Flex LNG (Buy, TP: NOK340.00) - DPS likely shielded from market lull
With limited spot exposure in 2025–2026e and ample pro forma liquidity of c11x its ‘regular’ USD0.75 quarterly DPS, we see support to maintain a 12% dividend yield. We also see re-rating potential of its contract backlog, and calculate a 16% earnings yield assuming ‘open’ vessels (with no extension options exercised) are contracted at the 2019–2024 average 2-stroke 1-year TC rate of USD110k/day in 2027. We reiterate our BUY, and have raised our target price to NOK340 (335).Flex Lng Limited. FLEX LNG Ltd. is an owner of liquefied natural gas (LNG) carrier vessels and floating storage regasification units (FRSUs). The Company is focused on commercial activity relating to securing hydrocarbon feed stock for floating liquefaction projects, constructing, owning and operating floating liquefaction vessels and/or LNG vessels and sales and marketing of hydrocarbons and business in connection therewith, including investing in other companies. The Company operates a fleet of LNG carriers and has four M-type, Electronically Controlled, Gas Injection (MEGI) LNG carriers with a capacity of approximately 174,000 cubic meters under construction. The Company markets these vessels for charter and is also pursuing FSRU projects. The Company has four modern LNG vessels on short term charter that are being traded in the spot and short term LNGC market. Its subsidiaries include FLEX LNGC 1 Limited, FLEX LNGC 2 Limited, FLEX LNG Shipping Limited and FLEX LNG Management Limited.
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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