Dorian LPG (Buy, TP: USD19.00) - Entering high season
VLGC spot rates have seen positive momentum recently, with the FFA curve indicating ~USD55k/day for Q4, nearing the bullish ~USD63k/day of Q4 2019. In our view, this could lay the foundations for solid earnings this winter season, as the majority of Dorian LPG’s fleet is exposed to the spot market and set to reap the benefits from tight energy markets (with buyers seeking cheaper alternatives to LNG). We see an unwarranted valuation gap, at an EV/GAV of 0.72x versus the 2018–2019 average of 0.82x. We reiterate our BUY but have cut our target price to USD19 (20).
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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