Avance Gas (Hold, TP: NOK22.00) - Waterline getting closer
The Q2 results were marginally better than Bloomberg consensus, but the QOQ cash drain was larger than we expected. We now see liquidity becoming an issue that needs to be addressed by early 2019 on our VLGC rate forecasts, as opposed to our previous estimate of late-2019. Should VLGC rates average USD10k/day (we forecast USD14.7k/day for Q3), the company’s cash covenant could be breached during Q2 2019. We reiterate our HOLD 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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