Avance Gas (Buy, TP: NOK74.00) - Discount in a strong market
Although current VLGC rates look on course for a correction, we find the ongoing energy squeeze reassuring, coupled with meaningful US inventories potentially boosting long-haul exports over the winter. Hence, we see further potential for Avance Gas, supported by a still-meaningful discount to underlying asset values despite persistent market strength, with the current market valuation implying a 5-year-old VLGC vessel valued at USD65m versus broker quotes at USD74.5m. We reiterate our BUY and have raised our target price to NOK74 (73).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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