Avance Gas (Buy, TP: NOK163.00) - Piling on the dividends
The VLGC freight market has come off its peak, with solid inventory draws last week during the cold spell. However, an outlook for warmer weather could ensure inventories remain comfortably above the 5-year average at the seasonal low-point, which should support the US-Far East arbitrage that currently implies a USD60k/day rate well above spot rates. On our estimates, we find a c27% run-rate dividend yield for Q4–Q1, and c21% for the next 12 months. We reiterate our BUY, but have cut our target price to NOK163 (177).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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