"Crude tanker demand lags supply in 2017–18 wiping out DHT's earnings, but remains cash flow positive. Tanker demand weakens in 2017 while rates fall below average market breakeven levels," analyst Fotis Giannakoulis wrote in a note.
The analyst expects VLCCs to earn on average $27/$30kpd in 2017/18 as market starts improving toward 2H18.
The analyst noted that, despite lack of earnings, the company's liquidity generation allows it to pay small dividends during the stronger winter quarters. The company pays at least 60 percent of ordinary net income to shareholders as dividend.
"Given the low stock liquidity and possible further decline in second hand values, the stock trades slightly below its current NAV of ~$5.5/share," the analyst said.
Shares of DHT closed Wednesday's regular trading at $4.72. The analyst cut the price target to $5.5 from $7.
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