Dorian LPG (Hold, TP: USD41.80) - Near-term headwinds
The US–Far East arbitrage has been under mounting pressure from a weather-related price spike in the US and a somewhat concerning drop in Far East prices. Accounting for today’s fuel, canal and terminal costs, we believe the arbitrage for shipping is currently closed. Hence, we expect the anticipated rebound in VLGC spot rates to be pushed out in time, while we still forecast the outlook for warmer weather in the US to support the arbitrage going forward. We reiterate our HOLD, but have lowered our target price to USD41.8 (44).
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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