Category Archives: LNG carriers
After more than two years of abysmal earnings, we now expect the worst is finally behind us. Although the recent increase in newbuilding contracting as a cause for concern, we remain confident in medium term improvements in earnings, vessel values and share prices. We reiterate our BUY recommendation on the LNG Carrier segment and highlight Flex LNG and GasLog as our top picks.
The company today announced a restructuring and recapitalization of the balance sheet by deferring charter hire payments to Teeky LNG Partners and a private equity placement of USD ~25m through a book building process. As we touched upon in our initiation in late April, today’s announced pro-rata equity issuance is a positive surprise, although at a heavy discount to last close. The restructuring/ refinancing also alleviates the challenging liquidity position we forecast, with the low cash point now at USD 6m in 4Q19E (-17m in 2Q19E previously). Although issuing equity at P/NAV ~0.25 is highly dilutive to our per share valuation, shareholders’ interests are well covered by the pro-rata participation and subsequent offering. Add the positive effects of increased market cap., share liquidity and reduced balance sheet risk, we reiterate our BUY recommendation, but lower our TP to NOK 5.6 (6.9) due to the dilution .
Flex LNG announced earlier this week the purchase of two MEGI LNGC newbuildings from Geveran (Mr. Fredriksen) at USD 180m apiece, which we view as attractive vs our generic valuation at USD 194m and as we see significant upside in asset prices over the next few years. The payment structure is 20% on completion of […]
The company is too small for most institutional investors, and we see limited prospects for growth. Despite the share illiquidity and stretched liquidity position on our estimates, we believe there is upside to the share price based on the continued massive discount on steel and our positive sector view. We initiate coverage of Awilco LNG with a BUY recommendation and target price of NOK 6.9 (+7%).