DHT Holdings, Inc.

DHT Details

DHT Holdings, Inc. (NYSE: DHT) is a crude oil tanker company with its own fleet. DHT's fleet consists of 27 Very Large Crude Carriers (VLCC), out of which 12 vessels operate on time-charters and 15 vessels operate on voyage charters, with a total capacity of 8,363,707 deadweight tons (dwt) as of June 30, 2021. Time charter contracts and voyage charter contracts (operating in the spot market) are the two forms of contracts that generate revenue for the firm. DHT's fleet operates across the globe on various international routes, and its management companies are located in Monaco, Singapore, and Norway.

Share Repurchases: On July 01, 2021, DHT stated that between May 17, 2021, and June 07, 2021, the company bought back and cancelled 3,721,841 of its common shares, representing 2.2% of the outstanding shares, at an average price of USD 6.025.

Sale of DHT Condor: DHT announced the delivery of its DHT Condor fleet to its new owner on July 08, 2021, and expects to book a profit of roughly USD 1.5 million in Q3FY21 on the sale price of USD 30.25 million. The company initially signed the agreement to sell DHT condor in April 2021.

H1FY21 Results: The company reported a massive decline of 66.60% in shipping revenues to USD 152.92 million during H1FY21 (ending June 30, 2021) compared to USD 457.85 million during H1FY20, owing to a decline in both the tanker rates and the total revenue days. As a result, DHT reported a sharp decline in net income to USD 12.42 million during H1FY21 vs. USD 207.98 million during H1FY20. As of June 30, 2021, the company's cash and cash equivalents amounted to USD 52.24 million, and the total debt was USD 526.18 million.

Key Risks: The company's top five customers collectively accounted for 53% and 41% of the total revenues during H1FY21 and H1FY20, respectively. Excessive dependence on a few customers for business could hurt the company's financial standing in the long run.

Outlook: As of August 09, 2021, 64% of DHT's available VLCC days have already been booked for Q3FY21, at an average price of USD 22,100 / day on a discharge-to-discharge basis. DHT also plans to use the current weak freight market conditions to its benefit by carrying out dry dockings, scrubber installations, and ballast water treatment systems. As a result, it estimates its scheduled off-hire will range between 80 and 100 days in Q3FY21.

Valuation Methodology: EV/EBITDA 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.

DHT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: DHT's share price has increased by 9.93% in just one month and is currently at the higher band of the 52-week range of USD 4.52 to USD 6.84. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 63.01. We have valued the stock using the EV/EBITDA multiple-based relative valuation methodology and arrived at a target price of USD 5.53. Considering the current market conditions, a sharp decline in top and bottom-line, associated risks, and the current valuation, we recommend a "Sell" rating on the stock at the current price of USD 5.98, up by 1.70% as of September 09, 2021, 12:51 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.

Biomerica, Inc.

BMRA Details

Biomerica, Inc. (NASDAQ: BMRA) is a biomedical technology company that develops, produces, and distributes innovative diagnostic and therapeutic devices to diagnose and treat chronic and gastrointestinal disorders. It also offers diagnostic test kits for COVID-19, dietary intolerances, and other esoteric tests. BMRA currently serves ~400 diagnostic customers, comprising ~75 overseas distributors, 40 local distributors, and several domestic hospitals and other clinical laboratories and institutes. The firm's products are sold in Europe, Asia, the United States, South America, and the Middle East.

Inching Towards Completion of Patient Enrollment for InFoods DGT: On August 30, 2021, BMRA stated that it intends to complete patient enrollment in its InFoods diagnostic-guided therapy (DGT), which is designed to relieve Irritable Bowel Syndrome (IBS) symptoms. The final patients in the trial are expected to finish therapy by the end of October 2021, after which the research data will be locked for final statistical analysis. Top-line trial findings demonstrating the efficacy of the InFoods IBS treatment are expected by the end of CY21.

Allowance for Patent to Treat Depression: On August 11, 2021, BMRA was granted a notice of approval by the Japanese Patent Office for a patent relating to a new treatment option for individuals suffering from depression. The patent is expected to enable physicians to discover patient-specific foods (such as salmon, milk, shrimp, broccoli, chickpeas, and so on) that, when eliminated from the patient's diet, may improve depressive symptoms.

FY21 Results: The company reported YoY growth of 7.57% in net sales to USD 7.20 million in FY21 (ended May 31, 2021) compared to USD 6.69 million in FY20, primarily due to an increase in sales of COVID-19 test kits. However, BMRA reported an increase in a net loss to USD 6.47 million in FY21 vs. USD 2.34 million in FY20, owing to an increase in selling, general and administrative (SG&A), and research and development (R&D) expenses. As of May 31, 2021, the company's cash and cash equivalents amounted to USD 4.20 million, with no outstanding debt.

Key Risks: BMRA's key distributor accounted for over 33% and 26% of its net consolidated sales during FY21 and FY20, respectively, as well as most of its accounts receivable balances. Excessive reliance on a single distributor for products could harm the company's financial health in the long run. Furthermore, the company relies on third-party contract research organizations (CROs), universities, or clinical sites (vendors) to monitor and execute clinical trials and manage data for its clinical programs.  Any failure on the contractual obligation by these third parties could harm its financials.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

BMRA Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: BMRA's share price increased 17.38% in the past month and is currently leaning towards the lower band of the 52-week range of USD 3.30 to USD 8.15. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 63.80. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 4.03. Considering the company's road to regulatory processes, negative bottom-line, current trading levels, and valuation, we recommend a "Sell" rating on the stock at the current price of USD 4.66, up 7.13% as of September 09, 2021, 10:17 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.