Avance Gas (Hold, TP: NOK96.00) - FFAs suggest upside potential
Although we see downside risk to 2024 earnings from recent levels on the staggering 2023 delivery schedule and US export growth risk, the current FFA implies cNOK23/share (25% of market cap) in cash flow on top of our 2024–2025e, signifying the potential to lock in earnings at attractive levels. However, with an EV/GAV of 0.9x on close to record-high second-hand prices, we find the valuation rather full. We have downgraded to HOLD (BUY) and cut our target price to NOK96 (103).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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