Avance Gas (Hold, TP: NOK185.00) - Strong freight market fairly valued
We believe the strong freight market will persist on a strong US-FE arbitrage, supported by solid US fundamentals, backed by a slowing delivery schedule for the next two years. However, we estimate Avance is trading at a 1.19x P/NAV on all-time-high asset values, which on current 1-year TC (c35% above 5-year mean) is pricing the adjusted 5-year VLGC at an EV/EBITDA of 6.5x and 9.5x at 5-year average TC. Hence, we find the solid outlook fairly valued. Thus, we reiterate our HOLD and have reduced our target price to NOK185 (194).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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