Avance Gas (Hold, TP: NOK22.00) - Headwinds tearing on liquidity
The VLGC freight market is hurting owner liquidity, and we believe the market turnaround is distant enough to wreak some havoc for the VLGC owners. Avance Gas’ cash burn for Q1 was more than we expected and has lowered the cash balance to USD44m by Q3 2019e, when amortisation is set to pick up again – there is just USD9m to go on its cash covenant. We maintain our HOLD recommendation and NOK22 target price.Avance Gas Holding is principally engaged in the transportation of Liquefied Petroleum Gas ("LPG"). Co. operates a fleet of 14 Very Large Gas Carriers, providing transportation services to oil majors and traders of LPG on a global basis. Co. transports LPG from the Middle East and the U.S. Gulf or U.S.loan facility from BCBloan facility from BCB(excludes dividends satisfied by issue of shares) East Coast to destinations in Europe, South America and Asia.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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