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.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.