Avance Gas (Buy, TP: NOK70.00) - Lucrative cash generation
Avance Gas achieved a beat to consensus across its Q1 results, and declared a solid dividend of USD0.20/share. The company’s cash breakeven of USD21.2k/day is well below current VLGC spot rates, setting the company up for solid cash generation. Also, delays in the Panama Canal due to the new booking system could see added VLGC demand, with more vessels sailing the longer route to Asia via the Cape and tightening supply. We reiterate our BUY and have raised our target price to NOK70 (56).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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