Dorian LPG (Hold, TP: USD26.90) - Balanced risk/reward
VLGC freight rate momentum in 2023 has been supported by a wide arbitrage on abundant US propane inventories, and the current FFA implies cUSD5.5/share (20% of market cap) of added cash flow on our fiscal 2025e and 2026e. This contrasts with our view of potential downside risk to 2024 markets on a staggering 2023 delivery schedule and US export growth risk. The current 0.9x EV/GAV valuation implies near record-high second-hand prices and we therefore see a balanced risk/reward from here. Thus, we have downgraded to HOLD but raised our target price to USD26.9 (26.1).
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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