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Section 1: Company Overview and Fundamentals
1.1 Company Overview:
Scorpio Tankers Inc (NYSE: STNG) is a Monaco-based provider in the transportation of refined petroleum products. The Company involves in the oil, seaborne transportation of refined petroleum products from the tanker industry to the international shipping markets. It operates through four segments: Handymax, MR (Medium Range), Long Range 1 (LR1)/Panamax and Long Range 2 (LR2)/Aframax.
Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.
Stock Performance:
1.2 The Key Positives, Negatives, and Investment summary
1.3 Top 10 shareholders:
The top 10 shareholders together form ~43.88% of the total shareholding, signifying concentrated shareholding. Scorpio Holdings Ltd and Scorpio Bulkers Inc. are the biggest shareholders, holding the maximum stake in the company at 7.34% and 7.34%, respectively.
1.4 Key Metrics
Financial Performance Overview (2019-2023)
STNG demonstrated significant fluctuations in its financial performance from 2019 to 2023. Revenue experienced a peak in 2022 at USD 1.56 billion, after which it slightly declined to USD 1.34 billion in 2023. The gross profit followed a similar trend, peaking at USD 1.24 billion in 2022, before reducing to USD 1.03 billion in 2023. Gross margins were notably high in 2022 and 2023, at 79.28% and 76.47%, respectively, indicating strong cost management and profitability. However, the company faced a dip in gross margin in 2021 to 38.07%, highlighting potential challenges in maintaining profitability during that period.
Margin Comparison with Industry Standards
When compared to industry medians for Q3FY24, STNG's margins show impressive performance across several metrics. The gross margin of 69.80% exceeds the industry median of 53.40%, showcasing a strong competitive position. Additionally, STNG outperforms the industry with its EBITDA margin of 53.90%, compared to the median of 43.80%. The operating margin of 63.80% and pretax margin of 59.20% also significantly surpass the industry medians of 21.10% and 20.90%, respectively. Moreover, the net margin of 59.20% aligns with its pretax margin, indicating effective management of expenses and tax liabilities, further solidifying the company’s strong financial standing.
Section 2: Business Updates and Corporate Business Highlights
2.1 Recent Updates:
The below picture gives an overview of the recent updates:
2.2 Insights of Q3FY24:
Section 3: Key Risks & Outlook
Section 4: Stock Recommendation Summary:
4.1 Price Performance and Technical Summary:
Stock Performance:
4.2 Fundamental Valuation
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 29, 2025. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: The report publishing date is as per the Pacific Time Zone.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.
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