Nordic American Tankers Limited

NAT Details

Nordic American Tankers Limited (NYSE: NAT) owns and operates double-hull crude oil tankers. It is an international tanker company that owns double-hull Suezmax tankers. It operates vessels in the spot market or market-related charters under cooperative arrangements with third parties. The company's fleet size currently comprises 25 vessels, which includes two newbuildings, Suezmax crude oil tankers.

Signing an Equity Sales Agreement: On September 29, 2021, the company signed an equity distribution agreement with B. Riley Securities, Inc., pursuant to which NAT may offer and sell its common stock through an At-the-Market offering program for an aggregate value of up to USD 60.0 million.

Vessel Divestiture: On July 28, 2021, NAT announced that it plans to divest at least two vessels (built in 2000 and 2002) and certain vintage tonnage, with attractive second-hand prices available for Suezmax tankers. As of September 30, 2021, the company has signed an agreement to sell one of the vessels. The transaction is expected to be completed soon.

H1FY21 Results: The company reported a 60.59% decline in voyage revenues to USD 100.39 million in H1FY21 (ended June 30, 2021) compared to USD 254.73 million in H1FY20, owing to lower Suezmax tanker rates prevailing in the market. Net loss for H1FY21 was USD 53.72 million vs. a net income of USD 88.72 million reported in H1FY20. As of June 30, 2021, the company had cash and cash equivalents of USD 34.30 million, with total debt amounting to USD 345.74 million.

Key Risks: The Suezmax tanker industry is highly cyclical and volatile, and if it is depressed in the future, it could hurt the company's results of operations. In addition, any adverse movement in the spot charter rates or fuel prices may adversely affect NAT's earnings.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

NAT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: NAT's stock price increased 25.54% in the past week and is currently below the mid-point of the 52-week range of USD 2.08 to USD 4.05. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 69.19. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 2.47. Considering the significant uptick in the stock price in such a short span, we believe the business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 2.90, up 13.28% as of October 01, 2021, 2:27 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

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