BW LPG (Buy, TP: NOK148.00) - Upside potential on strong markets
We expect still-strong earnings towards end-2023, but see potential headwinds from US demand reverting to the mean and the heavy delivery schedule taking full effect. However, FFAs indicate solid VLGC earnings potential of USD50k/day for 2024e and 2025e, suggesting 65% and 37% upside potential to our EBITDA estimates, respectively – possibly adding 26% of the current market cap in cash flow on top of our 2024–2025e. On a still-attractive EV/GAV of 0.7x, we reiterate our BUY but have cut our target price to NOK148 (155).
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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