Scorpio Tankers Inc

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:

• The stock has corrected by 9.21% in the last three months, on the other hand a return of 20.49% on a YTD basis.
• The stock is in its upper band of its 52-week range of USD 84.67 and 52-week low price of USD 47.88. Post the announcement of Q2FY24 results the stock has been consolidating with a mere correction of approx. 1.32%, with the current price taking support from USD 65-USD 70 key level.
• The price is currently trading above both its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 60.24.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together hold ~36.94% of the total shareholding, signifying concentrated shareholding. Scorpio Bulkers Inc. and Dimensional Fund Advisors, L.P., are the biggest shareholders, holding 7.30% and 6.87%, respectively.

1.4 Key Metrics

STNG has exhibited a strong improvement in its financial performance over recent years, particularly from 2020 to 2023. The company's revenue increased from USD 704.3 million in 2019 to USD 1,341.2 million in 2023. Gross profit also showed a notable turnaround, moving from a loss of USD 48.5 million in 2019 to a significant gain of USD 546.9 million by 2023. This growth is reflected in the gross margins, which improved from a negative 6.89% in 2019 to a solid 40.78% in both 2022 and 2023, showcasing enhanced profitability and operational efficiency.

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 Q2FY24:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has corrected by 9.21% in the last three months, on the other hand a return of 20.49% on a YTD basis.
• The stock is in its upper band of its 52-week range of USD 84.67 and 52-week low price of USD 47.88. Post the announcement of Q2FY24 results the stock has been consolidating with a mere correction of approx. 1.32%, with the current price taking support from USD 65-USD 70 key level.
• The price is currently trading above both its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 60.24.

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 October 02, 2024. 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.