Avance Gas (Hold, TP: NOK22.00) - Investors could lose either way
Avance Gas’ liquidity has fallen by 40% in nine months to USD67m, and 100% debt repayment starts from July 2019. Avance Gas has underperformed BW LPG in the spot market by USD3k/day over the past two years and we believe it does not have the liquidity to convert to LPG fuel or install scrubbers without raising equity, which means investors could lose either way: 1) through a diluting equity issue; or 2) further inferior spot performance versus peers. We reiterate 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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