negotiation of securities under the Brazilian capital markets regulation.
113
Distribution in Canada
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2023-04 Arctic Tanker Sector Report

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2023-04 Arctic Tanker Sector Report

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A spicy cocktail

Shipping - Tank - Sector Report

Kristoffer Barth Skeie

Lars Moen Eide

The fleet is hardly growing….

… while oil demand is definitely not slowing

Crude bound to show strength…

… while product rates are already record strong

Lifting H1, while keeping our view on rates unchanged long-term

Still upside, with one clear re-rating candidate

Source: Arctic Securities Research, SIN, Sea-Web  5

Rate estimates Supply and demand summary

New VLCC Suezmax Aframax LR2 LR1 MR 8% 95%

Source: Arctic Securities Research  6

 We expect volumes to expand by 3.5 10%

2.9%, 5.3% and 1.8% in 2024- 0.1

their production. TMX in Canada 2.5 1.8%

Source: Arctic Securities Research, SIN, Opec, IEA, EIA  7

Russian exports. While this is highly 80 4.7% 4.7%

Source: Arctic Securities Research, IEA, SIN  8

Implied value of a resale VLCC

Source: Arctic Securities Research, Arctic Shipping  9

From current to 1yr fwd P/NAV 1yr NAV appreciation in %

Source: Arctic Securities Research, Bloomberg  10

Mcap (USDm) EV* (USDm)

# vessels Average age fleet (years)

Net LTV NAV sensitivity (10% change in values)

60% 20% 18%

Source: Arctic Securities Research, Company data, Arctic Shipping, Bloomberg  12

Comments Crude rates (Q1 averages vs. 5yr average)

 If we split the market into crude 100,000

view, this can be attributed to less 2024 2023 5yr avg.

which has led to the development 70,000

levels compared to product. 40,000

Source: Arctic Securities Research, Bloomberg, SIN  14

Oil demand vs. seaborne trade (crude &

 2023 marked the year when 120

Global oil demand - mbd

 Over time, seaborne trade and oil 0

Source: Arctic Securities Research, EIA  15

 The IEA sees the risk of a 105 2.0 105 2.0

prolonged supply deficit even with

Source: Arctic Securities Research, IEA  16

Comments Inventory cycles dictate VLCC earnings

 Inventory cycles tend to dictate 160,000 400

Source: Arctic Securities Research, IEA, Bloomberg, EIA  17

Comments Oil in transit Oil in transit vs. VLCC rates

1,250 1,200 100,000

Oil in transit - million barrelse

Oil in transit - million barrels

creeping upwards due to re-routing 30,000

Source: Arctic Securities Research, EIA, Bloomberg, Opec  18

 The IEA’s monthly report took the 12 18 12.0 80,000

bull by the horns, literally, in

streak of bearish narratives. The 17 11.5

how much demand will disappear 9

EVs, it seems probable that more 13 9.5 3,989 5,378

Source: Arctic Securities Research, IEA  19

Comments Output vs. quotas

 Opec+ and its members extended 12.00

the 2.2 mbd cuts through Q2 on 3 10.00

March and the monitoring 8.00

seasonal from here, thus impacting

Source: Arctic Securities Research, EIA, IEA  20