BW LPG (Buy, TP: NOK204.00) - Dividends set to flow to shareholders
VLGC spot rates are down c80% from the peak, along with large draws on US inventories last week (11%) during cold weather. However, the US-Far East arbitrage is again trending up and implies cUSD60k/day rates, as an outlook for warmer US weather should allow propane inventories to remain above the 5-year average, which leaves potential for another rate upswing. We estimate a c32% dividend yield for Q4–Q1 and c23% for the next 12 months, the highest among LPG peers. We reiterate our BUY but have cut our target price to NOK204 (212).
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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