Three of the largest names in tanker shipping lambasted analysts this afternoon, insisting the bullrun is here to stay and the naysayers have got it wrong. Euronav ceo Paddy Rodgers and Robert Macleod, the ceo of Frontline were joined by Nikolas Tsakos, president and ceo of Tsakos Energy Navigation (TEN) for an engaging tanker webinar organised by Capital Link. The trio were adamant that tanker stocks were not properly valued and the recent stock jitters in the sector are misguided.
Rodgers kicked proceedings off, noting that the tanker sector is now in the sixth quarter of good earnings and yet it listed tanker players have had to continually fight analysts who think the run cannot last.
“There is a huge appetite for bad news,” Rodgers said.
Tanker stock prices in 2016 have been hit, partially as investors reacted to lowering tanker asset prices. This, Rodgers said, was because shipyards are empty and other owners, who have other types of ships, are selling tankers to keep up liquidity.
“Stick to our knitting and don’t panic,” Rodgers urged.
“We are wrongly correlated to the price of oil,” Tsakos said. Described as an energy service was misleading, he reckoned – energy services were in today’s investment world “a dirty word”, he said, noting how the offshore and offshore support market is “on its knees”.
Tsakos noted how bunker prices had dropped 60% in the past 12 months, which combined with strong rates meant tanker owners have been “printing cash”. The Greek owner said TEN has been “netting a million dollars a day”, but the New York-listed firm was not getting any value or appreciation in its stock price.
“I believe this is just the beginning of the cycle,” Tsakos insisted, so long as owners do not order too many new ships.
All three panellists played down the likelihood of a slew of new orders coming in. Rodgers said: “In Korea you will find the government less and less willing to support shipyards.” Capital will get starved, he added, as banks are hit with losses from the offshore sector.
Frontline’s Macleod pointed out that with the sheer amount of ships for sale on the water with prompt delivery should keep newbuilding orders down.
“Opportunistic newbuild orders will hopefully be something of the past,” Tsakos hoped, adding later in the discussion: “To break a bottle of champagne on some cold steel and celebrate a night in Korea or Japan but bring the market down is not worth it.” Tsakos told private equity to invest in secondhand tonnage, not newbuilds.
Concluding Macleod said: “2016 could well be better than 2015 and I would not be surprised at all but is up to us as to how we play it.”
Quite so, concurred Tsakos, saying: “This market has legs and is here to stay for a couple of years.”
The next Capital Link webinar is scheduled for February 9.
