Scorpio Tankers Inc

Section 1: Company Overview and Fundamentals

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 18.03% in the last three months, similary a correction of 40.89% in the past six months.
• The stock is in its lower band of its 52-week range of USD 84.67 and 52-week low price of USD 38.03. Post the announcement of FY24 results the stock has corrected by approx. 16.10%, with the current price taking support from USD 35-USD 38 key level.
• The price is currently trading below both its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 31.85.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~45.10% of the total shareholding, signifying concentrated shareholding. Scorpio Bulkers Inc and Dimensional Fund Advisors, L.P. are the biggest shareholders, holding the maximum stake in the company at 7.43% and 7.04%, respectively.

1.4 Key Metrics

Scorpio Tankers Inc. (NYSE: STNG) exhibits exceptional financial performance in FY 2024, significantly outperforming industry medians across key profitability metrics, which underscores its operational efficiency and justifies a potential premium valuation compared to peers. The Company achieved a gross margin of 74.3% against an industry median of 56.7%, reflecting superior cost management in vessel operations despite a reduced fleet size. Its EBITDA margin of 61.9% and operating margin of 61.5% far exceed the industry medians of 46.7% and 23.8%, respectively, driven by strong TCE revenue from time charters (e.g., USD 30,803 per day for LR2 vessels in Q4 2024) and effective deleveraging efforts that lowered financial expenses by USD 27.9 million in Q4. Additionally, STNG’s pretax margin of 53.8% and net margin of 53.8% surpass the industry medians of 17.3% and 11.6%, respectively, bolstered by a 32% annual net income growth to USD 668.8 million and a USD 176.5 million gain on vessel sales, highlighting its ability to generate substantial profits in a challenging market environment characterized by declining seaborne volumes and refinery maintenance issues.

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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 FY24:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has corrected by 18.03% in the last three months, similary a correction of 40.89% in the past six months.
• The stock is in its lower band of its 52-week range of USD 84.67 and 52-week low price of USD 38.03. Post the announcement of FY24 results the stock has corrected by approx. 16.10%, with the current price taking support from USD 35-USD 38 key level.
• The price is currently trading below both its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 31.85.

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 March 07, 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.